Groupe Gorge 3D Printing Revenue Analysis

One new entrant into the 3D Printing space last year was Groupe Gorge. The company trades on the Euronext Paris exchange (EPA:GOE) and on the US OTC market (OTCMKTS:GGRGF). Groupe Gorge had €208 million in revenues for 2012 from three business lines. Revenue breakdown from these three lines for 2012 are Industrial Robotics (47%), Industry Project Services (37%), and Protection in Nuclear Environments (16%). 64% of 2012 revenues came from France. Gorge has long-term debt of €40 million and cash of €49 million. Gorge had a loss of €2.61 million in 2012 versus a gain of €2.61 million a year earlier.

In May of 2013, Groupe Gorge bought 88% of Phidias Technologies for €4.8 million. At this time, Phidias had one employee, the founder Andre-Luc Allanic who was a formal principal scientist at 3D Systems. Groupe Gorge then renamed the company to Prodways and hired 10 employees for this new product line.

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Prodways has three printers on offer; the M350, the K20 for composite parts, and the D35 for biomedical applications. This line of printers uses MOVINGLight, Prodways proprietary technology, which is claimed to operate at up to 10 times faster than market standards and at a high-resolution throughput that can produce hundreds of tiny parts in just a few hours at a resolution of less than 35-µm.

Potential Revenue Analysis

Prodways sold 17 machines in the past three years and in 2012 had €1 million in sales. In an attempt to derive consumables revenue, we will assume no printers were sold in 2012 and that this €1 million in revenue was solely from consumables/servicing/etc. This means each installed printer generated €58,823 in revenue in 2012 (1,000,000 / 17). Assuming an average printer sale price of €350,000 gives us consumables revenue per year of 16% of the sales price for each printer or €58,823. We will assume also that Prodways can build and sell 10 machines in 2014 and then increase the number of machines produced by 25% over the next 5 years. Using these numbers we can perform a basic estimate of 3D printing revenues for Groupe Gorge over the next 5 years as follows:

Groupe_Gorge_Revenue_Analysis
All of the above amounts are in Euro millions

Given our previous assumptions, in 5 years the Prodways 3D printer line will only contribute around 7% of total revenue for Groupe Gorge given 2012 revenues remain constant. If we then assume that consumables revenues increases to 30% of each printer’s purchase price per year then the overall revenue contribution moves to around 9%. If we then also assume Groupe Gorge can increase the number of printers produced by 50% each year, the overall revenue contribution moves to 16%. Both of these additional assumptions would be very optimistic given the Company was acquired with one employee and 2012 revenues of €1 million.

Conclusion

In the past 3 months, Groupe Gorge’s stock price has increased over 128%. It is difficult to justify such an increase with so many variables left unknown. Hopefully, Groupe George will segment their 3D printing venture into a separate business line in their coming financials so investors have some transparency into how much progress the company will make with their move into 3D printing. Of course, analyzing revenue is a very simple way to assess the potential of 3D printing for Groupe Gorge, as profitability is what shareholders are really concerned about.

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