It’s an interesting conundrum to try figure out what Sigma could be worth, one I rarely try to put a number on. I’m very happy to see them grow into the industry and see where it goes. After all the industry is constantly developing and opportunities arising. We know they have the potential to save a great deal of time and money on traditional methods. We know they are more needed in high end, critical applications but that can be a lot (in the case of aerospace/medical especially). Wether ‘non’ critical parts adopt or need to use PR3D would obviously make a major difference to its value. Whilst these non critical parts may not need such intense quality inspection, they may choose to adopt it from a competitive, or time reduction perspective. Especially if PR3D was to become a common standard/product in the industry. One should not underestimate the value of a common, reliable standard in a supply chain. It saves a lot of paperwork, time and cost.
We also know Pr3d improves upon itself. The data captured will only improve the process going forward. It will also link with company ERP/MRP systems which would mean that its viral adoption across a company and across a supply chain make it more and more attractive should it get it’s foot in the door. The fact that its intial adoption will be with the top of the tree companies mean that it’s adoption into their supply chain will be a lot easier…if not mandatory.
We also know, and with regards to Sigma’s valuation this is a huge variable, that parts of Pr3D may be relevant to AM use in plastics and ceramics. These two markets will be huge going forward and if Sigma can also play a role in either of these markets, let alone both, then it’s value appreciates dramatically.
We know there will be money made from the contract manufacturing side too. It’s true role I feel is yet to reveal itself. Is it a proxy for GE, or is it a standalone business? Either which way, it is a part of the industry that stands to grow and produce solid revenue over the next 5 years. There will be heavy demand as people transition towards AM and test its usefulness. AM is a dark art to many, and contract manufacturing will help keep costs low to manufacturers as the work out their investment strategy into the new technology. Sigma (Arete) is perfectly placed for this, not just geographically, but with Bill Herman’s skill set and Sigma’s technology combined. It is also a fairly easy concept. You start with one printer, if demand allows you buy 2, then if demand allows you buy 5 etc etc.
Does it suit for someone like GE to buy Sigma? Perhaps. Is its strength more in its independence as a quality inspection tool, perhaps. Sigma is well placed to be a useful tool for all the group members of the likes of America Makes, EWI, AMC. It’s independence may just make it more valuable to the market that were it to be incorporated into one company or another. Besides, the Inspect and Deform technology was developed with GE, Honeywell and Materialise. It’s not just a simple case of buying the package I imagine.
Then there is the size of the AM market as a whole. As you point out 1% of a very large number is still a very large number. The reports indicate the industry is moving faster and bigger than was previously predicted. Whilst we don’t necessarily see that interest transforming onto the shop floors yet in terms of production runs, where PR3D really shines, there is absolutely no doubt we will, and very soon. Years of testing and strategizing have already been done. GE maybe the first, but others are not far behind. The adoption of production runs, and a kind of industry confidence with the product and methodology will grow upon itself. Gradually smaller manufacturers will be forced to adopt to compete in terms of cost and speed. New entrants in manufacturing will also appear without the baggage of traditional manufacturing logistics and hardware. These will delve straight into AM production. So the future of AM production is very bright. It is inevitable, it is just a question of how quickly it competes for a percentage of the greater manufacturing pie.
All this is phenomenal news for Sigma Labs. The product is being completed just as the market is needed for it. This is not pure co-incidence. Mark and crew know this market intimately. They have spent 20 odd years within it. They have worked on the building and testing phase with the people that matter for the last 2,3, 5 years. We know their value lies in these production runs. We know there is no other commercial product offering what they do. We know production runs are tested and built not for a 6 week run, but for years. We know what PR3D offers is GROUNDBREAKING. It is an industry milestone.
So what is it worth? Too hard a question for me. Like Sigma said a few years back ‘they don’t know how to value us’. As long as they keep progressing, their adoption will come. With their adoption their intrinsic value to the supply chain will grow. With their intrinsic value growing the viral nature of the product kicks in. With the viral nature kicking in then that percentage of that very large industry percentage really starts to come into play. There’s a lot of variables here. Without getting ahead of ourselves the base scenario I see is adoption by the large names we know for highly critical parts on a recurring revenue basis for the next 10 years. Should wider adoption kick in, as I expect it will then these revenues increase dramatically. Should it become that Intel Inside model that they crave, should it become an industry standard, should it truly prove useful for other materials too then all bets are off in terms of valuation.
Independent quality inspection is a vital part of this new industry. Sigma Labs has the only commercially available independent inspection tool of a sufficient standard for critical parts. It is machine agnostic, it is potentially material agnostic. All I can tell you is that its potential is worth a lot more than $50m market cap in my mind. In a short while recurring revenue will be coming in and we will eventually be up listed allowing a wall of money to decide whether it wants to invest in this picks and shovels stock of the AM universe. $50m market cap will seem a bargain to many at that point, I assure you. I understand how its trading now, little revenue, small volume, OTC board games. But this is ignoring the potential that is just about locked and loaded in the canon. The lucky few holding when the fireworks begin will be well rewarded, that’s all I do know.
