AL3 joins “Aerospace Prime” in advanced aerospace manufacturing project
Our 3D metal printing AML3D (ASX: AL3) is joining “industry and research partners, including an aerospace prime, in an advanced Aerospace manufacturing project.”
With the aim of “achieving qualified Aerospace tooling production capability”.
Basically meaning - having its 3D printing tech qualified for use in the Aerospace setting.
(source)
Today’s announcement said the the program would be in partnership with an Aerospace Prime…
Who is a “global aviation contractor, which manages the overall design, development, and manufacturing of large-scale aerospace systems, including aircraft”...
We googled “Aerospace prime” and here is what came up:
So it looks to us like AL3 is in the early stages of getting its 3D printing (additive manufacturing) tech qualified for use in supply chains where companies like Boeing, Airbus and the big defence aerospace contractors operate. .
We have said before that we think AL3’s integration into the US Navy supply chain could open doors into other parts of the military industrial complex.
This sort of early stage qualification work is exactly what we want to see for that strategy to play out.
Here is a section from a previous note where we wrote about the expansion: Where else could more AL3 contracts come from?
(source)
AL3’s business model (and current customers)
AL3 makes money in three ways:
- Selling its 3D printing (ARCEMY) systems (for ~$1-2.5M),
- Recurring software/services fees on every installed system (~$250K per system per year), and
- Contract manufacturing of parts (like the $2.6M submarine parts order). (source)
Here is a great slide from a recent investor presentation summarising the model:
(source)
AL3 currently has a “Master Licensing Agreement” with BlueForge which was given a US$951M budget from the Department of War to deploy into the US submarine supply chain.
A Master Licensing Agreement is basically AL3 being plugged into the parts database that the BlueForge Alliance covers.
(Sort of like the Uber Eats for parts the US military industrial complex needs)
AL3 also sells its systems to a division of Huntington Ingalls Industries (HII) - the biggest military shipbuilder in the USA.
Over 70% of the current US Navy fleet was built by Huntington Ingalls Industries. (source)
HII has ordered a total of six of AL3’s custom systems - two are now live, the remaining four are being built in Ohio for delivery in early 2027.
(source)
AL3 also has systems installed with $1.7BN Austal in the US Navy's Additive Manufacturing Centre of Excellence.
That US Navy ‘Centre of Excellence’ is the US Navy's flagship additive manufacturing facility, where there are three AL3 systems installed, including AL3's first portable, containerised ARCEMY (nice to show off the system that can be installed in 1-2 days).
What's next for AL3?
🔄More system sales into the US market
We want to see more orders from the six US naval base companies named in the Navy's LOI.
And hopefully new channels after last week's US Navy announcement.
🔄US facility expansion
AL3 has flagged that it will be doubling the capacity of its Ohio facility.
AL3 plans to invest $12M to expand production capabilities.
We don't expect things to suddenly take off but a few system sales every few weeks/months would be a great outcome here.
🔄UK and European market entry
AL3 has appointed distributors in the UK and Germany, and is running alloy testing with BAE Systems.
We think the alloy testing contracts are precursors for system sales/manufacturing deals - these testing contracts are where the bigger guys test AL3’s tech before buying.
Sales into Europe or the UK could change the way the market sees AL3’s future growth potential.
AL3 has said in the past that it “has the cash reserves to fund a $5 million investment in a UK Technology Centre to support UK and European demand” (source)
We are hoping to see AL3 replicate its success in the US, in the EU.
See our deep dive into this here: Can AL3 run its US playbook again in the UK/EU?
