This thread has finally come alive!
I've been a follower of this company for a while and believe that it has tremendous potential over the long term.
This company has basically two businesses. The first business is to build, sell and service rapid prototyping machines that uses a patented process called stereolithography (SLA). The president and founder of the company holds multiple patents on a method using a laser to harden liquid plastic resin into near exact replicas of a computer generated solid model. What this means is that an engineer that has designed a part can have a solid model of his part in his hands by the next day without having to generate engineering drawings, manufacturing instructions, or tooling. This, in turn, shortens the products design cycle, reduces the cost of design, and allows a quicker time to market. All very good things. Competing methods of rapid prototyping use different media and somewhat different process to build the model, but TDSC was the first to market, has the largest installed user base, and currently has the best product out there. Their patents on both process and implementation are a tremendous competitive advantage.
As part of this line of business, they write the software to translate the data generated by any number of modeling and design software packages (PMTC's ProEngnineer, IBM/Daussault CATIA, etc.) to data that the SLA machine can use to build the model. They established the data standards and protocols in the industry that all the other competitors use. (!) (Another VERY good thing.)
Their second line of business is as a service bureau. An engineering company can send them a computer generated model electronically by FTP and have them make the part out of the resin. Typical turn around time is about a week - still far shorter and often much cheaper than making many types of models by other methods. For small companies that cannot afford the $200K + cost of their SLA machines, this is a good alternative.
The company is located in Valencia, California (just north of Los Angeles). They are currently opening another plant out of state as they are outgrowing their current facilities.
The company that I work for owns one of their very first machines and I have personally made several models using it. I've also used their service bureau and can report that they offer outstanding service.
I currently own a small equity position in the company. The company has consistently shown the ability to increase sales quarter over quarter and the stock has risen accordingly. The recent (July 96) disjoint downwards in the stock price occurred as the result of two factors: (1) the ending of tax advantages associated with startup costs and (2) capital costs associated with opening a new facility out of the state of California (I believe Arizona, but I'll have to check this.) Nothing can be done about the first factor - after all, they're posting positive earnings now. The second will help improve the bottom line due to the lower overhead costs as the company expands and grows.
Earnings should grow steadily over time as more and more engineering companies realize the advantages of rapid prototyping and of the SLA process. The company has recently tested a new type of SLA machine that uses wax instead of resin. The advantage is that the new machine will be simpler to operate and cheaper to buy and maintain (in the $50K range). Only fairly large companies, like Ford, Chrysler, Boeing, Nissan and Toyota currently own their own resin based SLA machines. The newer type of machine will extend the potential customer base to small engineering and design firms. The downside of the new machine is that the wax models will not be as durable as the resin models.
Buy the way, they also sell the proprietary supplies (resin) for the machines. A little bit of the razor versus razor blade paradigm going on here :-)
Enough rambling for now. Hope this helps out some of you out there.
Tony |
