Evidence is mounting that Arcam (OTC:AMAVF) sales and earnings are escalating sharply.
During the 12-month period ending September 30, 2012, Arcam generated revenues of just under $20 million. This revenue was generated by sales of an unreported number of systems in the fourth quarter of 2011, four systems in the first half of 2012, and three systems in the third quarter of 2012; in total, seven systems during the first nine months of 2012.
Evidence is suggests that Arcam may report an additional seven systems delivered and thus reported as sold in the fourth quarter of 2012 alone. This should translate into year over year revenue growth of greater than 100%. As Arcam had a profit margin of 9.14% for the 12-month period ending September 30, it is likely that this magnitude of revenue growth will translate into earnings growth of 200% or more.
The evidence supporting the supposition that Arcam will report seven or more systems delivered in the fourth quarter is based on two components:
- Arcam's third quarter financial report stated that they had a sales backlog of six systems and that a seventh system order had been received from a French manufacturer on October 1.
- On December 14, Arcam published in Swedish (I believe this seekingalpha article is the first English publication of this information) two announcements of new 3D printer orders. Both were from aerospace manufacturers which want to remain anonymous. The first announcement was for a system to develop prototype aircraft components; the announcement says this system will be delivered in 2012. The second announcement stated that two systems were being acquired for the purpose of initiating pilot programs for the production of aircraft components; one of these systems is to be delivered yet in 2012 and the second in 2013.
Looking forward, I believe we should expect significant escalation in Arcam's share price. This will be driven by two principal factors. First, exceptional fourth quarter results as discussed above. Second, further indications that industry is using Arcam printers for actual production (not just prototyping and custom work) is indicative that huge new markets and demand for printers is opening up. Arcam has had previous success in the medical field with their printers now being used to manufacture annual production of more than 20,000 components for hip surgery. Now, at least one aerospace company has apparently determined that actual production of components is better done on Arcam's machines than using traditional subtractive manufacturing technologies.
At a recent price of $16 per share, Arcam is trading at a multiple of about 3 times sales and 32 times earnings for the October 2011 through September 2012 period. If sales are more than doubling and profits increasing even more rapidly, then the share price is likely to increase substantially.
For more background about Arcam, please see my previous seekingalpha article.