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Full Analysis of the Stratasys and MakerBot 3D Printing Acquisition
Full Analysis of Stratasys and MakerBot Deal
On June 19, desktop 3D printer company MakerBot was acquired by Stratasys for $403 million. The next day, executives from Stratasys and MakerBot hosted a conference call with analysts to discuss the transaction. Seeking Alpha published a full transcript of the call and we provide our analysis on the deal below.
Executives on the call included:
- Shane Glenn – VP Investor Relations
- S. Scott Crump – Chairman of the Board
- David Reis – Chief Executive Officer
- Bre Pettis – CEO and Co-Founder of MakerBot
- Erez Simha – Chief Operations Officer, Israel and Chief Financial Officer
Stratasys Definitive Move into Desktop 3D Printer Market
Stratasys has long been a leader in the additive manufacturing industry. In December they completed a merger with Israel-based Objet to create a $3 billion 3D printer company. Now, with the addition of MakerBot, Stratasys is definitively embracing the desktop 3D printer market.
The executives commented that desktop 3D printing is the next industrial revolution.
It has been widely reported that MakerBot has major customers in organization like GE, NASA and Lockheed Martin, and continue to sell its desktop 3D printers to other Major Fortune 500 companies as well as small entrepreneurial startups and individuals.
Desktop 3D printing usage among design and engineering professional is growing rapidly. Stratasys and MakerBot estimate that between 35,000 to 40,000 desktop 3D printers were sold in 2012. This number is estimated to double in 2013, as consumers increasingly adopt desktop 3D printers for broad range of applications.
In acquiring MakerBot, Stratasys has expanded its scope, selling 3D printers priced from $2,000 to more than $600,000 for all purposes. The MakerBot products allow for more accessibility and affordability of 3D printers that will enable more rapid growth.
MakerBot Company Profile
MakerBot, headquartered in Brooklyn, is the market leader in desktop 3D printing, selling more than 22,000 3D printers since 2009. The company has 274 employees.
MakerBot generated revenues of $15.7 million in 2012, and grew rapidly to $11.5 million in Q1 2013. The company sells two 3D printers: the MakerBot Replicator 2 Desktop 3D Printer, and the MakerBot Replicator 2X Experimental 3D Printer. Retail prices range from $2,200 to $2,800. The majority of sales are placed on the MakerBot website. 60% of customers are based in North America, and 40% international.
The 3D printers are assembled in Brooklyn at a 55,000 square foot production facility in the Sunset Park neighborhood.
MakerBot hosts a web community called Thingiverse, where users can upload 3D printable files. There are more than 90,000 3D product files online and the site has more than 500,000 unique visitors and 1 million downloads each month.
Bre Pettis’ View
MakerBot CEO shared his perspective on the deal:
Our company shares a vision about how to lead the market’s growth and development and it’s all about creating a great user experience. We are very proud of what we have built at MakerBot, but we’ve only just begun. That’s why we are so attracted by the opportunity to join with Stratasys.
Our mission remains the same. Merging with Stratasys offers us an opportunity to continue to build our business and pursue our vision under the MakerBot brand. The last couple of years have been incredibly inspiring and exciting for us. We have an aggressive model for growth. Partnering with Stratasys will allow us to supercharge that mission to empower individuals to make things using a MakerBot and allow us to bring 3D technology to more people.
Deal Structure
Stratasys will issue 4.76 million shares of its stock, worth $403 million, in exchange for 100% of the outstanding capital stock of MakerBot.
In addition, MakerBot stakeholders will also be eligible for performance-based earn-outs of up $201 million through the end of 2014.
Read the full transcript at Seeking Alpha.
ExOne Takes On 3D Systems and Stratasys in 3D Printing Stocks
3D Printing Stocks Analysis
ExOne is the most recent 3D printing stocks to go public. Long overshadowed by 3D Systems and Stratasys, ExOne is now coming into its own limelight.
Investor site Seeking Alpha sheds some light on ExOne’s profile.
ExOne is a relatively new player compared to the other two heavy weights – the company was formed in 2005 as a spin-off of Extrude Hone Corporation, a developer of nontraditional machining processes and automated systems. The company is currently operating in Asia, Europe and the Americas. Through research and development, the company has achieved considerable success in additive manufacturing. Notable ExOne products include S-Max, S-Print, M-Print and M-Lab. Most of these products are meant for industrial use, and have the capability of manufacturing molds with sand printing and metal and glass printing.
Almost all of the ExOne products cater to the industrial customers, and the company has some of the largest printers available in the market. ExOne’s customers are showing considerable interest in the products and the company is receiving new orders. 3D printer sales have gone up for the company in the fourth quarter of the last year. As a result, ExOne was able to post impressive full year results. Another target market for ExOne is the researchers and educational customers – M-Lab is specifically designed to be used in labs and it is one of the smaller printers available in the company’s arsenal.
So, there are two sets of target markets for the company: industrial customers, which require ExOne products for rapid prototyping and building molds, and researchers and educational customers, which convert their experiments into reality using ExOne equipment. Industrial customers are a big segment and ExOne’s products are getting good response, which should allow the company to grow further in this segment.
Read the full analysis at Seeking Alpha.
3D Printing Presents Long-Term Threat to Otherwise Healthy Toy Stocks
Back in April, we discussed how 3D printing could disrupt the toy industry, and in May featured a story about a father printing the Rosetta stone for kids toys.
The analysts at Seeking Alpha have put together an interesting perspective of how an otherwise appealing dividend growth stock might be a failed investment because of the emergence of 3D printing. The stock is Hasbro (NASDAQ: HAS), the owner of brands such as Tonka, G.I. Joe, Transformers, and My Little Pony.
As an investor who is interested in dividends, I look at these metrics to begin my analysis.
- Dividend: $1.44
- Yield: 4.1%
- 5 yr. DGR: 17.2%
- Payout Ratio: 44%
- Debt Coverage Ratio: 6.1
This is just a quick peek at a few data points, but upon deeper analysis, the company looks relatively healthy with plenty of room to increase its dividend in the near term. Additionally, the recent success of the Avengers movie is expected to translate into revenue for Hasbro. What has me worried is the future of the company five to ten years out. Why? 3-D printing.
The analyst goes on to say that once 3D printing becomes ubiquitous, it will become a threat to traditional toy makers, and we won’t be able to get the genie back in the bottle. He cites some examples of 3D printed substitutes and complements.
- The following is a video of a student at a community college who created a STAR WARS TIE Fighter. There are 2 important additional points to note: Hasbro owns the rights to sell STAR WARS toys, etc. I don’t believe that this is an exact/scanned replica because it is not as detailed as the real one would be.
- Soon, owners of Microsoft’s (MSFT) XBOX Kinect will be able to use it to scan objects and create 3-D models. This will make it very easy to create the schematic (instructions) that the printer needs.
- Also, the Pirate Bay (an illegal file-sharing website that has successfully fought against being shut down) recently created a section for sharing the 3-D schematics. There are already a number of possible cases of patent infringement. The Huffington Post notes one case where someone has shared a file that is probably a copy of a “Warhammer 40,000 Space Marine Dreadnought.”
In my eyes, this is just the first evidence of what will be gaining speed throughout the next couple of years.
Read the full article at Seeking Alpha.
Read more coverage about 3D printing and toys.
Hasbro booth photo by Gage Skidmore used under Creative Commons license.
Top 10 Countdown: Most Popular 3D Printing Stories in June 2012
Here are the top 10 most popular stories On 3D Printing brought you in June 2012.
10. The Dutch combine 3D printing and textiles.
9. A review of 3D modeling software Tinkercad, SketchUp, and 123D.
8. People are wondering why Google sold 3D modeling business SketchUp.
7. Still popular: the Motley Fool reviews the 3D printing industry.
6. We exclusively covered 3D Systems’ Cubify at Google I/O 3D printing in San Francisco.
5. UP! 3D printer from China is a viable competitor to MakerBot and other.
4. You can be a superhero; your face 3D printed on a superhero action figure.
3. Facebook investor Peter Thiel backs 3D printing entrepreneur.
2. Why 3D printing will be more fun than LEGO thanks to Minecraft.
1. 3D printing stock are hot and up over 180%! So was this article.
Thanks for reading in June!
Peter Thiel photo by thekenyeung used under Creative Commons license.
Top 10 Countdown: Most Popular 3D Printing Stories in May 2012
Here are the top 10 most popular stories On 3D Printing brought you in May 2012.
10. 3D Systems acquired FreshFiber for 3D printed electronics accessories.
9. We wrote an editorial analyzing the space of 3D printing creators and consumers.
8. We reviewed SketchUp, Tinkercad, and 123D modeling software.
7. The fashion runway was 3D printed in Belgium.
6. The Motley Fool weighed in on public 3D printing manufacturers.
5. We featured companies exhibiting at Maker Faire Bay Area 2012.
4. Why Google sold SketchUp and what it means for 3D printing.
3. A 3D printing vending machine surfaced at Virginia Tech.
2. This New House: constructing and printing WikiHouse.
1. We featured Brad Feld as a premiere venture capitalist looking at 3D printing investments.
Thanks for reading in May!
