From the emergence of basic 3D printing in the 1980s to the latest plastics and metals used today, additive manufacturing has opened a new range of possibilities in the manufacturing realm. Modern methods and processes have yielded improvements in precision, resolution and increased detail.
Additive manufacturing involves a layer-by-layer process to produce 3D objects directly from digital 3D models. Benefits over traditional forging and casting methods include improved quality, design flexibility, cost reductions and the ability to address manufacturing limitations.
What’s more, additive manufacturing has also served as means to innovate. We’ve seen this in the midst of COVID-19, with 3D printing being harnessed to create products like ventilators and face shields. Typically, however, applications for the technology extend to the aerospace and defence industry, rail, manufacturing, tooling applications, marine and shipping businesses, plus more.
All in all, additive manufacturing companies are vying to compete in a global market that Frost and Sullivan anticipates could reach US$23.6bn by 2025. With an implied compounding annual growth rate of 15.1% between 2015 and 2025, an increasing number of investors have identified this sector as one that could prove lucrative in the long-term.
AML3D Limited (ASX: AL3) – share price: $0.17; market cap: $22.5m
Founded in 2014, AML3D is an Adelaide-formed welding, robotics, metallurgy and software business that utilises wire arc additive manufacturing in order to produce large commercial-scale metal structures and components.
This method of additive manufacturing incorporates robotics and software to harness thermal energy that fuses and deposits layers of material so they are melted and formed into 3D objects. Some of the key benefits associated with this form of additive manufacturing are that it reduces material waste by up to 80%, offers time benefits compared with subtractive manufacturing methods, and it doesn’t come with some of the size limitations that other methods are burdened by when printing metal parts.
AML3D’s technology also boasts certification from Lloyd’s Register, which is the designated inspection and certification firm that assesses businesses providing services to the marine, shipping and manufacturing sectors. AML3D also targets aerospace, defence and resources businesses.
Underpinning its business model, the company combines its own proprietary software into the manufacturing technology. AML3D relies on the following operations to underpin its commercialisation strategy:
- Contract manufacturing: fees to produce manufactured products, either ready-to-use or near-form that require final detailing
- Arcemy 3D printing modules: selling complete systems for in-house 3D manufacturing capabilities, with recurring revenue from annual licensing, support and wire feedstock
AML3D’s Arcemy printing modules allow clients and users of the technology to print their own parts, ensuring design security and confidentiality when producing prototypes. The company plans to leverage its success as a contract manufacturing service provider to sell its Arcemy printing modules.
Thus far, AML3D is an early-stage revenue business, however, the company has commercial contracts established with clients in Australia, Singapore and Europe to produce trial parts. These clients have been in the aerospace, marine, oil and gas, and defence sectors.
Since listing, AML3D has completed the production of and tested a 3D panama chock for marine and shipping giant Keppel Corp. This was executed as part of a paid trial, which is currently subject to third-party assessment. The company hopes that this will lead to subsequent orders.
As part of its broader growth strategy, the company is eyeing a first-mover advantage in South East Asia. It is currently expanding into Singapore and hoping to target marine applications courtesy of recent IPO funding. Global engineering technology firm ST Engineering has entered a ‘rent to buy’ agreement with AML3D for one of its Arcemy mobile 3D printing modules, which was successfully delivered in the first days of June.
Management of AML3D have also suggested that the company will pursue growth by increasing production capacity at its existing Adelaide contract manufacturing centre, developing integrated machine learning, starting a manufacturing run of its Arcemy mobile 3D printing modules and continuing to develop software and IP.
On this point, the company has also pencilled in further R&D for new products and processes, including new alloys and exotic metals, which could diversify its operations and appeal to a broader set of clients. With approximately $14m in funds in mid-April, the company will be hoping its various growth initiatives gain momentum over the coming months.
Titomic Limited (ASX: TTT) – share price: $0.78; market cap: $118.4m
Titomic is an industrial-scale additive manufacturing business that makes use of metal powder grades across the price spectrum to produce high-end high-spec products. According to the company, the value proposition behind its technology incorporates greater affordability, productivity and performance than traditional forging and casting methods.
The company claims to have the world’s largest and fastest metal 3D printer using the Cold Spray process, which is located in its Melbourne manufacturing facility. Utilising its patented Titomic Kinetic Fusion (TKF) technology, metal powders are deposited at supersonic speeds to create industrial-scale parts and complex surface coatings. This technology was developed jointly with the CSIRO and Titomic owns exclusive rights to commercialise it.
Capabilities and properties associated with the technology and its metals extend to ballistics protection, corrosion resistance, improved surface friction, anti-fouling and repair, as well as lighter and stronger materials, among others.
Titomic has also pinpointed the prominence of titanium metal in its strategy, noting that Australia is the biggest importer of titanium to the US, which is the largest titanium metal importer in the world. Australia also boasts the largest reserves of titanium metals in the world at an estimated 250m tonnes of Ilmenite (28.4%) and 29m tonnes of rutile (46.7%).
Target segments highlighted by the company extend to near-term market potential in excess of US$1.75 trillion. This includes aerospace and space (e.g. special coatings, tool moulds, space manufacturing); defence (e.g. DoD projects, soldier systems); consumer goods; government applications; mining, oil and gas (e.g. pipelines, valves, pumps); and construction, transport and automotive (e.g. cladding, car rims).
Since listing on the ASX in 2017, Titomic has recorded numerous achievements. Last year these included but were not limited to:
- The development of 15 commercial and R&D partnerships
- More than 20 completed R&D projects and 5+ completed production trials
- Development of its TKF 1000 printers
- Securing two global CSIRO patents
- Creation of new IP for two TKF processes
- Formation of the Titomic Space division, a new growth market for TTT.
Revenue is generated from TKF system sales that range from ‘turnkey’ solutions at one cubic metre, all the way up to the world’s largest bespoke purpose-built systems and automated production lines.
In addition, the company also produces income from scalable OEM manufacturing, advisory and prototyping services for companies wishing to undertake R&D services, plus metal powder sales.
A high proportion of Titomic’s revenue is derived from non-operating income not shown in the earlier comparison table at the start of this report. The majority is R&D tax refunds.
As far as growth initiatives in progress, the company has set in motion the following catalysts:
- A strategic partnership with Triton for research and prototyping and potential third-party investment sourcing to enter the US$60bn US DoD R&D sector
- A US$16.8m sales agreement with Composite Technology, an international defence manufacturer, for two of its TKF Metal AM Systems, plus a joint cooperation agreement to develop new material technology and process IP
- A partnership with Thales (Australia) to develop additive manufacturing methods supporting its military work by developing soldier system components
- A partnership with US Ascent Aerospace for tooling validation and feasibility testing
- The receipt of a purchase order and statement of work from Airbus for TKF AM parts that will be performance tested
- Record output from its TKF Melbourne Bureau with parts completed for various sectors
While Titomic’s cash burn has historically been quite high, the company remains optimistic that the above initiatives will translate into a platform where commercialised success may deliver a growing stream of revenue from contracts with customers.
Aurora Labs Limited (ASX: A3D) – share price: $0.068; market cap: $8.0m
Aurora Labs is an industrial technology and innovation company that develops 3D metal printers, powders, digital parts and intellectual property that underpin its Rapid Manufacturing Technology (RMT).
The company’s product offering consists of the RMP-1 Beta and Alpha-2 printing machines, with the former in the beta-testing phase. Nonetheless, in the company’s most-recent update, management indicated they are now progressing initiatives to commercialise this technology.
In September 2019, the RMT (RMP-1 Beta) was achieving a printing speed of 350kg per day, an increase of 2000% over the 12 months leading up to that date.
The company has also printed samples in Stainless Steel 316L using its patented Multi-layer Concurrent Printing (MCP) technology, which were independently tested to exceed set engineering standards for ultimate tensile strength and yield strength. MCP technology prints multiple layers in a single pass, thereby improving production speed and offering a distinct benefit compared with traditional laser-bed fusion printers.
Aurora Labs has identified a series of target markets that include global metal manufacturing, oil and gas, automotive, power generation turbines, heavy equipment and aviation.
Through a new division called ‘AdditiveNow’, Aurora Labs struck a joint venture finance lease agreement with Worley (ASX: WOR) for its RMP-1 Beta machine. However, in late April 2020, this deal was amended to instead focus on continuing collaboration.
Aurora Labs will now receive the RMP-1 Beta machine, providing it with full utilisation of the printer to develop the technology and fulfil parts requests from other clients or those interested in the printer itself.
Nonetheless, the company still anticipates being able to print commercial parts for AdditiveNow like it has done in the past.
Thus far, Aurora Labs has been printing parts for clients from a range of sectors for evaluation, including a leading European auto manufacturer, a large Japanese industrial corporation, a US industrial products manufacturer, a European steel manufacturer, and a US-based print-for-service business. The company’s expertise has also extended to the health care industry, previously collaborating with leading hospitals in Perth to 3D-print titanium medical implants.
While Aurora Labs has been able to generate as much contracted revenue from customers as that of its three peers combined, the company’s cash burn has also run at a higher rate in the majority of prior financial periods. The company is looking to address this courtesy of a restructure of its operations, which includes the termination of the lease for its US facility, notwithstanding it may review this decision in the future when business conditions pick up post-COVID.
In terms of the company’s current growth initiatives, Aurora Labs is looking to strengthen its competitive position within the 3D printing industry. As part of this strategy, Aurora announced a Framework Agreement with global quality assurance and risk management company DNV GL. The company hopes this agreement will provide independent endorsement of its 3D metal printers to appeal to an increased assortment of clients.
Finally, Aurora has successfully transitioned its Memorandum of Understanding with Granges AB into a 9-month binding service contract up to US$250k. The research project will focus on the viability of its RMP-1 printer on a cost-plus basis, potentially providing scope for longer-term commercial benefits should the project be fulfilled satisfactorily.
Amaero International (ASX: 3DA) – share price: $0.15; market cap: $26.2m
Amaero International specialises in the 3D production of large-format complex structures via laser-based additive manufacturing processes. Much like the other technologies described within this report, Amaero claims that the benefits associated with this technology extend to faster production cycles and the ability to print complex shapes.
The company has enjoyed a longstanding relationship with Monash University, with the two working together since 2013. Not only have they pursued the development of the printing technology and commercial opportunities - where Amaero has gained status as an already-qualified supplier with leading aerospace and defence companies - but the company has also attained exclusive rights to commercialise two patented and proprietary alloys developed by Monash University.
Amaero notes that its partnership with Monash University saw the duo print what they believe was the world’s first 3D-printed jet engine and Aerospike rocket. Leveraging further industry expertise, Amaero also boasts a strategic partnership with the University of Adelaide. Both of these partnerships allow Amaero to utilise state-of-the-art 3D printing equipment and R&D facilities.
Since listing on the ASX, the additive manufacturer has established its operations in the US. Amaero has exclusive rights to distribute AmPro 3D printers and other printing equipment throughout the North American market. The firm has approval to supply large US defence contractors courtesy of approval it holds for various ITAR-regulated projects.
Previously, the company has assisted companies from the aerospace and defence, research and development, and industrial manufacturing sectors. Amaero’s services extend across a broad line-up, including R&D, design and prototyping, tooling, commercialising metal alloys, contract manufacturing, selling 3D printing equipment and consumables, plus fulfilling training, services and maintenance.
As part of its growth outlook, Amaero has set several goals that it believes can help the company follow a path to generate meaningful revenue. In order to fulfil this, management have been investing funds from the recent IPO towards purchasing new 3D printers that will enable Amaero to garner interest from clients, plus maintain R&D efforts.
The tooling market remains an immediate focus for Amaero. In the medium term, the company has signalled that it expects to help businesses in the aerospace and defence sector, following qualification periods and pre-production investment. Across the long-term, the company is hoping to collaborate with clients in R&D projects relating to defence and aviation platforms.
Most recently, Amaero has struck a research agreement with Fletcher Insulation to develop an additive manufacturing application for superior tooling they both hope to commercialise and distribute at a later stage.
Furthermore, with the use of one of its newly-commissioned EOS M400 3D printers in the US, Amaero has commenced a qualification statement of work for a large aerospace manufacturer regarding satellite parts, which it hopes to receive purchase orders for once it completes all the necessary stages.
Another initiative management have outlined under way is the expected delivery of a proof of concept to a global aviation manufacturer. It has also formed an agreement with an automotive manufacturer for the collaboration and development of tooling for steel inserts of aluminium casting die components.
Rounding out its growth pipeline, the company is executing an R&D project out of its Melbourne facility for the CSIRO, while the commissioning of its Renishaw AM400 in Adelaide will be used to manufacture qualification parts for a leading aerospace company. On account of its numerous projects in progress, Amaero International is at the beginning of what the company’s management anticipates is an exciting growth stage for the business.
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