3D printing company Optomec recently announced strong financial results for 2015. Moreover, it reported that it received "strategic investments" from General Electric (NYSE:GE) and software maker Autodesk, with GE's investment made as part of the behemoth's Industrial Internet of Things initiative.
Optomec is a privately held global manufacturer of systems for 3D-printing electronics and metals. It targets production applications in the electronics, energy, life sciences, and aerospace industries, with its business roughly evenly split between sales of two patented proprietary systems:
- Aerosol Jet systems for printed electronics
- Laser Engineered Net Shaping (LENS) 3D printers for metal components
The Albuquerque, New Mexico-based company was founded in 1982 as a manufacturer of optical-mechanical devices. It changed direction in 1997 when Dave Keicher, who invented LENS technology, left Sandia National Laboratories to join Optomec with the goal of commercializing LENS. The company went on to internally develop its Aerosol Jet technology.
Optomec's LENS 3D printers are noteworthy, as they can print metals onto existing non-planar structures, a unique capability that metal printers offered by 3D Systems (NYSE:DDD) and the other publicly traded players don't possess. However, the company's Aerosol Jet tech is why Optomec scored the GE investment. These systems allow customers to print integrated electronics onto plastic, ceramic, and metallic structures at extremely fine resolutions. This technology enables the high-volume production of 3D-printed antennas and sensors that are tightly integrated with an underlying product ranging from smartphones to industrial components.
Optomec's role in GE's Industrial Internet of Things initiative
Optomec didn't disclose the amount of General Electric's and Autodesk's investments, but its SEC filing of an offering and placement of $6 million in securities suggests that together, GE and Autodesk, along with existing investors, invested this amount. While the money is important, the strategic relationship with such an industrial powerhouse is key.
General Electric's relationship with Optomec dates back to 2005, when GE Global Research was one of the first customers to purchase an early-model Aerosol Jet system for 3D-printing electronics. GE recently invested in Optomec because the 3D printing company produces some of the technology that GE needs in some of its strategic initiatives, most notably involving the Industrial Internet of Things.
Optomec's Aerosol Jet 5X system enables sensors to be printed directly on high-value components, which will provide critical feedback about their structural health, allowing GE to determine exactly when parts need maintenance and repair. This "conditional-maintenance system" could substantially reduce the life-cycle cost of complex mechanical systems. GE has traditionally based its maintenance and repair schedules on the early end of expected-life ranges, which means many parts get replaced earlier than needed.
"We now have seven [Aerosol Jet] systems inside different operating groups in GE, which is not in the habit of investing in just any supplier," Optomec VP of Marketing Ken Vartanian said, according to the Albuquerque Business Journal. GE Ventures' blog indicates that these systems are installed at GE's power and water, aviation, and healthcare groups.
Optomec is privately held, so investors can't buy stock in this company. The company's rapid growth -- revenue soared 70% in 2015 -- suggests that an initial public offering might be in the pipeline to further fund its expansion. There was chatter a few years back that Optomec was considering going public, though the IPO market for 3D printing companies turned ice cold in 2014.
The company's revenue growth last year starkly contrasts the results of the two largest publicly traded 3D printing companies, 3D Systems and Stratasys (NASDAQ:SSYS), which posted revenue growth of 2% and revenue contraction of more than 7%, respectively. Moreover, Optomec maintained profitability while investing considerably for growth, while 3D Systems and Stratasys bled red ink.
There's also the possibility that Optomec could be acquired by GE or another company. Optomec teamed with Stratasys in 2012 to produce what was then the world's first hybrid conventional 3D-printed/electronics 3D-printed structure -- a "smart wing" for an unmanned aerial vehicle, or drone. It also located its R&D facility in St. Paul, Minneapolis, a short drone's flight from Stratasys' U.S. headquarters in a Minneapolis-St. Paul suburb. Several years ago, Stratasys might have been able to buy Optomec and net its metal and conductive-material 3D-printing capabilities in one fell swoop. However, Stratasys' plunging stock price combined with Optomec's soaring growth mean that an Optomec acquisition is now almost surely out of Stratasys' reach.
IPO investors should consider putting Optomec on their watch lists.
Beth McKenna has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. The Motley Fool recommends 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.