Stratasys, Ltd. (SSYS 1.43%) rolled out two new 3D printers and a new material earlier this month at its annual investor's day event. These product launches might be less flashy than acquisitions or big-name partnerships, but investors shouldn't overlook them. Stratasys posted powerful organic growth (growth in businesses owned for at least one year) of 33% and 35% in the first and second quarters of 2014, respectively, and these new products should help keep the strong growth momentum going.
Here's what you should know:
Stratasys' 2 new triple-jetting 3D printers
All three Objet500 models can produce multiple parts made from three different materials in one production run. Source: Stratasys.
Stratasys introduced the Objet500 Connex1 and Objet500 Connex2 multimaterial 3D printers at its annual investor's day event and displayed them at the International Manufacturing Technology Show in Chicago earlier this month. These printers feature the company's unique triple-jetting technology, which enables them to produce parts from three different materials in a single production run. This technology has been enthusiastically embraced by customers since Stratasys announced the first of the Connex platform, the Connex3, in early 2014.
Notably, the Objet500 Connex3 was the world's first 3D printer that can print in multiple colors and materials. The triple-jet technology allows the user to combine color with virtually unlimited combinations of rigidity, flexibility, and transparency. The printer is geared toward advanced prototyping applications, though it also has select short-run production uses. Stratasys believes the printer's "ability to produce the characteristics of an assembled part, including matching the look and feel of the finished product, is a unique capability that ... will empower manufacturers to accelerate the design process," according to CEO David Reis during the fourth-quarter 2013 conference call.
Stratasys has experienced strong demand for this printer since it's been available in the first quarter of 2014. Robust demand for any new product, of course, is good news. However, the bigger positive with the Connex3 -- which will also hold true with its two new siblings -- is that not only is it a higher-end product, it's also a higher-margin one. This means that sales of this printer result in a greater contribution to Stratasys' earnings than they do to its revenue.
What's the difference between the two newly introduced Connex printers and the Connex3?
Like the Connex3, both new printers are also well suited for advanced prototyping applications. However, they have additional features that make them better suited for production purposes. Both new models improve on the throughput speed of the Connex3 by doubling material capacity and increasing unattended run time. They're reportedly ideal for creating custom manufacturing tools such as jigs and fixtures.
The Connex1 has a larger material cabinet than the Connex3, which is how it accomplishes the longer unattended run time. Hot swapping -- or reloading material and support cartridges while the 3D printer is operating -- allows for continuous part production.
The Connex2 has all the capabilities of the Connex1 plus a cool feature that it shares with the Connex3: It has the ability to combine droplets from two base materials to produce new materials or "digital materials."
Stratasys' new UV-resistant thermoplastic: ASA
Side-view mirror. ASA resists fading in direct sunlight. Source: Stratasys.
Stratasys also announced the availability of a new thermoplastic material for its FDM-based Fortus line of production 3D printers: Acrylonitrile Styrene Acrylate, or ASA. ("FDM" stands for "Fused Deposition Modeling," one of Stratasys' printing technologies.)
What's especially standout about this material is that it's UV-resistant and has the best aesthetics among FDM printing materials. This material surpasses the capabilities of ABS, which is a commonly used thermoplastic, in that it will better "resist fading and remain durable with long-term exposure to direct sunlight," according to Stratasys' press release. Additionally, Stratasys claims that it offers an "exceptional surface finish and has the best aesthetics of any FDM material available." This means that details, such as printed text, will be clearer due to ASA's matte finish.
As you might expect from such characteristics, ASA has a wide variety of applications, including in products that will be used outdoors. Manufacturers in the automotive, electronics, sporting goods, and construction industries use this material to manufacture products. Some specific applications include jigs and fixtures, electrical boxes, components for recreational vehicles, and outdoor tools.
This new material should help boost sales of Stratasys' Fortus line of production printers. Like the Connex platform, the Fortus platform is also a higher-end, higher-margin line. So, sales of Fortus printers should also help Stratasys increase earnings faster than revenue.
Continuing to build on its success
Stratasys' organic growth has been firing on all cylinders in 2014, rising 33% and 35% in the first and second quarters, respectively. The company's focus on building on its strengths by introducing product line extensions of successful, higher-margin products should help it increase earnings faster than it increases revenue, in addition to maintaining strong organic growth. This is assuming, of course, that Stratasys maintains its pricing power on its higher-margin Connex and Fortus platforms, and there's no reason to believe at this point that it won't.
