AL3 - Slow and costly US Navy Shipbuilding industry an opportunity for AL3?
Overnight we saw the following Bloomberg article:
The main points from the article were that building navy ships in the US have become expensive and time consuming - to the point where despite billions of dollars in investment, China now has a larger navy fleet than the US.
The article also mentions how the US needs to adapt its manufacturing industrial base so that it can keep up with its navy’s needs:
We think there is no doubt the US manufacturing sector needs to modernise.
That’s why we are Invested in AML3D (ASX: AL3).
AL3’s technology is robotic automated 3D printing of metal parts, at the point of need.
(the technical term for AL3’s tech is “wire additive manufacturing”)
As well as being at the point of need, AL3 is also able to print parts that are made stronger, faster and more efficiently than conventional manufacturing processes.
The connection to that Bloomberg article is that AL3 recently expanded its business into the US - AL3 launched its US facility late in 2024 and is already planning a second facility.
At the same time, AL3 raised $30M putting the company in a position to scale up as quickly as it needs to based on demand signals coming out of the US.
We covered that raise and the US expansion in a previous AL3 note here: US Navy Now Demanding 3D Printed Parts, Or Else…
AL3 is already selling into the Defence and Space industries…
The Bloomberg article re-affirms what a US Navy official has said in the past…
Here is a quote from US Navy Rear Adm. Jon Rucker, demanding that their parts suppliers adopt metal 3D printing technology:
(Source)
US organisation Blue Forge Alliance has also been tasked with the job of modernising the US Navy’s supply chain and industrial base - they were given US$951M from the US Department Of Defence to make this happen:
(Source)
AL3 already has a Master Licensing Agreement (MLA) in place with BlueForge to 3D print parts for the US Navy.
AND AL3 has previously said that it is being “guided to expect significant growth in US demand following the award” of this US $951M contract to Blue Forge Alliance.
What’s clear to us is that there is a big push by the US Department of Defence to re-shore defence supply chains and adopt 3D printing.
In early January AL3 announced that it would supply a tailpiece component for the US nuclear submarine program.
AND that the part was able to be supplied in less than five weeks vs the 17 months for traditional manufacturing.
Another positive sign AL3 is getting traction inside the US…
We think that as AL3 establishes and builds out its US facility/team, there is a real chance for the company to sign deals that are material to the company, given where it is currently being valued.
What’s next for AL3?
More sales out of the US
Now for AL3 it’s all about the US scale up.
AL3 has previously mentioned it will be doubling the capacity of its US facility AND is only days away from having the facility ready for operations.
We are hoping that the US facility coming online brings with it big new contracts to fulfil (and hopefully big $ revenue amounts attached to those deals).
We are also hoping to see some of those lucrative ITAR contracts that AL3 have mentioned get converted into sales.
(Source)
UK/European expansion on the cards?
AL3 has also previously flagged the opportunity of expanding into the UK.
The majority of AL3’s sales are out of the US, so expansion into a new market is completely new upside from a revenues perspective.
We are looking forward to newsflow from the company’s push into the UK/European market.
