What will the L&W deal bring? Talked with them. What is possible even likley is quite a bit bigger than guessed. had no idea how huge compressor market is when industrial is added.
As have posted here L&W has stellar reputation, could not find a single bad review on multiple dive discussion boards, and many with high praise for quality, service and value.
L&W sells over $10 million a year in Europe and Asia. Fould out without a distributor in Americas they had no sales at all in Americas, which is the biggest market. That is what the deal with Brownies is all about, L&W moving into Americas market.
How big is the market? The prime provider, Bauer, has a near monopoly in industrial compressors, and a lot of it relates to CNG, compressed natural gas for buses, cars, oil fields, etc. When Bauer started off in Americas they has sales of about $10 million not all that long ago, today it is $300 million!
They are German as is L&W. Maybe 95% of Bauer biz is industrial and 5% diving. They have trouble keeping up with orders, with long wait times. L&W has many competitive compressors for the industrial market that Bauer has almost a monopoly in Americas on now. A lot of it is government sales, military, fire depts, and all sorts of other gov sales. That takes a while to build, but then is very big. L&W did not sell here due to no distributor or service dept in America. Brownies is now the exclusive distributor in Americas for L&W and will provide a local service dept., quite the deal and a huge opportunity.
There is recurring revenue, these expensive compressors have expensive filters that need to be replaced fairly often.
So what follows is my guess. In 2018 Brownies should be able to sell over $1 million of L&Ws to dive market as Brownies is highly established in that market and has been selling high pressure nitrox etc. systems for decades, so easy start. Bauer sells about $15 million in that same market/area now per year.
The big opportunity is industrial, where Bauer sells about $285 million and has trouble meeting demand. Maybe BWMG only sells .5 mill or a mill in 2018 in that market, but 2019 could be? $5 million? 2020 $10-15 million?
Brownies existing sales are steady and about $2.5 million, think 2018 with $1.5 added by L&W is $4 million a big jump to say least. 2019? It is indeed possible to be $7.5 million IMHO. 2020? $15 million?. And that would be only getting 4% of a 2 competitor market with a product people love. Check out the reviews yourself.
Down the road if Brownies gets 25% and the market is then $400 million which is inline with prior growth, then Brownies could be selling $100 million a year. That is the high end of what I think is possible.
This is how big this deal is. What would the share price do with 40 times more sales?
Cheers
