Amaero Ltd (3DA) Earnings Call Transcript & Summary

Good day, and welcome to the IAccess Alpha Virtual Best Ideas Summer Investment Conference 2026. Our next presenting company is Amaero Inc. [Operator Instructions] I'd now like to turn the floor over to today's host, Hank Holland, Chairman and CEO of Amaero Inc. Please go ahead.

Thank you very much. Hello, everyone. Pleasure to present to the IAccess Alpha conference. Appreciate everybody's time. Again, as it was said, I'm the Chairman and CEO of Amaero, Hank Holland. We will work our way through the presentation here. Amaero is the largest U.S. domestic producer of refractory and titanium alloy powders that are used in 3D printing of weapon systems, defense platforms, aerospace, space, nuclear energy applications such as that. We also have a pioneering and leading position in manufacturing large, near-net shaped parts via technology called PM-HIP or powder metallurgy - hot isostatic press, that we'll talk about later in the presentation. I first invested in this business in May of 2022. I'll tell you a bit about myself here in a moment. We relocated this business to the U.S. from Australia in July of 2023. We actually just completed a redomiciliation. We are now a Delaware company. We remain traded on the ASX, the Australian Stock Exchange. And earlier this year, we announced plans to redomicile to the U.S., which we have now completed, which would position us to pursue an IPO in the U.S. later this calendar year, early next calendar year, subject to market conditions. And we remain on track with that. As you see on this page, again, we are in 2 primary markets. Advanced material business, producing spherical powder for additive manufacturing applications, again, the largest in the U.S. by a significant margin, as well as an advanced manufacturer of powder metallurgy hot isostatic press or PM-HIP manufacturing. And we'll talk about why that's so important as a substitute forging to castings later in the presentation. We have stood up the largest and the leading technical team in the U.S. for both spherical powder production as well as PM-HIP manufacturing. Work very closely with a number of verticals, as I mentioned, including the defense industry, aerospace, space, nuclear energy as well as medical. And right now, one of the really interesting things about Amaero from my perspective is we sit right at the nexus of 3 really significant macro themes: the defense industrial base, reshoring of sovereign manufacturing, and critical minerals. The 2 complementary businesses, I mentioned the advanced materials side coupled with an advanced manufacturing side of our business. I think this is really interesting. It gives us expertise in 2 adjacent areas. Gives us scale. Also gives us interconnectivity between these various verticals and applications that we are party to. Moreover, the strategy of the company has been very much built on a demand pull basis. We have got the most advanced gas atomization technology in the world. It's called an EIGA premium, manufactured by a company in Germany that we have made significant proprietary modifications to the equipment as well as the parameter set. As such, we are, as I said, the largest refractory powder producer in the U.S., really with only 1 competitor for production scale spherical powders, $25 billion, $30 billion, U.S. company called ATI, of which this is noncore to their business, and the largest titanium alloy spherical powder producer by multiples in the U.S. as well. Our technology has got significant benefits, including it's got a higher yield and thus requires less feedstock. This drives us to have the most attractive unit cost economics for titanium powder in the U.S. We also use half the argon gas. Moreover, we're installing argon gas recycling plant at our facility in Tennessee. We also have a 10-year subsidized electricity contract via Tennessee Valley Authority, which is part of our contract. It was -- when we moved to Tennessee and negotiated with the state. And then finally, labor rates in Tennessee versus markets such as Pennsylvania and Massachusetts, another area that powder is produced. On the advanced manufacturing side, and I'll talk a minute about the next slide about how I got involved in this business. But shortly, you'll hear we've got a critical shortage in the U.S. of large castings and forging capacity. PM-HIP is a technology that's been around for 7 decades. It was first used for cladding of nuclear rods. The last 2 decades, [ Fred Yolton ] and [ Eric Bono ] and our team have done significant pioneering work to manufacture large near net shape parts. And as a result of having 7 decades of that data, it's one of the only mature technologies that could be immediately substituted for large forgings and critical castings. This is a big deal, again, given the shortages we have. It's particularly a big deal with the U.S. submarine industrial base in the U.S. Navy in general, also the missile complex. So an area that we'll talk about a bit longer. And again, really ties in with a critical federal policy meant to incentivize reshoring, scaling and rebuilding of sovereign advanced manufacturing and supply chains. A bit about my background. I'll be an engineer by education, I spent my entire career in finance. Was the youngest partner at Sanford Bernstein, New York City. When Bobby McCann was running Merrill, I did something similar at Merrill Lynch. And then about a dozen years ago, started managing my own capital, Pegasus Growth Capital. It's a private equity fund, of which I've invested half the proceeds into that fund. In May of '22, Pegasus led an investment in Amaero. Amaero at the time, as I said, was traded -- it was an Australian company traded on the ASX. I led an investment May of '22. I personally fully underwrote an investment in December of '22. Led another capital raise. Today, Pegasus owns a little bit over 30% of Amaero. I personally funded about half of that. I think this is a really interesting part of our story. I'm amazed as an investor to see the small-cap, micro-cap companies with CEOs that are given all of the stock. Very poor alignment with shareholders, very poor incentives. Every single share of stock I own, I pay for. I paid for alongside other investors in placements in on-market and off-market activity. I relocated my family to Chattanooga, Tennessee, which is where our factory is based and where I relocated this business again in July of 2023. I set out to hire a leading technical team, both on the advanced material and the advanced manufacturing sides. It's anchored by Eric Bono, 3 decades in the industry, quite well known at National Labs. Eric was mentored by Fred Yolton, who invented gas atomization of titanium about 35 years ago. Brett Paduch -- and by the way, we will later talk about this. Important that we built out a team that can support us as a U.S.-listed company. And Brett brings those credentials. While in public accounting, he led the audit for Ingersoll Rand for 6 years, global audit that is. Subsequently has been with New York Stock Exchange and NASDAQ as well as private equity companies in a senior finance capacity. Mick Maher, our Chief Strategy and Commercial Officer, led the material Director at DARPA, our Defense Advanced Research unit for 5 years. Was an Army Research Lab before that, and the private sector, [ Mark Marriott ], another company such as that before that. Importantly, why now to transition from ASX with the intent, as we've mentioned, to list in the U.S. We are just completing as in this month a 3-year capital investment plan. It was AUD 72 million, about USD 50 million. We have completed that. We've also added some additional scale and scope to that 3-year investment plan. In doing so, we built out a 100,000 square foot facility outside Chattanooga, Tennessee. We have commissioned 3 atomizers. It gives us about 4x the titanium scale of anyone else in the U.S. and several times the refractory scale from powder production of anyone else in the U.S., as well as we set up our PM-HIP manufacturing production capability. We've got some really interesting expansion opportunities on the horizon, working very closely with the U.S. government, our counterparts, U.S. Navy, as it relates to that. The year that we're finishing, we're currently on a June 30 fiscal year, and the year that we're finishing is really the first year of revenue. We've given guidance for the year that ends this month, AUD 18 billion to AUD 20 million revenue for the year. And I think this is a business that is really nicely positioned for significant growth, '27 over '26, '28 over '27 and so forth given the thematic runs that we've got and visibility that we have in contracts. I'll talk about that later as well. Many of you are probably well aware, but I truly believe we've got a generational thematic opportunity as it relates to the themes that I mentioned earlier. Those being defense industrial base. Prior to the Trump administration, we were spending as a percent of GDP the lowest, the trough level on defense since World War II. Again, I repeat that prior to the Trump administration, our defense budget as a percentage of GDP was trough spending since World War II. So we're coming off of very low trough levels. At the very same time, of course, we all know the geopolitical backdrop in the world that we live in today is perhaps the most dangerous it's ever been. And so significant need not only in the U.S. to increase our defense spending, but we're seeing the same thing with our allied countries around the world, notably Europe, Australia, et cetera. At the very same time, this administration has had a strong push to -- via executive orders, via a policy, via other incentives to incentivize multinational and U.S. companies bringing manufacturing home after 3 decades of offshoring manufacturing places such as China. In 1980, by way of reference, we had 21 million manufacturing jobs in the U.S. It was about 20% of employment. Since 1980, we have lost 7 million of those jobs. And one of the reasons I was so confident making this investment in May of '22, mind you, we had a democratic administration at that period of time, not knowing who the next president would be, is I am convinced for both national security reasons as well as economic policy reasons, regardless of the administration and the next administration, we will continue these policies. Why am I so convinced of that? The 7 million jobs that we've lost, these are high-skilled, high-paying jobs. And the part of the country that's leading the resurgence in manufacturing, it's not California, it is not New York. It is Tennessee, Georgia, Alabama, the Carolinas, Ohio, Pennsylvania, Michigan. What do those states have in common? Not only are they leading the manufacturing resurgence in our country; they are the swing states. They will determine the next president in this country and the presidents thereafter for a period of time. And thus, I think on the economic policy front, you're going to continue to see regardless of administration policy that is intended to incentivize the continued reassuring, rebuilding and scaling of advanced manufacturing in this country. At the very same time, as I mentioned, we have been driven by a demand pull approach. And so Amaero is a small company, it's very intentionally addressing specific vulnerabilities in our supply chain. In all [ cases ] in our business, we have but a single competitor, maybe 2 competitors. In all cases in our business, we're addressing a significant bottleneck. So for example, in powder metallurgy HIP or PM-HIP manufacturing, it's a substitute for forgings. What the Ukraine war exposed was that the U.S. had become incredibly dependent on Russia, in particular, for large forgings, a company called VSMPO, as well as China and other places, right, adversary countries that were incumbent and supporting our large castings and large forging ecosystem. PM-HIP can be immediately substituted, as I said, with 7 decades of data. The U.S. Navy, after a couple of years of development work we had done in collaboration with them, convened a meeting in there of December 3 of last year. They followed that up, which is highly unusual, with a letter that we'll see here shortly from the U.S. Navy, talking about exactly this issue. Talking about the vulnerabilities that we had as a country for a lack of capacity of forgings, talking about the maturity of PM-HIP, talking about Amaero as a proven supplier and requesting that our shipyards and our [ first-tier ] suppliers identify parts that were a problem in the supply chain that were good candidates for PM-HIP. Same on the powder side. On the powder side, entities such as Air Force Research Lab were taking 2 years to source refractory powder such as niobium and C103, that was critical for hypersonic programs and moving these programs to research development testing evaluation. And again, the reason for that was we had but a single producer in the U.S. in ATI. It was noncore to their business. They had very long lead times. We have dedicated anatomizer exclusively to refractories. The refractory alloys, if you think back to your college days, are really important. These are the alloys in the periodic table that are high-temperature alloys. So think about niobium, tungsten, tantalum, zirc, hafnium, iridium. And so whether you're talking about thermal protection systems for weapon systems or space or whether you're talking about propulsion systems, again, think defense systems and space, these refractory alloys are really, really important. Very high value and, again, very low supply available in the U.S. And then finally, titanium powder production. We do not have a single competitor in the U.S. today that has scaled titanium spherical powder production. Our 2 primary competitors are Canadian companies, AP&C and TEGNA. And yet again, we've got a big movement upfront to relocate these businesses back to the U.S. And you're seeing large manufacturers both on the medical side as well as the consumer side relocating manufacturing back to the U.S. as well as their supply chains back to the U.S. Where we play -- the powder market, many of you may or may not know, you can broadly think of it as kind of 2 different markets. First, you've got reactive metals and nonreactive metals. So that 80% of the powder market are nonreactive metals, Think about nickels and stainless steels such as that. Only about 20% of the market are high-value, lower-volume reactive metals: titanium and refractories. We only play in the reactive space. Again, this is a much higher value, much lower supply in the U.S. And then moreover, in the powder market, you've got angular powder, often used for things such as press and sintering, much, much lower value and higher volumes available in the U.S. And then you have spherical powder, much higher value and lower supply in the U.S. So we only play in the spherical reactive market, so the most supply-constrained, highest value part of the U.S. powder market. Why PM-HIP, as I mentioned, and I won't have time for the story today. I was in Ukraine in the early days of the war, happened to be in Lviv the night the first Russian cruise missile came in and hit a fuel depot near where we were. And having come through the supply chain challenges that were exposed in COVID and then find myself in Ukraine, it became so clear to me the U.S. would have to reindustrialize. And this is why I came back, I looked at 19 businesses, led to my investment in Amaero. But as many of you know, we are embarking on scaling up submarine production today, in what we call 2 plus 1. We're supposed to be making 3 ships a year right now. In fact, we're making less than 1.5. On top of that, you will have [ OCUS ] over time. On top of that, you'll have a Trump battleship, which is going to be nuclear propulsion over time. At the very same time, we're expanding commercial nuclear applications to support AI and data centers. So a lot of demand in this area. And yet, as I said, we're very challenged when it comes to forgings as well as large castings. And so PM-HIP has been adopted with a lot of enthusiasm at the U.S. Navy, the shipyards and the Tier 1 suppliers. Speaking of the U.S. Navy, as I mentioned, we've had sustained engagement now for over 2 years. We have completed a significant number of programs, of which have not been announced. Stay tuned. For shortly, I've alluded to a commercial announcement to come. But we've done a lot of work on the demonstration side, the first article side, for a path to qualification of sub-safe critical parts, and stay tuned on that. Given the success that we've had, the Navy convened a meeting at Amaero on December 3. This was at the extension of an invitation specifically from the U.S. Navy, not from Amaero. It included the shipyards, [ NAPCO8], naval reactors, BPMI that is the sole defense prime contractor for nuclear Navy, if you will, and a series of suppliers. We had the roundtable and all-day meeting. The agenda was, as I described earlier. And then as I said, the Navy highly unusual, followed this up days later with a formal letter that was made public expressing many of these same issues. Real opportunity for us going forward, the business, as it is today, the powder side of the business and the PM-HIP side of the business is a business that scales to about $200 million of revenue, USD 200 million of revenue. We've got significant expansion opportunities though. And one of things we've got to do in this country is a better job of integrating and co-locating adjacency processing capabilities. Today we've got these parts that travel all over the country for adjacency processing. And again, we've got to do a better job of creating regional manufacturing hubs, co-locating, integrating these capabilities. And this is part of our road map and part of our ongoing conversations with stakeholders, the U.S. government and the U.S. Department of War. On the commercial side, we signed a number of long-term agreements over time whereby we are the exclusive powder supplier companies such as ADDMAN, something such as Velo. ADDMAN is owned by AIP, the largest industrial private equity firm focused in this area. Velo3D, the only made in U.S.A. 3D printing equipment OEM. Titomic, a leader in cold spray for net shape parts. Knust-Godwin, significant expansion underway in the Houston area, particularly the titanium machines and others. In the middle there, you'll see we currently have 11 active contracts with the submarine industrial base. We've got 3 active contracts with missile and space ecosystem, 1 active contract with aerospace, it's one of a few on here that we've announced, which is Boeing. And then we've got another industrial contract. 40 unique customers today, 14 different refractory alloys, will actually atomize in the current quarter. And 16 different active PM-HIP contracts. And then lastly, we have alluded to the fact -- just a few more page after this. We've alluded to the fact that we are redomiciling to the U.S. We announced this a number of months ago with a plan to complete that in June. That has, in fact, been completed ahead of schedule. We announced that we expected to complete a PCAOB audit by the end of June. That is on schedule. And that would position the company to pursue a U.S. IPO late this year, early next year, subject to market conditions. Again, that remains on schedule. And then lastly, why the U.S., obviously, the market position the U.S. investors such as those on this call, there is a very strong investor interest when you think about small cap funds given the verticals that we play in defense industrial base, sovereign manufacturing, critical minerals. Very strong investor interest. Obviously, a much, much deeper market. Relationships and connectivity that I have over the course of my career are very, very strong, both in Washington, D.C. as well as in the capital markets. And they give us more strategic flexibility on a going-forward basis. That is the end of the presentation, and we will shift to the Q&A tab and see what we may have for questions here. If we refresh the screen, if I may.

Okay, let's work through these. What milestones should investors watch over the next 12 months as Amaero transitions from a capital investment phase to our revenue growth phase? Great question. So this is, as I mentioned, we're just completing the year in June that will be our first real year of revenue, AUD 18 billion to AUD 20 million. If you look at the growth drivers of our business, A, we've got very good revenue visibility on a going-forward basis. And then moreover, the nature of our contracts is such that we begin each calendar year or fiscal year with significant contracts already secured. So I would look at this business as a type of business that could grow, we haven't given specific revenue guidance, but if you think about a business that could grow 75%-ish on a year-over-year basis for a number of years, that's the type of demand and growth drivers that we have in this business given these verticals. How much visibility do you currently have in the customer demand for refractory and titanium alloy powders as product capacity comes online? So I'll take 2 separate question. They've got different drivers. The refractory side of our business is heavily, heavily dependent on government contracts, Department of War contracts. And again, it tends to be issues where we're looking at thermal protection systems, propulsion systems, things such as that. We have very good revenue. If you look for the next 12 months, we have already contracted about 75% of our plan over that period of time. And we already are in the midst of identifying demand drivers for the 12 months thereafter. And so a good -- very good visibility and very strong demand in the refractory side. On the titanium side, this tends to be more commercially driven. Some of you might know, there's very strong demand right now for civilian suppressors in the firearm market given some recently change in legislation. And you've also got very strong demand drivers in the adoption of [ AD ] manufacturing. Just last week, we had an active AM participant announced they purchased 50 EOS machines. Another company advanced significant expansion of their machines. You've got other companies expanding significantly, as well as producers that are moving production back to the U.S. that heretofore has been in China and other places. So very strong drivers on the titanium side as well. Let's see here, it says that I have 11 questions, but I'm not -- here we go. Okay, so more just came in. What differentiates Amaero's EIGA powder production technology from competing powder manufacturers servicing aerospace and defense markets? As I mentioned, we have the most advanced gas atomization technology. It's got about twice the yield of the most valuable powder from the prior generation of that technology, which means we need half the feedstock. And so it gives us a far more competitive unit cost advantage over the other producers, as well as we can scale it. So all the other technologies are better suited for development. Our technology is best suited for large-scale production. Have you spoken extensively about casting, forging bottlenecks [indiscernible]? How is customer interest evolving as those bottlenecks persist? As I said, very strong uptake of demand, the U.S. Navy, given the challenges we have in the maritime industrial base, but also across other areas. I mentioned the missile ecosystem. I mentioned -- or I haven't mentioned, we've got a number of other aerospace and space companies. And they're having a hard time essentially sourcing forge billet to take up to 2 years. So we're doing a number of things for companies such as that as well. And then lastly here, we'll wind down to time, what industries are currently showing the strongest demand for Amaero's products? It is across the board and it varies by vertical. So on the PM-HIP business, think the maritime, think nuclear energy, we think will be a really interesting opportunity for us. On the powder side, the drivers for refractory are defense and space, primarily, again, 2 really interesting growth markets right now. And on titanium, more so on the commercial side of the equation. Medical is a big driver, think orthopedics for the knees, hips, such as that, the civilian firearm suppressor market right now as well as just the general adoption of [ AD ] manufacturing. Hope this has been a very helpful overview and very much appreciate everybody's time. Thank you.

Thank you. That concludes Amaero Inc.'s presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.