There are three very exciting and very different 3D printing companies for aggressive, high-growth investors to consider. They are ExOne, (XONE), Arcam AB (AMAVF) and Sigma Labs (SGLB). These three companies are focused exclusively on the fastest-growing segment of the 3D printing industry, which is the printing of high-grade metal components. This article will look at projected future growth of 3D printing in metals, as well as a quick look at three unique companies that are focused almost exclusively on this high-growth segment.
3D Printing and its Fastest Projected Growth Segment, Metals
The 3D printing industry as a whole grew at a CAGR (compound annual growth rate) of nearly 29% in 2012, and that double-digit growth is expected to continue. The industry stood at $2.2B in worldwide sales last year and is projected to nearly triple in size in just 5 years to $6B in sales (Wohler’s Associates). The technology used in3D printing of high grade metal components for industrial and commercial use has rapidly advanced in the last several years, and this is transforming multiple industries of gargantuan size, including the aerospace, defense, medical and automotive industries.
Industry insiders such as Brian Deagon, along with trade publications like Design2Part Magazine have predicted that the fastest growth in 3D printing will be in metals. In fact the generally agreed-upon subject matter expert and 3D printing industry spokesman, Terry Wohlers, recently stated that:
“3D printed metal parts have gained traction during the past couple of years and are growing more briskly than plastic parts. There’s just a lot more activity around metals”.
Scott Crump, Founder and Chairman of Stratasys (SSYS), has also mentioned the growth in the 3D metals printing segment. The majority of Stratasys’ revenue has been in plastics, but Crump stated in an interview with Bloomberg last month:
“Because there is so much opportunity we also will selectively grow though M&A. We have an organic project to get Stratasys into additive metal. It’s rational to say that through M&A we want to expand with different technology on a dual path.” (Stratasys Plans Purchases for 3-D Printing Using Metals)
Finally, 3D Systems (DDD), acquired Phenix Systems in June to expand their large scale metals products.
When industry experts, analysts, trade publications and the founder of one of the world’s largest 3D printing companies all agree that the best opportunities for growth for 3D printing companies is in metals, then it’s time for prudent investors to look for companies that are focused almost exclusively in that niche.
A Quick Look at 3D Printing Companies with a Strong Focus on Metals
With a market capitalization of $872M, ExOne (XONE) dwarfs the send and third companies I’ll mention here. I wrote a more in-depth article about ExOne last month that readers might gather some due diligence from.
Substantive Points on XONE
- Nearly half of ExOne’s revenue last year came from their PSC (Public Service Center) network with just 5 PSC centers up and running. ExOne will be expanding to 15 PSCs by 2015. Rapid expansion of their PSC network is a large part of why the company is predicting profitability this year
- ExOne has a wide moat of patents in metals printing as well as early mover advantages
- The company plans rapid expansion in China and Brazil
- ExOne increased investments in R&D by 33% in 2011, and another 26% in 2012, a sign they intend to keep their leadership position in 3D printing of metals
- Strong balance sheet with negligible debt and $71M cash from their IPO this year
- As of July 4th, over 35% of XONE shares were held short . This level of short interest could lead to covering on news and added upward momentum in the near term
Arcam AB (AMAVF) is a Swedish company that provides additive manufacturing solutions for the production of metal components. Among other products in 3D printing, they sell the Arcam Q10, an electron beam melting (EBM) machine for industrial production of orthopedic implants and Arcam A2, a solution for additive manufacturing of metal parts from a range of different materials in the aerospace industry.
I have made some fundamental comparisons between Arcam and ExOne in a more recent article (8/16/2013) here: http://3dprintingstocks.com/exone-and-arcam/
and a complete source of due diligence, including financial reports, an interview with the CEO of Arcam, and other research can be accessed here: (8/21/2013)
Substantive Points on Arcam AB
- The company is profitable (ttm EPS of .85) and has a more modest trailing PE than other 3D printing companies
- Quartely revenue growth (yoy) was 80% in the most recent quarter
- Arcam is a relative unknown in 3D printing companies by American investors- in part because their news doesn’t show up under their US-trading ticker (AMAVF). Investors can follow this link for news released under their Stockholm Exchange ticker which is ARCM.ST.
- Arcam AB customers include NASA, Airbus, Boeing, Lima, Adler Ortho and FIT
- The company has been in business since 1997 with over 60 installations worldwide
Sigma Labs (SGLB) is a micro-cap development stage company with very modest revenues to date, all of which have come from the consulting business they own as a subsidiary. Revenue from 3D printing might begin as soon as Q3 or Q4 of this year as the company commercializes their PrintRite3D system. I wrote a profile on the company, “Sigma Labs (SGLB): The 3D Printing Industry Micro-cap That Investors Should Meet” last month that contains some due diligence readers might find interesting and informative.
Substantive Points on Sigma Labs
- Sigma Labs has patented/additional patents pending technology (PrintRite 3D) that works in real time during printing of metal components to make micro-adjustments to the print if needed and guarantee quality while eliminating post-production analysis, cost and time
- GE Aviation has been beta testing the PrintRite 3D System and released this news on the Sigma Labs/GE Aviation partnership in May. For me, this is all the information I need to know that Sigma Labs has a potential game-changing product for 3D printing of metal components, despite being a currently unknown penny stock
- Sigma Labs is currently exploring commercialization opportunities for PrintRite 3D. One possibility mentioned by management is incorporating the technology into every metal additive manufacturing platform, similar to the “Intel Inside” licensing for computers
- In a June 6 investor presentation management stated that Sigma Labs is now in discussions with two of the three largest 3D metal printing companies. They have a NDA (non-disclosure agreement) in place so their identities are unknown at the moment. This NDA was also made with GE Aviation while the two companies were in initial talks
The metals niche in 3D printing is projected to grow faster than the industry as a whole by many insiders and experts. 3D printing companies with a strong focus on metals like ExOne, Arcam AB, and development stage company Sigma Labs are worthy of further due diligence by potential investors.
I received no compensation for this article. I am long XONE, AMAVF, and SGLB
Gary Anderson……..Follow me on Twitter: @3DPrintingStock