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| optionplayer333 801 posts msg #111803 - Ignore optionplayer333 |
2/26/2013 3:00:21 PM it has most of the patents on 3d printing which will put china out of business 3D Systems (NYSE: DDD) This company was originally recommended on January 20, 2012. The numbers below have been updated. Suds are spilling out the side of your dishwasher, and you need to replace the little plastic bracket that stops them. No problem — just get the specs online and print out the part. Or you’re designing a new laptop and you want to get a feel for the ergonomics, so you print out a model. Or maybe you need a hearing aid fitted exactly to your ear, so a technician prints out a custom earpiece. If all that sounds like sci-fi, that’s because for most of human history, making things has been a process of subtraction. Michelangelo said, “Every block of stone has a statue inside it, and it is the task of the sculptor to discover it.” But technology developed since the late 1980s has made it possible to do additive manufacturing — laying down only what we want with little or no waste. (Think Michelangelo’s David without all the dust.) Sometimes called 3-D printing or rapid manufacturing, the revolution began with my recommendation of 3D Systems (NYSE: DDD). Another Dimension In 1986, Charles Hull coined the term “stereolithography” to describe a process during which print heads deposit very thin layers of resin in an exact location, building a finished, 3-D object one layer at a time. Hull founded 3D Systems that same year, and he remains the company’s chief technology officer. Additive manufacturing has made great advances in speed, accuracy, and quality since its early days, and it’s now being eagerly adopted by many industries that ignored it for decades. That shift is reflected in the company’s growth; over the past five years, its sales have climbed at an average annual pace of just 15.9%. But over the past three years, that rate was 42.5%; over the past two years, 49.2%; and in the past year, 51.7%. Best of all, its sales of $322 million over the past twelve months barely scratch the surface of the $3 billion to $5 billion market 3D thinks its current technology can serve. Because although it was once a way to make a one-off prototype, 3-D printing is now used for all kinds of high-value, lowvolume functional parts — specialty tools, parts for fighter jets, and other objects with complex geometries that would be difficult or impossible to manufacture conventionally. 3D Systems offers parts made not just from a variety of tough plastics, but also waxes, nylons, rubbers, metals, and composites. That makes its offerings attractive to all kinds of industries. What’s more, 3D’s technology is changing not just manufacturing but the design process itself. As CFO Damon Gregoire put it, “complexity is free” with 3-D printing. Intricate objects are no more time-consuming or expensive to produce than simple ones. This gives designers freedom to create differently -- and that’s how world-changing ideas take shape. The Future Is Now Companies’ newfound love of additive manufacturing has brought 3D Systems consistent profitability and improving margins. Management believes revenue will hit $400 million to $500 million over the next three or four years — an inexact target, but one suggests 20%-plus annual growth in the near future. And if 3-D printing takes off among individual consumers, even that could prove conservative. No company is doing more to advance that next revolution than 3D Systems. At this year’s Consumer Electronics Show, the company launched Cubify.com, a forum where consumers can access design tools, share 3-D designs, and even sell their creations. Objects can either be printed and delivered through 3D Systems’ network of service providers on professional machines, or made at home using the company’s 3-D printer called the Cube, which retails for $1,299. Even more tempting for everyday users, 3D Systems’ “Kinect- To-Print” application uses Microsoft’s Kinect — yep, the hands-free Xbox game controller — as a 3-D scanner. That and other tools offer what the company calls “coloring-book simplicity” for creating designs. We think such ease of use will eventually bring 3-D printing into the home, with huge implications for a variety of industries — and huge profits for 3D Systems shareholders. Risks and When We’d Sell 3D Systems’ chief rival is Stratasys (Nasdaq: SSYS), a company you can read about below. While I obviously like both companies, Stratasys uses different technology and has focused mostly on high-end printers. 3D Systems, in contrast, has made a greater effort to bring 3-D printing to consumers. It also has a different business model, focused not just on selling printers and supplies (a classic razor-and-blade model) but also snapping up a number of service companies that create objects on spec. Its large installed base drives a high level of recurring revenue, powering about 70% of sales. The other significant industry player, Objet Geometries, recently gave up plans for an IPO and decided to merge with Stratasys — something that should bring more attention to the industry. I’m not worried, though; I think this is a case where better, more widely accessible technology lifts all boats here’s room for more than one player here, and 3D Systems has a host of advantages. 3D Systems’ acquisitions are another potential risk. While most have been relatively small service providers, the company issued $152 million in debt to pay for Z Corp., which brought the total goodwill it already carries on its balance sheet to $221 million. The company’s strategy of growth by acquisition has also obscured the fact that organic growth has slowed somewhat. The debt should be manageable, but we’ll be keeping an eye on organic growth as well as looking for margins to keep climbing. We’re counting on this business to boom, and if it stumbles, we’ll print ourselves a pair of walkin’ shoes. The Foolish Bottom Line Companies are already embracing additive manufacturing like never before, and tomorrow we may all be printing up our own bling. With change coming so fast, it’s hard to know what the future of 3-D printing will look like. That’s why 3D Systems offers the industry’s broadest range of solutions — high-end systems, low-end printers, service agencies offering a variety of materials and capabilities. Unless the world suddenly goes flat, 3D Systems should continue to drive a powerful — and profitable — trend. Abaqus software suite to simulate deep digging, successfully determining how to safely and efficiently exploit real-world resources. • Researchers at Frankfurt University used Dassault software to model the forces on the human body at rest, in order to design a better mattress. • Engineers in Germany simulated how a nuclear facility would stand up to earthquakes and airplane strikes. And it’s not just about physical modeling. Dassault’s Delmia division lets clients test a manufacturing process in a virtual environment. A Japanese company that makes wire harnesses says it cut production time 67% by simulating and optimizing its assembly process with these tools. To give Baudrillard a little credit, we live in a world where it is increasingly possible — and therefore competitively necessary — to represent, manipulate, and test reality in digital form. Investors should get excited, because Dassault is on the cutting edge of this endeavor. Financials, Valuation, and Management Dassault is relatively large, with a market cap of $13 billion, so it doesn’t generate the runaway growth you might expect from a smaller and less mature company. Nonetheless, its revenue has increased at an 10% compound rate over the past five years. It’s been a steady climb: The top line has grown every year since 1998, with the exception of a 2.5% dip in 2003. Even during the recession, Dassault’s sales held steady, and a key part of that was high retention. Considering Dassault’s stable earnings, strong balance sheet, and 0.8% dividend yield, now looks like the best way to buy into the long-term growth of simulation and modeling, particularly since Dassault’s broad range of products exposes it to more industries — and more opportunities — than its smaller competitors. Dassault is impressively efficient, with the strong margins of a successful software company — an 86% gross margin over the past year and a net margin that typically runs north of 15%. Moreover, it achieves these returns with a business that’s light on shareholders’ capital. Return on invested capital was more than 24% in 2008, an indication not only that our money goes a long way but also that management isn’t overspending to buy growth or fend off competition. That team is led by CEO Bernard Charlès, who has been with Dassault since not long after it was spun out of Dassault Aviation in 1981. Charlès has been president since 1995 and CEO since 2002, but he’s an engineer by training and came up through the R&D side of the company. He’s used that background to keep the company technologically competitive and to make some of the key acquisitions that have put Dassault |
| johnpaulca 12,036 posts msg #111807 - Ignore johnpaulca |
2/26/2013 4:55:39 PM Products become commodities just like inkjet printers did 10 years ago, just like AAPL devices are currently doing, and when that happens margins evaporate and only a few are left in business. Earnings are coming up shortly, Citron refered to them as a bubble stock...something is not right with this stocks just can't put my finger on it. |
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