The US Navy is expanding rapidly on the back of geopolitical challenges
\nOne ASX tech company, AML3D, could benefit from this
\nWe speak to AML3D\u2019s CEO, Sean Ebert<\/p>\n
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New geopolitical challenges, along with the Biden office\u2019s prioritisation of modernising the US military, have driven robust demand in 2023 for defence-related stocks.<\/p>\n
Analysts believe this demand will continue into 2024 and beyond as geopolitical instability grows.<\/p>\n
Unlike many other developed countries, spending on national defence in the US tends to gain support from the masses, as it is considered patriotic.<\/p>\n
The Biden government, for its part, is capitalising on this support by making bigger investments to preserve the nation\u2019s military edge.<\/p>\n
Underpinning these investments is the Administration\u2019s focus on additive manufacturing technology as a solution to rebuilding the US\u2019s sovereign manufacturing capability.<\/p>\n
Called the Biden AM (Additive Manufacturing) Forward Program<\/strong>, the initiative is a voluntary pact among large manufacturers to help their smaller US-based suppliers increase the use of additive manufacturing, otherwise known as 3D printing.<\/p>\n Surprisingly, there is one ASX-listed tech company that has reaped benefits from this program as well as greater spending in the US defence budget.<\/p>\n The company is a $20m market-capped stock called AML3D (ASX:AL3)<\/a><\/strong>, a provider of on-demand additive manufacturing services that have gained a foothold within the wider US Navy\u2019s supply chain.<\/strong><\/p>\n AML3D, which stands for Additive Manufacturing 3D, was founded in 2014 and is the OEM (original equipment manufacturer) of the ARCEMY industrial metal 3D printing system.<\/strong><\/p>\n \u201cWe print large scale, 3D metal parts, and what makes it different for us is that we have a range of alloys that we can print in,\u201d says AML3D CEO, Sean Ebert.<\/strong><\/p>\n \u201cThe core differentiation for us is we\u2019re about 75% faster than casting, and 95% less waste than billet machining. And the parts we produce are typically 30% stronger than cast products.\u201d<\/p>\n \u00a0<\/p>\n Shares in AML3D have been rallying in recent months after a series of contract wins in the US.<\/p>\n In late September, the company received its inaugural order for its ARCEMY 3D printing system from the US Navy submarine component partner, Laser Welding Solutions<\/strong>.<\/p>\n While the order was insignificant, it proved to be the stepping stone for a much bigger order worth $2.5 million from a US Defence contractor, Cogitic Corporation<\/strong>, in early November.<\/p>\n This was followed up by another order worth $2.2m to provide a custom built ARCEMY system to be installed at Austal\u2019s (ASX:ASB)<\/a><\/strong> USA Advanced Technologies facility<\/em> in Charlottsville, Virginia.<\/p>\n Whilst details of the contract are obviously sensitive in nature, Ebert said Austal had asked AML3D to make the largest printing system that it could produce.<\/p>\n \u201cSo we\u2019ve produced and designed and customised a system for Austal, which essentially has a build volume of about 35 cubic meters,\u201d said Ebert.<\/p>\n \u201cBut what\u2019s really important is that the market for us in the US has really taken off, specifically with the Department of Defence\u2019s US Navy.\u201d<\/p>\n \u201cThis is all part of our US scale up strategy, which is focused on developing and deepening our long-term, strategic partnership with key stakeholders within the US market.\u201d <\/p>\n \u00a0<\/p>\n Ebert explained that the US Navy Supply Chain Management <\/strong>has chosen and\u00a0decided to adopt ARCEMY to manufacture parts for the US Navy.<\/p>\n The ARCEMY 3D printing system is basically a medium to large scale metal 3D printer.<\/p>\n It uses the company\u2019s patented Wire Additive Manufacturing (WAM) process<\/strong>, which combines state-of-the-art welding science, robotics, and materials engineering. This allows the 3D printer to produce parts smartly by depositing molten wire layer by layer, in a controlled manner.<\/p>\n \u201cHow WAM works is we take metallurgical science, robotics and software technology, and we combine them together to form the WAM process,\u201d explained Ebert.<\/p>\n \u201cWhat that means is we create a beam of molten metal, and then we sequentially lay that on top of each other to form the geometry of the path that we want to produce.\u201d<\/p>\n \u00a0<\/p>\n The ARCEMY 3D printinh system. Source: AML3D<\/strong><\/em><\/p>\n \u00a0<\/p>\n \u201cDefence is obviously our major market at the moment, but we\u2019re also working in aerospace, as well as in the oil & gas industry,\u201d said Ebert.<\/p>\n \u201cWe\u2019re also doing qualification of alloys, as well as qualification of parts, together with selling systems to their downstream manufacturers.<\/p>\n \u201cSo we\u2019ve got multiple, diversified, revenue streams coming out of the US at the moment, and we\u2019re seeing growth in each of those three areas.\u201d<\/p>\n \u00a0<\/p>\n Back home meanwhile, AML3D announced last week that it signed a prototype part manufacture and testing contract with BAE Systems Maritime Australia.<\/strong><\/p>\n The prototype part may have application within BAE Systems Maritime Australia\u2019s contract to design and build the Hunter class frigates<\/strong> for the Royal Australian Navy<\/strong>.<\/p>\n The contract follows the completion of previous feasibility and test work with BAE Systems Maritime Australia to demonstrate that the WAM technology is suitable for Australian marine defence applications.<\/p>\n The contract also demonstrates AML3D\u2019s progress in diversifying its revenue base<\/a> by accessing additional marine and defence sectors.<\/p>\n In addition to defence sector, AML3D has also previously produced a number of parts for the oil and gas customers, Exxon<\/strong> and Chevron<\/strong>.<\/p>\n \u201cWe\u2019ve got a couple of parts that we\u2019re making for Chevron at the moment. One has been tested in the US, and the other one is being printed here in Adelaide,\u201d said Ebert.<\/p>\n \u00a0<\/p>\n While declining to give forecasts, Ebert said the company has a very close relationship with its customers, and most of them have a very long-term investment program.<\/p>\n \u201cSo they don\u2019t enter into these contracts lightly, and they\u2019ve given us a fairly good, strong view of what the outlook looks like for them,\u201d said Ebert.<\/p>\n \u201cAnd that view has become a key platform for us to make that next step, and the confidence to move into the US and set up a facility there.\u201d<\/p>\n \u201cSo we\u2019re very, very encouraged, and I\u2019m very bullish on the on the outlook for the company,\u201d Elbert said, adding that there\u2019s a huge amount of value yet for investors to see in the company.<\/p>\n \u201cWe\u2019ve literally signed $11.5 million of orders in the last 10 months. And that\u2019s incredible growth compared to where we were 12 months ago, where we had revenues of $600k.<\/p>\n \u201cSo I think just that sheer growth of the company, the inertia of the demand that we\u2019ve seen in particular in the US, should encourage investors to look at our company.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span><\/span>\u00a0 The post 3D printing innovator AML3D is winning big as the US Navy chases its military edge<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"US scale up strategy<\/h2>\n
The ARCEMY system<\/h2>\n
Australian Navy and giant oil companies<\/h2>\n
Sheer growth<\/h2>\n
AML3D share price today:<\/h2>\n
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