$1.2M AL3 system sale into US Navy - US Navy wants another 99

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 6,685,029 AL3 shares at the time of publishing this article. The Company has been engaged by AL3 to share our commentary on the progress of our Investment in AL3 over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs.

Our 2024 Tech Pick of the Year AML3D (ASX:AL3), just made a sale for the US Navy’s additive manufacturing Centre of Excellence in Danville, Virginia.

... 14 days after the US Navy said AL3 would play a “pivotal role” in bolstering the Navy’s advanced manufacturing capabilities.

This outlining of AL3’s “pivotal role” was in a letter from the US Navy to the AL3 forecasting it expects it will require 100 system installations and 400 components in 2026, rising to 1,600 by 2030 for the US Navy Maritime Industrial Base.

So today’s $1.2M sale was a ‘small’ system sale for the US Navy - based on that letter, there could be another 99 to come...

(But of course the Navy could potentially use other suppliers)

(Source)

The ASX listed AL3 sells 3D printing systems in the United States to the defence and specialty manufacturing industries.

These systems “3D print” complex industrial metal parts on site for customers.

Two weeks ago, the US Navy and AL3 signed a letter of intent (LOI) which outlined the US Navy’s forecasts of what it needs in the 3D printing space.

100 new systems over the next five years.

The US Navy told AL3 to get ready to deliver - because AL3 would play “a pivotal role in achieving these targeted needs”.

The letter specified:

• 100 new additive manufacturing (3D printing) systems to be installed across the US Marine Industrial Base
• A minimum of ~400 manufactured parts printed in FY26, growing each year until an estimated ~1,600 parts will need to be produced in FY30

Today AL3 sold a ~AU$1.2 million system for the US Navy’s additive manufacturing Centre of Excellence in Danville, Virginia.

An excellent start so close after the letter from the US Navy.

The sale was made to the $2.6BN capped Austal, an Australian-based global ship building company and defence prime contractor that runs the US Navy’s additive manufacturing Centre of Excellence.

(Source)

The announcement said the “small edition” system would complement AL3’s already installed system (the largest standard system ever sold), already operational at the US Navy’s facility.

Here is a picture of the bigger AL3’s system already installed in that facility:

(Source)

The announcement also said “small edition” and would be mounted to a shipping container to show how AL3’s systems could be “deployed” in the field... (more on this in a bit)

We did some back of the napkin calculations on what the LOI could mean for AL3 from a revenue perspective in our last note.

Please note the below numbers are all speculation on our part and are not guaranteed to happen, AL3 is a small company subject to variations in performance.

Previously, AL3 has sold its systems for between A$1M all the way up to A$2.5M.

(Source, Updated from AL3 Presentation November 2024)

(The list of sales in the image above are sales AL3 has announced to the market - there could be more that have happened but haven’t been announced to the market)

Now, based on today’s announcement we have more information about what a “small” system is getting sold for - ~A$1.2M.

Using today’s sale and (the previous ones we listed above) - 100 systems could be worth ~A$100M to A$250M (gross revenue, before costs, taxes, etc).

(keep in mind, AL3 still has work to do to land and execute on this forecast demand from the US Navy)

Even if AL3 is contracted to meet just 40% of the forecast demand, it means $40M - $100M in gross sales revenue for the company.

That $40-100M doesn’t include the yearly recurring revenues that would be made from the servicing and maintenance for all those systems.

Again, it's important to note that any “back of the napkin” rough calculation we make depends on assumptions made about AL3’s “pivotal role” to fill this US Navy demand.

Will it be 20 systems? 50 systems? 80 systems - we can't predict what final number AL3 will achieve.

Read our coverage over the LOI here: US Navy Letter of Intent: AL3 “pivotal” to US Navy’s forecast demand of 100 x 3D printing systems.

A key takeaway from today’s announcement - “accelerated installation and flexible deployment options”

Another thing we liked about today’s announcement was how the system would be used to show how AL3’s systems could be suitable for “forward deployment” to “Multiple branches of the US Military”:

(Source)

It sounds to us like the US Navy is taking on a container mounted system from AL3 to show the rest of the US military industrial complex how the systems could be used in the field...

Imagine an AL3 3D printing system on every US military base around the world OR on every ship...

Of course we are a long way from that and it’s no guarantee it will eventuate.

In our last note we wrote about “Where else could even more AL3 contracts come from?”

Across the US military-industrial complex, AL3 could start selling into the US Army and Airforce:

(Source)

Outside of the US government, associated industries AL3 can also sign big deals in other industries like oil and gas, utilities and other industries where on-site manufacturing is important.

AL3 is already selling systems and parts to those other industries, like Boeing, Austal (the Australian military shipbuilder - and the client who AL3 sold to today) and oil & gas giants Chevron and Exxon - so it's not inconceivable to see AL3 sign bigger deals here:

(Source)

Our take on AL3’s share price

We think the Letter of Intent (LOI) with the US Navy on the 7th of July 2025 was a really big announcement for AL3.

Given the strength of the announcement, the natural question from the market would be - if it's so good, why hasn’t AL3’s share price run to new all time highs?

We think the market response has a lot to do with the $30M capital raise done back in November last year at 19c.

The LOI announcement was the first time AL3 traded above the cap raise price since November on strong volumes.

So anyone who took a big swing at that raise, wouldn't have had a chance to sell without a loss before that news...

Anyone who's held a stock with a loss will know that feeling of just wanting to sell and breakeven.

We think the selling following the LOI was partially that type of selling.

For example, we saw Regal Funds Management sell and cease to be substantial after the news - Regal were one of the groups who became bought in at the 19c cap raise.

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

It looks like some of the selling pressure from the capital raise has gone from AL3, which means that the stock could run off the back of any good news.

We think any material news going forward could help trigger a re-rate higher for AL3.

However, if AL3 is delayed in bringing good news to market, misses deadlines or revenue expectations - then a share price re-rate may not materialise.

New sellers can appear for whatever reason as well.

Remember, share prices of small ASX companies can be volatile and go both up and down.

Our AL3 ‘Big Bet’:

“AL3 re-rates to a $500M market cap on achieving significant sales growth across an expanding range of industries and jurisdictions”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and regulatory risk - just some of which we list in our AL3 Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What are the risks?

The key short term risk for AL3 is that no sales made OR there are delays to sales contracts.

If AL3 fails to deliver more sales and its financial performance suffers, the market may start to price in lower growth potential for the future and re-rate AL3’s share price lower.

At the same time, any delays to big sales contracts could lead to protracted periods of no newsflow which would decrease market interest in AL3.

Sales risk

There is always the possibility that AL3 does not close more sales, and its financial performance suffers as a result.

Source: “What could go wrong” section - AL3 Investment Memo 27 June 2024

Other Risks

There are also a number of other risks worth keeping in mind. These include regulatory risk – with AL3 operating in highly sensitive defense and industrial sectors, changes in US or Australian policy, licensing, or procurement processes could impact operations.

There’s also tech and execution risk – AL3’s advanced manufacturing process is impressive but scaling it successfully to meet future US demand involves complex logistics.

Other new entrants / competitors could enter the market, hampering AL3’s performance.

And finally, customer and funding concentration risk – any delays in securing or fulfilling major US orders, or needing additional capital, could affect financial performance.

As always, these risks are part of early-stage industrial tech investments.

For the full set of risks we have identified and accepted in making our Investment in AL3, see our AL3 Investment Memo below.

Our AL3 Investment Memo

You can read our AL3 Investment Memo in the link below. We use this memo to track the progress of all our Investments over time.

In our AL3 Investment Memo, you can find the following:

• What does AL3 do?
• The macro theme for AL3
• Our AL3 Big Bet
• What we want to see AL3 achieve
• Why we are Invested in AL3
• The key risks to our Investment Thesis
• Our Investment Plan