ARC Group

In after hours news: ARC Group Announces Stock Dividend (link)

 

“Jason T. Young, Chairman and CEO of ARC Group Worldwide, Inc., stated, “We have approved the stock dividend in an effort to increase liquidity in our stock.  Stockholders of record will receive an additional 1.5 shares for every 1 share they own.”

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I’m beginning this article on 3D printing services provider ARC Group Worldwide (ARCW) with an impressive chart that compares the year-to-date performance of ARCW shares to 3D Systems (DDD), Stratasys (SSYS), ExOne (XONE) and voxeljet (VJET). There are several material factors at play which lead me to believe that ARCW will continue to outperform these 3D printer manufacturers as well as the market in general over the next 3-6 months, factors I’ll discuss in this article.

ARC Group

arc group worldwide

High Growth at a Reasonable Value?  In the 3D Printing Industry?

At the recent Inside 3D Printing Conference and Expo in New York, I was honored to be part of a panel discussion on investments in the 3D printing space moderated by industry expert, Terry Wohlers.  One panelist mentioned that for the short term, pure play 3D printer manufacturers don’t have the fundamentals to support substantially higher share prices now that much of the “hyped” air has been let out of their bubbles.  Another opinion on the panel was that if you’re investing in the 3D printing industry you can’t look at fundamentals- just buy and hold until their earnings growth can sustain higher share prices.

Personally, I believe there are several companies within the industry right now that have both reasonable fundamentals as well as the fast revenue and earnings growth required to support higher share prices. ARC Group Worldwide is one of these companies and the chart above suggests that the market agrees.

 

Company Overview

ARC Group Worldwide (web site) is the largest metal injection molding (MIM) company in the world. Headquartered in DeLand, Florida, the company has multiple subsidiaries in the U.S. and Europe, approximately 440 full time employees, and a market capitalization of $213 million. For the trailing twelve month period ARC Group Worldwide generated $76 million in revenue, (which is $20 million more than the combined revenues of voxeljet and ExOne for the period), and reported adjusted earnings in fiscal 2013 of .85/share.

 

New 3D Printing Services Division Launched  

ARC Group WorldwideIn December of last year, ARC added 3D printing services to their operations with the launch of their 3D Material Technologies division, while also adding renowned 3D printing industry expert Todd Grimm to their board of directors.  As a result, ARC Group Worldwide can now leverage existing sales channels from their extensive MIM operations to ramp sales in their new 3D printing division.

 

In a shareholder update held just last week, CEO Jason Young discussed the company’s strategic growth initiatives, stating:

“Given ARC is the world leader in metal injection molding, we quickly identified 3D printing as a complementary technology to our core business. Metal 3D printing in particular dovetails with our metal injection molding business quite well given the customer base and the fact that the end use is quite similar; since metal 3D printing is still in its early days we believe our incumbent business will position us to be leaders in metal 3D printing.  At the very least our initial results for 3D printing technology in our facilities have clearly demonstrated the significant opportunity associated with reduced lead time and decreased cost across our supply chain.”

 

ARCW Now Has: “One of the Largest Capabilities in Metal 3D Printing Today”

What CEO Jason Young then stated last week is really quite remarkable:

We’ve made probably one of the largest investments in 3D printers in the country having purchased 16 industrial grade 3D printers, 7 of which were metal printers. I believe we have one of the largest capabilities in metal 3D printing today.

So in a few short months, ARC has rapidly grown their new 3D printing services division to position themselves as a future market leader in the space, particularly in the fastest-growing space in industrial 3D printing, the production of high grade metal components.

3D printing stocks

Prediction: Increased Awareness of 3D Printing Service Providers Coming

Many investors have focused on the manufactures of 3D printers as the only way to invest in the 3D printing industry due to the high level of media attention applied to the handful of public 3D printer OEMs. With the upcoming U.S. IPO of Materialise, a 3D printing services and software provider, I believe some of that media attention will shift focus to 3D printing service providers.  In fact, ARC Group Worldwide, now having “one of the largest capabilities in metal 3D printing today” may receive direct attention from the media as well as from investors unable to obtain what could be a high-demand Materialise IPO allocation. Like ARC Group Worldwide, Materialise is earnings positive. However the company’s 16% revenue growth for 2013 pales in comparison to revenue growth reported by ARC Group Worldwide noted below.

 

ARCW Earnings Growth & Comparative Metrics

For their fiscal year 2013 ARCW reported the following:

  • Fourth quarter net revenue grew 153.7% over fourth quarter of the prior year
  • Full fiscal year net revenue grew 125.3% over prior year results
  • Fourth quarter adjusted earnings of $1.7 million and full fiscal year adjusted earnings of $4.7 million
  • Fourth quarter adjusted EPS was $0.30 and full fiscal year adjusted EPS was $0.85
  • Full-year adjusted EBITDA of $10.1 million
  • Full year cash flow from operations was $7.4 million, up from $6.2 million for the prior year

 

ARC is now well into their fiscal year 2014, and while there are many positives in their SEC filings, the bottom line numbers are:

  • First quarter adjusted income increased 47.8% to a record $0.34/share over Q1 2013 (link)
  • In their most recent quarter, their second quarter, adjusted income rose by 127% to $0.32/share. This is faster earnings growth than any pure play 3D printer manufacturer reported in their most recent quarter. (link)

 

Potential For Earnings Estimates To Increase In Near Term

Average analyst estimates for fiscal year 2014 (ending in June) are $1.19/share, a 40% increase over fiscal year 2013. However, these estimates were made prior to last week’s announcement  of two acquisitions that ARC Group Worldwide states will “add meaningful cash flow” to the company and will be “immediately accretive to earnings.”

 

As a result, earnings estimates may very well be revised higher for 2014.

 

Comparative Metrics

Despite the strong earnings growth noted above, (which rivals the growth in any pure play 3D printing OEM), ARCW shares are currently trading at the lowest PE and the lowest price-to-sales ratios found in the 3D printing industry.

Company

PE
(trailing twelve months)

Price-to-Sales
(trailing twelve months)

ARCW

39.5

2.7

PRLB*

49.2

10.3

DDD

109.2

9.4

SSYS

NA

8.6

XONE

NA

9.6

VJET

NA

19.1

Source: Fidelity Investments (4/12/14)
*Note: While Proto Labs (PRLB) offers no 3D printing services, I’ve included it due to their CNC machining and injection molding operations.

 

Insiders Buying More Than 3D Printers And Accretive Acquisitions…They’re Buying Shares

There are many reasons why management might sell shares of their company that are not inherently negative-  such as accessing funds for a home, a big wedding bash for a daughter or grand- daughter, a new boat, etc.  However, there’s only one reason for management to buy shares in the open market, and it’s because they believe the company is undervalued.

ARC Group Worldwide
Insider Trading Activity

 

Last 3 Months

 

Last 12 Months

Number of Open Market Buys

2

18

Number of Open Market Sells

0

3

# Shares bought

8,750

179,685

# Shares sold

0

4,000

Source: Nasdaq.com

I invite investors to research SEC Form 4 insider transactions in any 3D printing company, pure play or otherwise. None will show the high ratio of insider buys to sells that ARCW has over the last year. In fact, almost all will show far more open market selling than buying from insiders.

 

Conclusion

I believe ARCW shares will continue to outperform 3D printer manufacturers and the broader market due to the company’s reasonable valuation and strong projected forward earnings growth.  In addition to being an established leading metal injection molding company, ARC Group Worldwide has quickly emerged to offer “one of the largest capabilities in metal 3D printing today.”

Average earnings estimates of $1.19/share for their fiscal year 2014 may be revised higher soon due to accretive acquisitions announced last week. Earnings growth in the most recent quarter far exceeds earnings growth in any publicly traded 3D printer manufacturer or in Materialise as it readies to IPO, yet ARC Group Worldwide sports comparatively favorable valuation metrics.

Insiders are buying shares in the open market for a reason. CEO Jason Young may have shed some light on that reason when he explained last week:

“We don’t know of any other companies that have this model which we believe is quite unique and scalable. We have an extensive and high quality customer base with underlying industries that are growing and we believe there’s an exciting opportunity to round-out our product offering while bringing new technology like 3D printing and automatic online quoting software to pioneer the future of manufacturing.”

Lastly, it’s now clear that successful investing in the fast-growing 3D printing industry requires more than (often inaccurate) media hype. For a sustained rise in share price, companies must demonstrate strong bottom line earnings growth, and that’s exactly what ARC Group Worldwide is now doing.

 

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Disclosure:  I am long shares of ARC Group Worldwide (ARCW). I have not been paid by ARC Group Worldwide or any third-party for this article.

 

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

MGI Digital logoIn news released this morning, MGI Digital Graphic Technology (ALMDG) on the NYSE Euronext, and (FRIIF) on the U.S. OTC market, announced the sale of three of their Ceradrop printers.MGI digital

CERADROP is a cutting-edge company founded in 2006 by members of the CNRS (Centre National de la Recherche Scientifique) the world-renowned laboratory, and has become the French leader in inkjet equipment for printed electronics market and intelligent 3D printing.

The press release goes on to state that “These orders represent a combined turnover of € 700 K (approximately $ 966,000 USD) for the first half of 2014. These commercial successes not only reinforce CERADROP’S recognition on a global scale, they also validate MGI Digital Graphic Technology’s strategy to focus on the highly promising market of Printed Electronics and 3D printing.”

MDI Digital acquired their new Ceradrop printer division last fall and Konica Minolta recently purchased a 10% ownership stake in the company.

MGI Ditigal has a PE ratio below 40 and rapid earnings growth. The stock continues to strongly outperform the high-multiple pure play 3D printing stocks, and is up just over 30% YTD.

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For more information on MGI Digital and Ceradrop printers, see: Meet a 3D Printing Stock With a PE of 40: MGI Digital Graphic Technology (ALMDG)

and: New 3D Printer Company, MGI Digital Graphic Technology, Reports Record Revenue & EPS $1.50.

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Disclosure:   I am long shares of MGI Ditigal (ALMDG).  I have not been paid by any company or third-party for this article.

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

 

 

 

3D printing stocks- a view from Australia

3D printing stocks
Robert Bugge

Corporate in-house transaction attorney, Robert Bugge, shares his thoughts from Australia on 3D printing stocks.

3D Printing: The River and Traction in 2014

2014 hasn’t been a good year so far for 3D printing stocks.  Some say that 2013 was the year of hype, with analysts trying to plot the growth of 3D printing using Moore’s Law and a technology adoption curve.  Others say, that companies like 3D Systems (DDD), Stratasys (SSYS) and ExOne (XONE) are overvalued.  Yet, while all of this is happening each and every one of the major 3D printing companies are making significant investments in growth, at the expense of EPS and all of them have done so via profit warnings to which they were all thrashed by the market.  So what are investors to think?  Should all of the longs bet on the strategic investments in R&D, sales, marketing, channels, and head count that all of them are making?  Should they believe that the hype cycle is over and head for the exits as many already have?  Or, should they hold on, and if they do, why?  I am long and while I am disappointed with the shorts and many of the ill-informed analysts, I sleep at night because I look at 3D printing a bit differently, so maybe what follows will provide cause for pause and garner a greater understanding for what is happening in this sector that has been likened by many to be the third industrial revolution. 3D printing stocks

3d printing isn’t a product, it is a manufacturing process – an additive manufacturing process that provides substantial savings in materials and energy costs and will completely change current approaches to inventory and logistics.  It is accomplished via a dozen or more different processes across dozens, if not hundreds of different materials.  It also can be used in hundreds of different manufacturing processes, each of which represents a vertical market.  It is this, the potential application of 3D printing to literally thousands of manufacturing verticals that sets it apart from other new technologies.  There are also other aspects of 3D printing that set it apart from other technologies that more readily lend themselves to the application of the traditional technology adoption curve.  They include, providing a reduced barrier to entrepreneurial manufacture, new material advances across verticals, decentralized manufacturing and the impact on logistics.  As the size of the potential market is as yet completely indeterminable, it is questionable whether opining that we are at the beginning, middle or end of the technology curve hype phase is of any relevance.  It is, even more questionable whether the traditional technology curve even applies to 3D printing.  I would argue that it does not. 3D printing stocks in 2014

Governments are investing millions in 3D printing and not a day goes by without news of a new vertical that has figured out a new way to use for 3D printing.  3D printing gives governments and manufacturers a competitive advantage, whether it is weight reduction in aerospace, rapid prototyping in engineering, a revolution in dental implants or new break throughs in bio printing.  There is little doubt that 3D printing is a game-changer.  As 3D printing provides an enormous competitive advantage, it is certainly not surprising that most manufacturers aren’t talking too openly about if, or how they are using it.  Neither are the 3D printing companies and for good reason – they are in a race to capture new verticals and don’t want to tip their hands.  So, while announced acquisitions give us some clues in the chase for verticals, the real clues will come in their sales numbers in the months and years ahead.  In this regard, many of them are forecasting growth at 40-50% per annum.  Not too shabby from my perspective.  So, how should investors look at all of this?  Well, maybe some other construct or analogy could better depict where we are and here we are going with 3D printing, better than the oft ill-applied technology adoption curve that has us stuck at the end of hype.3D printing stocks

3D printing has been around for more than 20 years.  During that time, its efficacy in rapid prototyping has matured and it is now actively being applied in direct manufacturing in a number of different verticals.  If you were to imagine a cross section of a river with flood plains to the right and left, and canyon walls at the outer edges of both sides of the flood plains, you could easily liken the 20 year growth of 3D printing to the rising of the river to the crest of its banks.  It is my view that 3D printing is now at flood stage – it has overflowed its banks and is now spreading out across the floodplain toward the canyon walls.  Physical science tells us that, when a river overflows its banks and spreads out across the floodplain that it slows down.  This is precisely what is happening with 3D printing.  If you also imagine that the floodplain is covered with trees, and each tree represents a vertical market you can see that slowly each of the trees – the vertical markets are being touched by the rising waters of 3D printing.  All of the 3D printing companies are investing millions in R&D, marketing, sales and channels to be the first to touch and capture as many verticals as they can – they want and need first-mover advantage in these verticals.  In short, they are seeking traction in as many verticals as they can, as fast as they can.  The wild card in all of this, is how much traction (read orders) can they get over what period of time? Stated differently, when will their recent investments pay off?  Are some verticals likely to purchase none, ten, a hundred or a thousand 3D printers?  Some will embrace 3D printing because they want to, others will do so because they have to, and others will die-off because they didn’t.

Many analysts have said we are at an inflection point.  I agree.  3D printing is on the verge of being embraced by hundreds of vertical markets, but once again the realities of physical science come into play.  Only when the flood crossing the floodplain of verticals reaches the canyon walls, will the river rise again and pick up speed.  The key to reading all of this is the rate of uptake by the verticals.  Will it be fast or slow?  Limited in some, and enormous in others?  The answers may lie in three factors – competition, reduced manufacturing costs and government sponsorship.  Competition and reduced costs are hugely compelling pressures that are driving verticals to rapidly adopt 3D printing.  And yes, don’t under estimate the competition between governments as they see 3D printing as a game-changer both in terms of GDP, as well as in defence and logistics.  When the government procurement machines crank up to buy 3D printers the only question will be manufacturing capacity.

To take the long view on 3D printing is to more accurately liken it to electricity.  It might take a while, but it will touch every aspect of our lives just like electricity did when it came on the scene.  I’m betting the 3D river will begin to flow faster than any of us expect, as the uptake by the verticals – and the aspects of our lives that they will touch – will grow much faster than the 20+% CARG forecasted.  Many of these verticals have been testing the waters and are poised to place substantial bets on 3D printing.  As they do, we will be getting the traction that will likely be the hallmark of 2014-2015.  I’m not worried.  Are you?

3D printing stocks

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About Robert Bugge

Rob is a corporate, in-house transactional attorney specializing in information technology, software licensing and government contract law.  His career spans 27 years where he has held positions as Senior Legal Counsel for Racal Electronics Plc, Assistant General Counsel Price Waterhouse Washington D.C., Counsel to the Canadian Commercial Corporation, Senior Counsel at the Washington law firm of Dunnells, Duvall, Bennet & Porter and Vice President, General Counsel and Director of Contracts for RJO Enterprises.  Rob retired in in 2011 from his position as Director of Legal Services Asia Pacific for Nuance Communications Australia based in Sydney, where he was responsible for multimillion dollar smart phone software licensing transactions across the Asia Pacific region for companies including Samsung, HTC, Nokia and Huawei.

Rob got his BA from the University of Florida in 1979 in Political Science with a specialization in military strategy, the Middle East and foreign arms sales where he studied under John Spanier who was the US lead negotiator of the SALT I Treaty and John Eisenhower for military strategy.  Upon graduation he was employed by the Boeing Military Airplane Company as a Weapon Systems Analyst in their Military Airlift Division where he was responsible for Middle Eastern mission planning while his masters degree studies and thesis at Wichita State University focused on arms sales as an instrument of foreign policy.

Rob attend the Cumberland School of Law where he graduated with his JD in 1986.  While in law school Rob was appointed by the American Bar Association as Law Student Division Representative to its Section on Government Contract Law.  After law school and pending completion of the bar exam Rob took a position as a Senior Contracts Administrator in Honeywell’s Space and Strategic Avionics Division where he managed a number of space-based military weapon system development contracts.

Rob is admitted to practice in Washington, DC, Florida and New South Wales Australia.  In 2003 Rob completed a 2 year 14,000 nautical mile TransPac sailing voyage aboard his 36’ sailing yacht Lone Eagle.  He began his voyage from Washington DC a month after 911, transited the Panama Canal and visited more than 22 countries.  Rob has dual US / Australian citizenship and lives with his wife in the little beach-side town of Yamba, New South Wales about 3 hours South of Brisbane.

Inside 3D Printing

 

“The Greatest (3D Printing) Show On Earth” returns to New York this week.

 

The Inside 3D Printing Conference and Expo will be held at the Javits Convention Center in Manhattan April 2-4, and it’s shaping up to be the largest on record with the addition of the “Maker Summit and Pavilion.”

Nasdaq listed Mediabistro Inc, (MBIS) is the producer of the Inside 3D Printing Conference and Expo events, and the company has more events scheduled around the globe for 2014.

 

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FEATURED SPEAKERS & KEYNOTERS AT INSIDE 3D PRINTING CONFERENCE AND EXPO NEW YORK 2014

Carl Bass, President and Chief Executive Officer of Autodesk, a leader in 3D design, engineering and entertainment software, will deliver the keynote, The Future of Manufacturing: 3D Printing and Beyond, the morning of April 4.
Curtis Carson, Head of Systems Integration for Centre of Competence Manufacturing Engineering at Airbus, will keynote in the afternoon of April 4. Carson will share his insight into how aircraft production can potentially benefit from emerging technologies, as well as Airbus’ vision for the integration of 3D printing applications.
Christine Furstoss, Global Technology Director of Manufacturing & Materials Technologies at GE, will keynote in the afternoon of April 3. GE uses 3D printing when making medical devices, jet engine parts, and prototyping components for washing machines.
Maxim Lobovsky, Co-Founder of Formlabs, will deliver the Maker Summit keynote “Kickstarting Innovation” on April 4th. Formlabs’ Form1 3D printer is the most-funded technology project in the history of Kickstarter and the company recently raised a $19 million Series A round.
Avi Reichental, President & CEO of 3D Systems, will discuss how 3D printing is revolutionizing the manufacturing industry in the morning keynote on April 3. 3D Systems is one of the fastest growing companies, according to Forbes.
Terry Wohlers, named the #1 most influential person in rapid product development and additive manufacturing, will use his expertise to examine the relationship between professional investors and the 3D printing industry, including what types of startups venture capitalists are looking to fund.
Inside 3D Printing Conference
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Panel Inside 3D Printing 
I’m honored to be participating on a panel discussion on April 3, “How Professional Investors are Playing the 3D Printing Boom” with Tracy Albert, David Honig, and Len Wagner, moderated by Terry Wohlers.
So plan to come and stop and say hello.  I love meeting subscribers, making new friends, and chatting about (what else?), 3D Printing Stocks!
3d printer stocks
Inside 3D Printing
inside 3d printing conference video 2013
- Here’s video from last year’s New York conference -

inside 3d printing conference and expo 2014

So register now, and I hope to meet you there!

- You can also get 15% off a full conference pass using this link.

register now for inside 3d printing conference

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

 

 

 

Lomiko MetalsResearch and Markets released their latest report on 3D printing this morning:

“Global 3D Printing Materials Market 2014-2018: Revenue Contribution of Customers to Global 3D Printers Market Expected to Post a Year-On-Year Growth Rate of Over 90%” See link.

The list of vendors in the global 3D printing materials space contains the usual well-known names like Stratasys, EnvisionTEC, 3D Systems, EOS, etc.

Also included is Lomiko Metals, (LMR), (LMRMF), a Graphene miner in Canada, with an ownership stake in Graphene 3D Lab Inc.  Lomiko Metals will be the sole supplier of graphene to Graphene 3D lab Inc., and the two companies have applied for patents for graphene-enhanced printer filament.

367b0dccc2bc458a6c3c8f04a7233ea6

Lomiko Metals is the only pure play graphene-enhanced 3D printing materials R&D company that is publicly traded. Their recent capital raise for gross proceeds of $5.5 million should enable Lomiko Metals and Graphene 3D Lab Inc. to continue their research and development of graphene-enhanced 3D printing materials.

Read more on Lomiko Metals, the amazing potential of graphene-enhanced 3D printed materials, and Lomiko’s partnership with Graphene 3D Lab in: Lomiko Metals (LMRMF) Enters 3D Printing Materials Market with Graphene.

 

Video with Lomiko Metals CEO, Paul Gill, on graphene’s potential in 3D printing.

 

Disclosure:   I am long shares of Lomiko Metals.  I have not been paid by any company or third-party for this article.

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

 

Groupe GorgeIn a press release this morning, Groupe Gorge announced their shares will be added to the CAC PME index effective April 1, 2014. Groupe Gorge also meets eligibility requirements for the PEA (personal equity plan)-PME (small and medium enterprises) investment plan. Investors with a PEA-PME receive favorable tax advantages which include tax-free gains provided they hold the PEA-PME for at least five years.

 

Prodways_LogoGroupe Gorge is a French engineering firm with global operations (web site) and has entered the 3D printing space with the acquisition of Prodways last year.

Groupe Gorge trades on the NYSE Euronext exchange under ticker GOE, and as a BNY Mellon sponsored ADR (American Depository Receipt) with ticker GGRGY.

See also:

Previous article on Groupe Gorge, The Best 3D Printing Stock to Buy Now is One You Haven’t Met

Interview with CEO, Raphael Gorge,  Interview with Raphael Gorge

prodways

prodways

Co-Founder of Prodways and creator of MOVINGLight® technology, Dr. André-Luc Allanic

 

 

Disclosure: I am long shares of Groupe Gorge (GOE)

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

MGI Digital logoMGI Digital Graphic Technology (ALMDG on NYSE Euronext, and FRIIF on the US OTC) is entering the 3D printed electronics market following their acquisition of electronics 3D printer OEM, Ceradrop, last fall.

 

At the IPEX 2014 event in London, it was announced that industry giant Konica Minolta, (10% stakeholder in MGI Digital), will be working with MGI to further develop the Ceradrop printer line (see last sentence).

MGI digital

MGI Digital reported $1.50 US in earnings in 2013, including sales from their Ceradrop division. I wrote about the company previously in: Meet a 3D Printing Stock With a PE of 40: MGI Digital Graphic Technology (ALMDG).

In my view this is a significant endorsement of the Ceradrop printer technology and future development potential, and it bodes well for MGI Digital’s future with their newly acquired Ceradrop printer division.

 

Disclosure: I am long shares of MGI Digital Graphic Technology (ALMDG)

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

Camtek Ltd. (CAMT) is launching the first commercial 3D printer for the PCB (Printed Circuit Board) industry this year. The company announced this development in a press release stating: “As a future growth engine, in addition to the existing products lines, the Company will focus its activity in the field of digital 3D printing for the printed circuit board industry.” As discussed in last month’s 2013 year-end conference call, Camtek’s new $300,000 “GreenJet” inkjet-based 3D printer has been delivered to the first customer and is in the final stage of testing with full commercialization anticipated in the second half of this year.

With the competitive advantages the printer delivers, the launch could be a game-changer for the company as well as the PCB industry.

 

The Camtek overview below 

Overview

CamtekCamtek Ltd. (CAMT) manufactures and markets computerized systems that optically inspect electronic components for defects caused during manufacturing.  The $120 million market cap company has 480 employees, a balance sheet with $ 22.5 million cash & equivalents, and a current ratio of 3. Camtek Ltd. is based in Israel, with offices in the U.S. and Europe in addition to a strong presence throughout the Asia-Pacific region.

spacer

See March, 2014 investor presentation.

camtek
Highlights of the Full Year 2013

  • Revenues of $85.4 million
  • Gross margins 45%
  • Non-GAAP operating income of $3.2 million; GAAP operating income of $1.1 million
  • Non-GAAP net income of $2.1 million; GAAP net income of $7 thousand
  • Positive operating cash flow of $4.7 million; Cash and equivalents of $22.5 million as of December 31, 2013

camtek

Highlights of Fourth Quarter 2013

  • Revenues of $23.3 million (a 32% increase over Q4 2012)
  • Net income (GAAP basis) of $0.02/share vs. loss of $0.11/share in Q4 2012
  • Positive operating cash flow of $2.6 million
  • 3D Printing System for PCB market installed at customer site for testing

Camtek is forecasting Q1 2014 revenue growth of greater than 20%

Sources: Form 20-F, press release

 

Analyst Earnings Estimate .40/share Next Year

Due to the launch of their new 3D printer for the PCB industry, Chardan  Capital Markets  upgraded Camtek to a “Buy” based on the company’s “3D Printing Opportunity.” Chardan Capital Markets now estimates earnings of .10/share for 2014, and an impressive .40/share next year.

 

Launching GreenJet 3D Printer For Solder Mask Deposition

 

CamtekCamtek’s $300,000 GreenJet printer is an inkjet-based 3D printer designed for the deposition of solder mask on PCBs and offers manufacturers a high-performance solution with a wide range of cost effective, and technological benefits. The GreenJet printer delivers savings in labor, cycle time, electrical costs, and space.

Moreover, GreenJet printers directly address a critical, costly and frequent complication during PCB manufacturing process: misalignment. As PCBs become increasingly crowded in order to fit more electrical components with more links on smaller boards, perfect alignment is essential. I believe the ability of the GreenJet printer to minimize alignment issues and reduce the 4-step solder mask deposition process to a 1-step process in addition to cost savings and shorter cycle times will result in strong demand from PCB manufacturers.

 

Early Mover Advantage In $93.9 Billion Market

The PCB industry is forecast at an 8% compound annual growth rate, and to reach $93.9 billion by 2017.  This enormous market is highly competitive and Camtek’s GreenJet printer is entering the space with a novel product that delivers PCB manufacturers the competitive advantages noted above.

In addition to machine sales Camtek will generate recurring revenue with their proprietary hybrid ink, tailored to meet the demanding requirements of the PCB industry.

 

Technical Indicators

Two strongly bullish technical indicators were put into place last week:

  1. CAMT is coming off a triple bottom formation with lows on 11/29, 12/18, and 3/14
  2. CAMT broke above the 10 day moving average on 3/19
    On Friday, 3/21, (a red day for the market in general), shares bounced off the 10 dma of 3.73 (low of day was 3.74)

Triple bottom reversals and 10 day moving average breaks are two of the more frequently used bullish technical indicators, and that’s in no small part because they are typically reliable.

Many experts agree that stock trading in specific companies and in the stock market overall tends to be forward-looking by about 6 months. Taking that time frame into consideration with Camtek’s scheduled commercialization of GreenJet printers in the second half of this year, I believe the lows of 2014 have been put into place and that the stock will trade higher from here.

 

Camtek

 

 

 

 

 

conclusion for Camtek

Conclusion

With a strong balance sheet, strong revenue growth forecast, positive cash flow from operations, and the commercial launch of the GreenJet printer this year, I believe shares are heavily undervalued at present.  Analyst estimates for .10/share in earnings this year, jumping to .40/share next year appear well within reason and should drive CAMT shares higher.

 

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Disclosure:   I am long shares of  Camtek Ltd.  I have not been paid by any company or third-party for this article.

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

Cautionary Statement on Forward-Looking Statements

This article may contain forward-looking statements as defined by federal and state securities laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying assumptions and other statements which are other than statements of historical facts. Forward-looking statements are only predictions that relate to future events or future performance and are subject to known and unknown risks, uncertainties, assumptions, and other factors, many of which are beyond our control. As a result, we cannot guarantee future results or performance as that performance is not necessarily indicative of future results.

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alphaform ag

Alphaform AGHeadquartered near Munich, Germany, Alphaform AG (web site) is a leading contract manufacturer and industrial service provider of complex and sophisticated components using 3D printing.

     

See Alphaform services brochure.

 

Alphaform AG is listed on the Frankfurt Exchange (ATF) and also trades on the U.S. OTC market (AFRMF).

 

Alphaform AG CEO

Dr. Thomas Vetter is the CEO of Alphaform AG and holds a doctorate in electrical engineering from the Technical University of Darmstadt. Before joining Alphaform AG, Dr. Vetter was a Managing Director at Carl Schenck AG, General Manager at Rieter Automotive Systems, and a board member for Sarna Automotive Europe. He was also General Manager at Johnson Controls automotive division where he was responsible for business development, strategic planning and advanced sales for all Daimler Chrysler related business activities in Europe, Asia, South Africa and South America. Dr. Vetter has been the CEO of Alphaform AG from January, 2008-present.

 

 

G. Anderson: Thank you Dr. Vetter for participating in this interview.

Can you provide a general overview of Alphaform AG, including when the company was founded, the services Alphaform provides, geographic locations of your major customers, current employee count, total outstanding shares, etc?

Dr. Vetter: Alphaform is a leading industrial 3D printing service provider in Europe. As a spin-off from EOS in 1996, the company is a know-how carrier for all important industrial 3DP technologies, from stereo lithography, laser sintering (plastics and metal), polyjet- / voxeljet- / color-printing through succession processing like castings, CNC machining, injection molding, metal coating or painting. We have business contacts into thousands of R&D departments and preliminary serve the markets automotive, medical technologies, electronics and aerospace. Currently Alphaform employes approx. 240 employees at 5 locations (Germany, UK and Finland) and has 5.85 million outstanding shares.

G. Anderson: What are the competitive advantages of Alphaform AG over other 3D printing or additive manufacturing service providers?

Dr. Vetter: Taking the early EOS days into account, we are among the companies of the first hour in the industrial 3D printing market. We have more than 20 years of application and technology experience and know our customers’ needs and technology limits. With our broad range of application and material knowledge we support our customers from the very first steps of their design ideas to the production of prototypes and even to the series production of their products. We are a recognized supplier of orthopedic implants with international customer base, serving from conventional production technologies to 3D printing of titanium implants whatever provides the most economic solution. As only a few players in our industry we know the ways of rapid prototyping AND volume production. With our engineering skills we are well positioned to successfully participate on the shift from prototyping to series production in our industry.

G. Anderson: In 2012 Alphaform reported .10 euros/share in earnings, (.14/share USD), and revenue of 27.1 million euros ($37.7 million USD) and is currently expected to release Q4 and 2013 financials on March 28.

Revenues in the third quarter of 2013 were the second highest in recent history and cash flow from operations was positive. However, Alphaform has guided for an overall net loss in earnings for 2013. Can you discuss the factors that caused the anticipated loss for 2013?

Dr. Vetter: 2013 was indeed very disappointing. After our turn-around in 2012 with black figures, we definitely had the goal to outdo the turnover and the earnings of that year. But instead of that we went in the red. There are two main reasons for that.

First, our medical subsidiary MediMet had significant problems in a management transition process (a classic PMI problem). The founder of MediMet retired from the operating business in 2012. After the departure of the founder we unfortunately haven’t had the right cast in the management. This especially impacted the distribution activities of MediMet, unsettled our customers and that resulted in a drop of orders. We solved these problems in the 3rd quarter of last year and have been enjoying growing order intakes since then.

Second, the production costs in our core business, 3D printing, were too high. The reason for that is that we were only able to meet the rapidly increasing customer requirements – especially their delivery time requirements – by operating our machines cost-inefficient. This is a direct result of our reluctance to invest in recent years and the very rapid technological progress in our industry.

In addition the medical technology market in general was weaker than expected. And finally we had to deal with customers’ price pressure in the automotive segment during the first half of the year.

As a consequence we had a negative result in our operating businesses and we made substantial one off non-cash write-downs in both divisions in 2013, in the case of MediMet especially by correcting the corporate book value and for the 3DP core business by considering the technological level of equipment and inventories.

G. Anderson: In February of this year Alphaform announced a realignment of the business and the successful completion of a capital raise at 3.40 euros/share ($ 4.73 USD/share) to be used in the realignment.

Can you discuss the realignment plans and how these changes might influence revenue/earnings growth for the company after completion?

Dr. Vetter: The realignment is based on three pillars: First, we expand our target customer groups. Second, we extend the technology and third, we broaden our distribution channels. Technologically, we will focus on the cradle of Alphaform: 3D printing. From prototyping in mind, we want to make greater use of the opportunities in our market for direct part production. The keywords here are small-scale production and product engineering for 3DP – “design for rapid”. We should also benefit from technical trends. A detailed analysis of the manufacturing cost parameters is expecting unit cost improvements of about 60% within the next 5 years and of another 30% within the next 10 years. These reductions should – and I’m sure they will – significantly boost the market for additive manufacturing.

With regard to customer groups, we have a strong footprint in medical orthopedics, in particular for metal applications. Now we will extend our exposure to aerospace and mechanical engineering – in particular related light weight solutions. In our plastics business we are currently very much focused on 3D printing for the automotive sector. That’s our core market and we know it very well. But the aerospace sector, the special vehicle & mechanical engineering sector offer many applications for plastic components that are produced in small quantities, too, which are ideal for additive manufacturing. Therefore we want to increase our business and enter these markets.

Part of the new alignment is also www.Artshapes.de through which we sell 3D printed high level art on the Internet. We started that website in December 2013. Above all Artshapes.de is a pilot scheme, too. We want to figure out to what extent we can use the Internet as an additional distribution channel for our services. Based on our experiences with Artshapes, we want to increase our web based activities and implement more web applications. And finally, we will expand our management capacities, especially in the areas sales and technology.

G. Anderson: In the Alphaform Q3 financial release it was reported that demand for 3D printing services was increasing and that pricing was improving. Have you seen that trend continuing so far this year?

Dr. Vetter: Based on the experience and analysis of last year’s problems we have established a detailed restructuring plan which is very much focused on process improvements but also on business growth. The first months of the year show already improvements of revenues compared to 2012 and even compared to our plans – and this as well on cost level. In addition analysts estimate an increasing economic dynamic during the course of the year. This typically keeps the market prices for our services on a healthy level. We have had increasing demands since several months and operate in some of our units close to capacity limits. Our realignment plan also includes capacity expansions in order to meet these demands.

G. Anderson: In February a research analyst at Close Brothers Seydler Research AG estimated a return to positive earnings by Alphaform in 2015 of .15 euros/share, or approximately .21/share USD.

However, 2014 looks to be a year focused on the restructuring and realignment of the company. Considering your realignment plans and the current business climate in Europe, do you believe Alphaform has potential to show positive earnings during some quarter this year?

Dr. Vetter: Please understand that we don’t publish forecast of individual quarterly results. Overall we are convinced that the implementation of our restructuring plan will lead Alphaform back into the black. At the same time we must be aware that the realignment also costs money. We therefore expect that Alphaform will do considerably better this year than in 2013 and that the restructuring efforts and respective costs should decline during the course of 2014. But we don’t think that we’ll already come out of the red this year. We are going through continuous changes and improvement processes and plan to show positive earnings in 2015.

G. Anderson: There are several articles predicting an IPO of at least one 3D printing service provider this year which could shift some focus onto other publicly-traded service providers like Alphaform AG.

Due to recent U.S. investor interest in Alphaform AG, trading in the company’s shares began on the OTC market under ticker “AFRMF” as an unsponsored ADR (American Depository Receipt). Is management considering upgrading to a bank-sponsored ADR as a means to increase confidence and trading from U.S. investors?

Dr. Vetter: In February 2014 Alphaform has successfully executed a small capital rise; it was oversubscribed several times of which we however could not take advantage according to German stock corporation law. If we want to achieve our goals and raise the growth potential of our business, we will need further capital measures. We are aware of the growing interest of U.S. investors in our company and the different valuation of technology stocks on both sides of the Atlantic. It is not in the interest of Alphaform’s management that our stock is traded OTC under an unsponsored ADR. We have never supported that, but unfortunately we can’t control it. Therefore we are evaluating an appropriate response to this development which could also include the upgrade to a bank-sponsored ADR.

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Disclosure:  I own shares of Alphaform AG. I have not been paid by Alphaform or any third-party for this interview.

Gary Anderson…..Follow me on Twitter: @3DPrintingStock

Widespread adoption of 3D Printing at the consumer level faces two major obstacles: ease of use and affordability for most consumers.

Taiwan-based Kinpo Electronics, (TWSE:2312), a company with 17 operating subsidiaries, an established presence in the U.S., and projected revenue of $1.4 billion for 2013, has addressed both of these obstacles.

Kinpo electronicsKinpo Electronics formed a new subsidiary called XYZprinting (see web site) and is launching a $499 3D printer with plug and play simplicity to compete directly with the Stratasys (SSYS) MakerBot and 3D Systems (DDD) Cube printers.

XYZprinting is predicting sales of 100,000 3D printers this year and has announced a staggering sales target of more than 1 million 3D printers by 2016. This compares to 19,317 printers sold last year by Stratasys (see page 58 of annual report). Should Kinpo Electronics and XYZprinting come anywhere near their sales target, they will become a major player…possibly the major player for consumer grade 3D printers.

 

Company Overview

Kinpo Electronics, Inc. manufactures network communication products, imaging systems, cell phones, digital set-top boxes, storage devices, electronic books, GPS systems, motherboards, 2D printers, and other consumer electronics. Kinpo has operations and sales in China, the rest of Asia,  and throughout Europe and the Americas.

  • Employee count approximately 80,000
  • 1.45 billion shares outstanding
  • Market capitalization approximately $570 million USD*
  • Projected 2013 revenue of $1.4 billion USD*
  • 2014 consensus estimate of .04/share in earnings*
  • Operations include Cal-Comp USA in San Diego, CA and Logansport, IN. Cal-Comp USA provides engineering design, rapid prototyping, and new product introduction services for the aerospace, defense, automotive, medical, and renewable energy industries
* Conversion rate 1 TWD = 0.0329445 USD

Kinpo Electronics trades only on the Taiwan Stock Exchange from 8 p.m.- 12:30 a.m. EST, and live trading can be tracked here.

The stock closed 3/13 at 11.75 TWD, approximately .39/share USD. (see: live currency converter)

 

Launching the Award Winning “da Vinci” 3D Printer

Kinpo and XYZprinting have directly addressed two of the greatest barriers to widespread consumer adoption of 3D printing with a $499 3D printer that features plug and play functionality for average consumers.

kinpo electronicsTheir first 3D printer, the “da Vinci 1.0″, employs FFF (fused filament fabrication) technology, the open source equivalent to FDM (fused deposition modeling) trademarked by Stratasys.

Kinpo electronicsThe da Vinci 3D printer was very well received at the 2014 Consumer Electronics Show in Las Vegas, and won the CES Editors’ Choice Award (see video) for “affordable and approachable 3D printing.”

This CES stamp of approval is validation of the da Vinci 1.0 as a strong competitor coming out of the gate.

A look at the qualifications required to win the CES Editors’ Choice Award and how the voting is conducted is here.

pricing

The da Vinci’s unheard of $499 price point and ease of use for the average consumer looking for their first 3D printer can be better appreciated when investors consider how the printer’s 100 micron resolution and larger build volume compares with MakerBot Replicator 2 and Cube 3D printers.

Printer 

da Vinci 1.0

MakerBot Replicator 2

Cube

Manufacturer

Kinpo Electronics Inc.

Stratasys Ltd.

3D Systems Corp.

Max. Build Volume

7.8W X 7.8H X 7.8D INCH
(475 cubic inches)

11.2 X 6.0 X 6.1 IN
(410 cubic inches)

5.5 x 5.5 x 5.5 IN
(166 cubic inches)

Filament Diameter

1.75 mm

1.75 mm

 1.75 mm
Layer Resolution

100 microns

100 microns

200 microns

Print material

ABS plastic

PLA plastic, ABS plastic

PLA plastic, ABS plastic

Warranty Included

One year limited warranty

Six month limited warranty

3 month parts and labor

Price

$499

$2,199

$1,299

 

Coming close on the heels of the da Vinci 1.0 launch will be the da Vinci 2.0 this summer. This version prints in ABS and PLA plastics, and features print bed auto-calibration. The da Vinci 2.0 also has dual extruders, allowing the printer to lay down PVA (poly-vinyl alcohol) along with the main printing material and to print two colors at the same time.

 

Potential for Market Dominance

XYZprinting appears confident in their ability to become a dominant force in the consumer 3D printer space.

Simon Shen, chairman of XYZprinting told the Taipei Times last week the company expects to continually launch newer versions of their printers, and stated:

“The 3D printer market is the only market that can achieve 100 percent growth in shipment volume over the next three years. The smartphone or tablet markets can no longer achieve similar growth”.

Most striking of all is XYZprinting’s sales target of “more than 1 million units of 3D printers globally by 2016.”

To help meet this goal the company is investing $100 million USD for capacity expansion.

 

Public Awareness of XYZprinting to Increase

XYZ printing is a Gold sponsor at the largest 3D printing conference in the world, the upcoming “Inside 3D Printing Conference and Expo” April 2-5 in New York. XYZprinting describes themselves as:

“Committed to being the number one provider of 3D printing products and services to consumers and small businesses around the world. Utilizing its parent company’s rich history and expertise in CE product manufacturing, coupled with its innovative attitude, XYZprinting is set to deliver high quality 3D printing products to market at startling price points unmatched in the industry.”

 

It’s clear which geographic market XYZprinting is targeting in this video.

 

XYZprinting will begin with sales on Amazon.com and other online portals. It’s important to note that Kinpo has mass manufacturing capabilities at costs far lower than Stratasys and 3D Systems. Should sales of their $499 3D printers begin at retail giants like Wal-Mart and Target, I believe “XYZprinting” and “da Vinci” are the names most consumers will soon be associating with 3D printing.

 

Share Performance

Trading in Kinpo Electronics (TWSE:2312) has been unremarkable YTD, although shares have outperformed 3D printer manufacturers DDD, SSYS, VJET, and XONE. Based on my expectation that more global investors will soon become aware of Kinpo’s move into 3D printing and the company’s potential to dominate the consumer grade 3D printer market, I believe this trend may continue.

Kinpo electronics chart

 

 

 

Conclusion

While there is currency exchange risk and additional brokerage fees for investors outside of Taiwan, I believe Kinpo Electronics is an attractive investment at current levels.

The company is expected to report some $1.4 billion USD in sales for 2013, yet has a market cap of approximately $570 million USD for a price-to-sales ratio below 0.5.

With sales targeted at more than 1 million 3D printers by 2016 and the potential the company has to achieve that target, I believe Kinpo Electronics is a company investors in 3D printing should take a very close look at.

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Disclosure:  I am long shares of Kinpo Electronics (TWSE:2312). I have not been paid by Kinpo Electronics of any third-party for this article.

 

Gary Anderson…..Follow me on Twitter: @3DPrintingStock