Unmasking Sonovia's green textiles revolution

Sonovia mask Photo: Company website

In the Covid pandemic, Israeli company Sonovia has become known for its superior facemasks, but its technology and ambitions go far beyond that.

Since going public about a year ago, Sonovia (TASE: SONO), which develops technology for the textile industry, has made headlines mainly thanks to its facemasks, which became a hit in protecting effectively against the spread of the Covid-19 virus.

The satisfaction at this surprising success expressed by company managers was also tinged with disappointment. Although the sale of masks currently provides Sonovia with breathing room, in the form of significant current income, they have diverted investor focus from Sonovia's ultimate goal: to develop a product that will lead to a revolution in the global textiles industry.

As Asaf Levy, VP Product at Sonovia, puts it, "Our Covid activity is a bonus that enables us to avoid burning cash, but that, along with the fact that we live in a short attention span world, makes it seem las though we’re a 'Covid company'."

How did a company that develops fabric finishing technologies get into producing facemasks?

Explains Sonovia CEO Igal Zeitun, "The company operates two separate divisions - one that develops products and technology, and another, more 'opportunistic' division. In our R&D activities, we use a large quantity of fabrics. Instead of throwing out or selling these fabrics, at the beginning of the pandemic, we decided to make masks out of them, and that resulted in our products division that sells mainly masks and other products. Our technology is embedded in those products, and it has proved to be very effective in protecting against viruses, including the Delta and Omicron variants.

"It’s a good and profitable 'side business', and we’re working on developing more products as part of it, and I don’t know of any other start-ups that are making money instead of burning it. But the perception of us as a Covid company or mask company - that isn’t the story. The masks case proves that we have the ability to produce high-quality textiles, but that isn’t our focus. We’re taking the company in directions where success will be much more significant, and we believe that investors will understand the huge business potential of the company and of its solution."

"A $14 billion market and growing"

Sonovia, founded at the end of 2013 and controlled by Joshua (Shuki) Hershcovich, who serves as chairman, is engaged in the research and development of high-performing, durable and sustainable textile finishing applications.

"Sonovia has acquired ultrasound technology from Bar Ilan University, and based on that, we are working to revolutionize the textile industry," says Zeitun. "Today, the textile industry treats fabrics in all sorts of ways that give them different properties - odor absorption, antibacterial, flame retardant, water repellent, dyes, and more - all through methods of passively absorbing materials into fabric."

Sonovia, says Zeitun, carries out the same treatments, providing textiles with the same features, but uses ultrasound technology. "While in the conventional methods the materials adhere to the fabric using contaminants like chemical adhesives, with our technology, the required properties are shot right into the fabric," he explains.

Sonovia’s technology "will also create a green revolution in the textile sector, as it’s the second most polluting industry in the world today, after oil and petroleum. The number one problem of the textile industry is pollution, because it consumes a lot of water and energy.

"Sonovia wants to be like Nespresso - it has a machine that it sells, but its 'Holy Grail' is selling its proprietary chemistry: the capsules. The combination of chemistry and a machine is big news for the textiles sector. That activity in the sector is estimated to be worth about $14 billion a year, and it’s a growing market. "

Although Sonovia's activity is in the initial stages, and perhaps thanks to its public exposure from its facemask production activity, its share price has climbed some 40% since the company began to be traded in December 2020. Following this rise, the company's market cap is some NIS 200 million. Controlling shareholder Hershcovich's 42% stake is worth about NIS 90 million.

Who are your potential customers?

Zeitun: "The end customers are textile processing plants around the world that have production lines which take in untreated fabric rolls that exit the plant treated according to customer requirements. For example, a textile plant that receives an order from Adidas to produce shirts with odor-repellent or sweat-repellent material. In this case, the plant would run tons of fabric rolls through our machine, which would treat the fabric so that it comes out with those features.

"Every machine that Sonovia installs uses about $1-1.5 million in consumables annually, so that every machine I install in a factory will generate annual revenue at this rate, in addition to the price of the machine, which is expected to be about $150,000," Zeitun continues. "We’ll start slowly, and in two or three years we'll several dozen machines a year. "

Like the heads of most of the dozens of young tech companies and start-ups that have ridden the TASE IPO wave since mid-2020, Sonovia’s managers, too, see the solution their company offers as a "game changer" for the industry in which it operates.

Zeitun: "The textile sector is hungry for innovation after decades, even centuries without any. This is a neglected market that finds itself working at full speed but with 18th century tools. Our instincts tell us that the textile market is bursting with demand and production, but lags behind in terms of innovation - and that’s what we’re coming to do for it."

"In 2022, we’ll report our first machine sale"

With its conquest of the textile world still in the future, Sonovia has thus far completed development of only two machines, one for its strategic partner, Bruckner Textile Technologies of Germany, one of the most prominent textile machine manufacturers in the world, and another for Israeli clothing manufacturer Delta, expected to be installed at its Karmiel plant during the current quarter.

The machine at Delta will be "the first time our machine will meet a real end-customer," Zeitun says. "During this year, we'll test the machine with all kinds of applications, including fabrics of Delta customers, so we can learn. We hope and believe that after the machine is operational at Delta, we can start selling machines to end-customers towards the end of 2022.

"We're running pilots with the world’s leading brands and manufacturers, in various textile market segments. We hope and believe that in 2022, we’ll report the first sale of the machine we’ve developed."

Meanwhile, the facemasks Sonovia has manufactured since the outbreak of the Covid crisis have helped bring in a fair amount of revenue. The masks are sold mainly through its website to private customers, as well as through Amazon, with the main market being the US, which is responsible for about 75% of purchases.

The company ended the first half of 2021 with almost $6 million in revenue, after recording close to $10 million in revenue for all of 2020. Sonovia posted a loss of about $1 million in the first half of last year, which compares with a profit of about $1 million for all of 2020.

Sonovia recently reported that it expected to end 2021 with revenue of over $14 million, an increase of 50% compared with 2020. This will enable it to, "continue to invest large sums in research and development in advance of the installation of a commercial industrial machine during 2022."

"Producing the highest performance fabric there is"

Textiles intertwine with almost every aspect of our lives, explains Sonovia CTO Liat Goldhammer-Steinberg. "Our activities are relevant to a variety of existing textile segments - from clothing, home textiles including bedding, towels, etc., through the institutional market, such as hotels, hospitals, and work clothes - where we can bring innovation in durability to laundry and textile treatments that don’t currently exist in the industry. Another market is technical textiles, like filters for air conditioners, water filters, and more. "

Surprisingly, she says that "the transportation market is also relevant for us; companies that develop technology for the autonomous vehicle market were looking for solutions even before the pandemic that would make vehicles more sanitary, and Covid enhanced that need. The average vehicle contains over 20% textiles, and therefore the ability to treat different types of these materials to give them high durability and antibacterial capability, caught their attention, and we have pilots with leading manufacturers in this market."

Goldhammer-Steinberg explains that, "Sonovia is not limited in the type of fabric that can be treated, whether it's leather, polyester, cotton, knitwear, wovens, or whatever. Because of this, our technology makes it possible to produce fabric with the highest performance there is, with far less pollution, using innovative methods instead of the traditional methods that exist today. So there's is a great need to implement it as soon as possible, which is part of our efforts for 2022."

"A sensitive industry with high consumer awareness"

At this point, Goldhammer-Steinberg returns to the company's facemask business, noting that "the mask fabrics are a subset of Sonovia's abilities, and the few million dollars this activity produces for us are just a fraction of the innate potential of our company, which can handle any kind of fabric."

Regarding the global textile industry, Goldhammer-Steinberg notes that, "we operate in one of the largest and oldest industries in the world, which created the industrial revolution, and needs to be overhauled, something that hasn’t happened for centuries.

"The volume of activity needed to produce all the textiles in the world is huge - which makes this industry sensitive, with high levels of consumer awareness and regulation. That puts pressure on manufacturers to introduce green products into a market that has been very set in its ways."

Published by Globes, Israel business news - en.globes.co.il - on January 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Sonovia mask Photo: Company website
Sonovia mask Photo: Company website
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