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TITOMIC LIMITED — Investor Presentation 2021
Aug 29, 2021
65963_rns_2021-08-29_549e2c09-2b94-4371-a451-486aacf3cb2a.pdf
Investor Presentation
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FY21 Results Presentation 30 August 2021
Disclaimer
This presentation has been prepared by Titomic Limited ACN 602 793 644 (“Titomic” or the “Company”) to provide summary information about Titomic and their activities as at the date of this presentation. The
information in this presentation is of a general nature and does not purport to be complete and may change without notice. This presentation is not a recommendation to buy Titomic shares and undue reliance should not be placed on the information or opinions contained in this presentation for investment purposes as it does not consider your investment objectives, financial position or needs. These factors should be considered, with professional advice, when deciding if an investment is appropriate.
This presentation includes forward-looking statements that reflect Titomic’s intentions, beliefs or current expectations concerning, among other things, Titomic’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies and the industry in which Titomic operates. These forward- looking statements are subject to risks, uncertainties and assumptions and other factors, many of which are beyond the control of Titomic. Titomic cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition, liquidity, performance, prospects, growth or opportunities and the development of the industry in which Titomic operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, Titomic does not guarantee any rate of return or the performance of Titomic nor does it guarantee the repayment or maintenance of capital or any particular-tax
treatment.
Investors should note that past performance may not be indicative of results of developments in the future periods and cannot be relied upon as an indicator of (and provides no guidance as to) Titomic’s future performance. Titomic, its related bodies corporate and each of their respective directors, officers and employees expressly disclaim any obligation or undertaking to review, update or release any update of or revisions to any forward-looking statements in this presentation or any change in Titomic’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.
Subject to any continuing obligation under applicable law or any relevant listing rules of the ASX, Titomic disclaims any obligation to disclose any updates or revisions to any forward-looking statements in these materials to reflect any change in expectations in relation to any forward-looking statements or any change in events, conditions or circumstances on which any statement is based. Nothing in these materials shall
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under any circumstances create an implication that there has been no change in the affairs of Titomic since the date of this presentation.
This presentation contains summary information about Titomic and its activities, which is current as at the date of this presentation. The information included in this presentation is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor should consider when making an investment decision. Each recipient of this presentation should make its own enquiries and investigations regarding all information in this presentation including but not limited to the assumptions, uncertainties and contingencies which may affect further operations at Titomic and the impact that different future outcomes may have on Titomic. This presentation has been prepared without taking account of any person’s investment objectives, financial situation or needs. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, make their own assessment of the information and seek legal, financial, accounting and taxation advice appropriate to their jurisdiction in relation to the information and any action taken on the basis of the information.
The information included in this presentation has been provided to you solely for your information and background and is subject to updating, completion, revision and amendment and such information may change materially. Unless required by applicable law or regulation, no person (including Titomic,) is under any obligation to update or keep current the information contained in this presentation and any opinions expressed in relation thereto are subject to change without notice. No representation or warranty, express or implied, is made as to the fairness, currency, accuracy, reasonableness or completeness of the information contained herein. Neither Titomic nor any other person accepts any liability and Titomic, its related bodies corporate and their respective directors, officers and employees, to the maximum extent permitted by law, expressly disclaim all liabilities for any loss howsoever arising, directly or indirectly, from this presentation or its contents.
The distribution of this presentation in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions.
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Agenda
Joanna Walker, CFO
- FY21 Financial results
Herbert Koeck, CEO
- Titomic at a glance
- The Technology
- Business Model
- Outlook
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FY 21 Financials
FY21 – Financials
| Earnings Summary June 2021 $,000 |
June 2020 $,000 |
|---|---|
| Revenue 1,985 Less Expenses (19,160) Loss before Income Tax (17,175) Less Tax - Net Loss After Tax (17,175) Less Significant Items 6,079 Underlying Operating EBIT (11,096) Significant Items – Non Cash One Off Items - Impairment of non-current assets - Depreciation adjustment for revision of estimated useful life of machinery Net effect of impairment assessment - Impairment of Contract Asset relating to Options issued in FY20 - Inventory write down Other One Off Items - Restructuring and Redundancy Costs - Strategic Consulting & Legal fees |
2,006 (12,833) (10,827) - (10,827) - (10,827) $3.3m ($1.2m) $2.1m $2.0m $0.7m $0.6m $0.7m |
• FY21 was a disappointing financial result • Necessary to reposition the business • ($3.3m) one-off non-cash impairment for noncurrent assets • $1.2m reduction in depreciation for machinery • ($0.7m) Work in Progress for Composite & other projects • ($2.0m) non-cash impairment of contract asset for options recognized as FY 20 asset • ($ 0.6m) restructuring and redundancy costs • ($0.5m) one-off costs for strategic review.
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FY21 – Financials
| Statement of Cash Flows | June 2021 $,000 |
June 2020 $,000 |
|---|---|---|
| Operating cash flows | (9,037) | (7,911) |
| Investing cash flows | (25) | (1,087) |
| Financing cash flows | (449) | 25,044 |
| Net cash flow | (9,512) | 16,046 |
| Cash balance at beginning of the year | 17,458 | 1,412 |
| Cash balance at the end of the year | 7,946 | 17,458 |
| Statement of Financial Position | June 2021 $,000 |
June 2020 $,000 |
| Current assets | 11,084 | 22,607 |
| Non-current assets | 2,505 | 7,279 |
| Total Assets | 13,589 | 29,886 |
| Current Liabilities | 2,977 | 2,551 |
| Non-current liabilities | 1,170 | 1,760 |
| Total liabilities | 4,147 | 4,311 |
| Total Equity | 9,442 | 25,574 |
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Operating cash flows impacted by
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one-off strategic consulting spend $0.5m and redundancies $0.6m
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Additional labour costs for Interim CE0
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Financing cash flows associated with principle portions of lease liabilities accounted for in accordance with AASB 116.
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• Cash movement of $9.5m.
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• Impact of Asset impairments • Contract Asset and other non current assets to align with Accounting Standard AASB136.
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• Offset by depreciation saving on Machinery $1.2m.
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• Inventories consistent with FY20
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Titomic at a a glance
Titomic snapshot
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Founded in 2014 to develop a new type of additive manufacturing process, developed with the CSIRO, using cold-gas spraying of metal particles to produce 3D structures
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This patented process is known as Titomic Kinetic Fusion® (TKF®), which Titomic has exclusive rights to commercialise
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Set to be a global leader in providing cutting-edge cold spray technology and solutions for our customers, changing the way manufacturing is done
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Scaling globally through joint venture partnerships with tier 1 suppliers to the defence and aerospace industries
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We seamlessly integrate TKF technology into partner supply chains, enabling customers to improve build quality and speed, all while minimizing their ecological footprint[1]
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We deliver on our financial goals by supporting customers on their journey transitioning from the traditional to the new world of digital manufacturing
Share Ownership
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43%
23%
Balance of
Founders &
Shareholders
Directors
34%
Remainder
of Top 20
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1 CSIRO study of Cold Spray vs Electroplating
New Leader, New Future
New leadership team executing on journey driving business success
A leading-edge technology in a very large growth market
Transformation NOW
Build leadership, clear vision, strategy
Build Foundation
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TKF Technology New leadership team executing
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New CEO; Herbert Koeck
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Strong board leadership
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New Engineering Lead; Max Osborne
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Start application focus
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New HR lead; Michael Rochford
Application driven growth with expert joint venture partners
Execution - Build global go to market
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Create JV partnerships
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Establish Titomic US and EU
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Deliver FY22 business plan
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Herbert Koeck CEO, Titomic Limited
Herbert Koeck is the Chief Executive Officer of Titomic, joining the company on 1 July 2021.
Prior to joining Titomic, Herbert served as Executive Vice President, Global Go to Market at 3D Systems from September 2016 to December 2020.
From 2013 to 2016 he was Managing Director of Hewlett Packard Europe, Middle East and Africa.
Previously he held several leadership roles for HP across the globe.
He holds a bachelor’s degree in Computer Science from Technical University Vienna.
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Together, we make it possible
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Executive team
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Herbert Koeck
Chief Executive Officer
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Previously Executive VP: go-to-market strategy of 3D Systems Corporation
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Former Managing Director of Hewlett Packard Europe
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Chris Healy
Legal Counsel
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Chairman of BondAdviser (previously Managing Director)
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Formerly Legal Director & Company Secretary of Guinness Peat Group
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Joanna Walker
Chief Financial Officer
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Previous CFO roles at Total Tools, Coventry Group and Officeworks
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Non-Executive Director and Chair of Audit and Risk Committee of both Countrywide Food Service Distributors and Southern Alpine Resort Management
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Jeff Lang
Executive Director
Chief Technology Officer
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30 years experience in manufacturing in Australia, Europe and Asia
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Previously Managing Director of Titomic and of Force Industries
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Max Osborne
Head of Engineering
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Joined Titomic in June 2021 after 14+ years at The Boeing Company in Australia and the USA
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Alumni of Boeing's global leadership program with technical background spanning R&D, design and product development
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Nine international patents in structures, materials and manufacturing.
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Michael Rochford
Head of HR & Operations
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Previously Regional Manager PACT Group, multiple full P&L responsible roles.
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Numerous Senior Ops and HR roles in the Packaging and Automotive Sectors.
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Extensive Expertise in Cultural change, currently undertaking a PhD in Organisational Growth.
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Dominic Parsonson
Head of Sales
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Extensive sales and marketing management experience in Europe, Asia, Africa and Australia
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Over 10 years Additive Manufacturing experience
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Colin Horman
Head of Strategy Execution
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CFO roles at Iveco Trucks Australia & New Zealand, and ANZIIF
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Extensive business leadership and corporate development experience, including roles at iSelect, PaperlinX and Amcor
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Together, we make it possible
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Board
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Dr Andreas Schwer
Independent Non-Executive Chairman
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CEO of Saudi Arabian Military Industries (SAMI)
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Previously VP – Design & Development at Airbus Helicopters
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Richard Willson
Independent Non-Executive Director
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Mira Ricardel
Independent Non-Executive Director
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Principal at The Chertoff Group
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Assistant to the President of the United States and Deputy National Security Advisor
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Previously VP – International Business Development at Boeing
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HumphreyNolan
Independent Non-Executive Director
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Dag W.R. Stromme
Independent Non-Executive Director
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Currently Co-Chairman of PAACS Invest
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Previously Managing Director and CoHead Nordic Banking of Morgan Stanley
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Prof. Richard Fox
Non-Executive Director
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Jeff Lang
Executive Director
Global industry expertise
Chief Technology Officer
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Non-Executive Director at Thomson Resources and PNX Metals
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Company Secretary at SILK Laser Clinics
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Chairman of The Nolan Group and Tapex Industrial
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Former Chair and Director of formerly listed Meditech Resources Ltd
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Inaugural Chair of the Cancer Research Centre for Cancer Therapeutics
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30 years experience in manufacturing in Australia, Europe and Asia
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Previously Managing Director of Titomic and of Force Industries
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Co-founder of Force Industries
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Taking our technology to the world
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We’re on track to expand across Australia, Europe, North America and beyond.
Neos Titomic Tooling JV Titomic Europe Base Titomic Sales Office Titomic USA Base Tri-D Dynamics Acquisition Titomic Sales Office US Defence JV
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Saudi Arabia Production JV UAE Tawazun JV Technology Partnership Titomic Sales Shree Rapid Titomic Repkon Barrels JV Titomic Melbourne Titomic Production Bureau Metal Powder Plant
Main Place of Business Bureaus JV / Cooperation Acquisitions / Investment Completed
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The Technology
Why additive manufacturing?
What is additive manufacturing?
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Additive manufacturing (AM), or 3D printing, is a digital manufacturing process
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Slicing three-dimensional digital designs into layers
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Produces physical goods additively, layer by layer, using AM systems and various materials
- Contrasts to traditional manufacturing which is ‘subtractive’ (removing material from a larger structure through drilling/carving/machining)
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Metal AM works by growing a 3D object one superfine layer at a time.
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Each successive layer bonds to the preceding layer of melted or partially melted material.
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As the material cools it fuses together to form the three-dimensional object
Advantages of additive manufacturing
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✓ Enables the creation of more complex shaped components which are not possible with conventional methods, supporting the design of products based on performance without normal manufacturing constraints
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✓ Allows rapid prototyping – without new specialist tools for prototyping each new product
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Design flaws efficiently removed prior to becoming costly errors during larger scale manufacturing
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Helps designers present new concepts as physical products to clients, rather than a concept
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Reduces time to market
Adoption is accelerating in key manufacturin industries g
The percentage of businesses in key industries who either already apply or are considering applying AM technology increased from 36% in 2016 to 83% in 2019[1]
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83% in 2019
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36% in
2016
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✓ Superior strength-to-weight ratios – parts that previously required construction of multiple pieces can now be produced as a single structure, enhancing durability
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✓ Reduced material wastage since the AM process only uses the amount of material required for the part itself
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✓ Increased customization for each customer – no retooling needed for customised and unique products
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Based on an EY survey of 900 small, medium and large businesses in the aerospace, automotive, chemicals, construction, consumer packaged goods, electronics, industrial, life sciences, logistics and transportation industries (Source: 3D printing: hype or game changer? A Global EY Report 2019 )
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Additive manufacturing market to reach almost $80B by 2025[*]
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28% CAGR
$80B 2020 – 2025
$60B
$40B
24% CAGR
2015 – 2020
$20B
$0B
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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Fuelled by rapid prototyping, faster turnaround, less waste and lower emissions
*Source: Wohlers Report 2020. Figures in US dollars.
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Our Titomic Kinetic Fusion Process
A new process that overcomes the limitations of melt-based metal additive manufacturing to produce parts faster, larger and more sustainably.
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Faster to market
Breakthrough materials
Build custom composite parts to near-net shape in just days, with minimal processing and machining and the world’s fastest deposition rates.
Fuse dissimilar materials within parts and even metallise plastics, with a variety of metals, superalloys and ceramic blends.
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Cost efficient
Superior repairs
Faster build rates, a shorter supply chain, less waste, and using competitively priced materials to form high performance parts, make TKF a more affordable choice.
From rail bogie to helicopter gearbox castings, repairs are also faster, stronger and simpler. With no damage or distortions, no pre-heating, no oxidation, no thickness limits, and no need to completely disassemble parts – with good-as-new performance.
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Proven patents
Our breakthrough technology is protected by our own patents and exclusively licensed CSIRO patents.
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Sustainable
A shorter supply chain and lighter alloys mean less waste and a smaller environmental footprint.
Unmatched value, certainty and confidence
Aerospace
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Less welding and forming
Less material than billet
Better buy-to-fly Minimal ratio machining
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Defence
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Lighter and faster manufacturing Minimal fabrication
Large single piece geometries For multiple threat levels
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Oil and Gas
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Faster Less machining than manufacturing stock bars and rods Better performance than High strength at high castings temperatures
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Titomic’s Additive Manufacturing technology
Titomic Kinetic Fusion (TKF)
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Key Attributes of the TKF Process
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Exclusive rights to commercialise a new form of cold spray additive manufacturing called Titomic Kinetic Fusion
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The TKF process uses cold spray technology which uses a compressed gas stream to accelerate metal powder particles at supersonic speed, which then bond together to form a layer upon impact
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Patented technology developed by the CSIRO to exploit Australia’s vast reserves of titanium mineral sands
The TKF Process
Solid state process
- Minimises any change to the properties of the metal due to heat distortion
No protective atmosphere required
- Results in TKF being far less restricted in size/build area
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Cost effective
- The TKF process can use cost competitive grade metal powders of dissimilar particle sizes and irregular shapes.
High build rate
- Relative to traditional metal AM processes
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Company Technical Comparisons
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Australian Companies
| Company | US Companies | Australian Companies |
| 3D Print type Kinetic Fusion |
Binder Jet Wire Direct Deposition Digital Light Synthesis Cold Spray Additive Manufacturing Powder Bed Fusion Wire Arc Additive Manufacturing |
|
| Metal Parts Yes |
Yes Yes No Yes Yes Yes |
|
| Part Build Size X-Large |
Small Large Small Medium Small Large |
|
| Part Build Speed Per print head Up to 15Kg/hr Up to 2.9Kg/Hr1 Up to 2.9Kg/Hr2 Up to 3.1Kg/Hr3 Up to 6 kg/h4 Up to 0.2 kg/h5 ?? |
1 www.desktopmetal.com
2 www.sciaky.com/additive-manufacturing/wire-vs-powder
- 3 Based on PU density of 100Kg/M3 @ build rate of 3120cm3 p/hr www.3dprint.com/53286/gizmo-3d-printers-fastest/ 4 wwwspee3d.com
5 Amaero SP 500 SLM Brochure, www.amaero.com, kg/h calculation based on metal density of 4g/cc
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Business model
Recurring revenue streams
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1 Direct TKF Machine Sales
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2 JV Partnerships
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Titomic receives share of net profit of the JV Company
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Each machine sale will lead to recurring revenue from powder sales (3) and, consumable & service requirements (4)
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Ongoing supply of powders, service, maintenance and consumables to the JV Company by Titomic
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3 Powder Production/Sales 4 Consumables & Service
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Users of Titomic’s TKF systems require ongoing provision of consumables, servicing and maintenance, supplied by Titomic
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Recurring revenue stream following on from the transactional sale of TKF machines
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A medium-term priority of Titomic is to establish a powder production plant in Australia reducing reliance on foreign suppliers, and increasing margins on powder sales
Commercialisation status
Prototypes of some consumables have been developed
5 Design & Engineering Consulting
- Titomic offers design & consulting services to customers looking for a TKF solution
Commercialisation status
Currently marketing TKF systems to research organisations
Commercialisation status
Multiple HoA agreements entered during FY21 to enter JVs to design and manufacture defence and aerospace products using TKF systems
Commercialisation status
Commercialisation status
Existing capability to on sell third party powder. Titomic is onboarding more engineering talent to Medium term opportunity to produce powder inallow the expansion of this service house at Titomic
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Joint venture partnerships
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More than a machine
We share both the risks and rewards with our joint venture partners, bringing everything to their door: our patented process, technology and custom system.
Phase 1 - Design
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Make prototype Validate and market
prototype
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6 – 9 months
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We collaborate with our partner to produce a prototype, sharing the costs.
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- $50k to $250k of prototyping work completed by Titomic with costs shared
Phase 2 - Assembly
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Ship system to JV partner Assemble
site
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~9 months
- We integrate a purpose-built system for our JV to run at their facility.
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$1.5m to $2.5m of expenditure required by each of the Joint Venture Parties
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Early revenue is generated via the production of validation parts in Titomic’s Melbourne based production facility
Phase 3 - Production & Sales
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Manufacture on demand & sell JV Partner finishes and sells
produced parts to partner to end users
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Ongoing
Profits from the JV are shared equally. Our partner markets the finished goods to their customer.
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- 50% of net profit generated from the sale of finished goods by the joint venture is paid out to Titomic, with the remaining 50% going to the JV Partner
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Joint venture partnerships
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Expected JV commercialisation timeline
- Multiple joint venture partnerships planned as at the end of FY21
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14
11
7
7
3
3
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4
3
4
8
7
4 4
3
FY22 FY23 FY24 FY25 FY26
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Prototype design work has already commenced on two of these partnerships
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First product expected to be sold in mid 2022 under existing partnerships
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Additional JV agreements expected to be onboarded based on current early-stage discussions with international defence and aerospace suppliers
Phase 1 - Machine Design Phase 2 - Assembly Phase 3 - Prod. & Sales (cumulative)
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Our trusted customer base
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Aerospace Defence Other
Tooling and Aerospace
Tooling and Structures
TKF Machine Customer
Tooling Joint Venture
MRO Investigation
Research Industrialisation Partner
Light weighting of Vessels
Reseller
Tooling
Prototyping Barrels & Ballistics Barrels Partner
Reseller
Aerospace
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Unlocking unprecedented potential
Large & expanding market
Proven process & industry leading technology platform
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Strong tailwind with additive manufacturing market set to grow by 28% each year[1]
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Pioneering patented technology co-developed with the CSIRO, Australia’s national science agency
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Buoyed by rapid prototyping, faster turnaround, less waste and lower emissions[2]
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Reduced costs and risks fueling fourth industrial revolution
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Strong cost advantage within Titanium alloys with patent protection
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Overcomes challenges like long lead times, limited scalability and excess waste seen in traditional manufacturing
Global foothold
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Transitioning to formal joint venture partnerships with shared risks and rewards
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Set to scale globally across aerospace, defence and other high-value markets
Compelling business model with attractive financial business profile
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Expansion underway with signed agreements in the US, Europe, Middle East and Australia
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Partnership manufacturing model with clients to deliver attractive unit economics with added benefit of sale of consumables and services
Unparalleled expertise
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Unique powder supply to reduce risk as well as cost of titanium parts while boosting performance
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New board of directors and management team with
strong industry, government and capital markets experience
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Operating leverage will drive profitability
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Deep scientific pedigree including Technical Advisory Committee with world-renowned
scientists
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1 Wohler’s Report 2020
2 CSIRO study of Cold Spray vs Electroplating
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Titomic Limited 3/270 Ferntree Gully Road, Notting Hill, Victoria 3168, Australia PO BOX 225, Mount Waverley, Victoria 3149, Australia [email protected] | titomic.com