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ASX:FBR
FBR Ltd
Investment Summary
The fund managers believe that FBR Ltd has made significant strides in its operations, particularly through successful milestones such as the completion of its Demonstration Program with CRH Ventures. In their opinion, the program's revenue potential could exceed US$1.1B annually, with target gross margins above 50%. However, despite achieving these critical milestones and receiving US$2m in milestone payments, the company has faced challenges due to a lack of formal notification from CRH regarding the joint venture option, likely influenced by leadership changes within CRH. As a result, FBR must now seek alternative partnerships to leverage its technology in the US market, which the fund managers view as a disappointing setback. Nonetheless, they see potential for significant value creation for shareholders if these hurdles are overcome and partnerships can be established. The ongoing support from manufacturing partner Liebherr is noted as a positive factor in navigating future opportunities.
Commentary From The Managers
Saville Capital
28 Feb 2025
$0.02
- Saville Capital highlights the completion of the Demonstration Program with positive feedback from PulteGroup.
- FBR did not receive formal notice from CRH regarding the JV option, which is seen as a disappointment.
- The introduction of a new CEO at CRH may have influenced its decision not to proceed with the joint venture.
- FBR is now tasked with seeking other potential partners within the US building sector.
- Despite setbacks, Liebherr remains committed as a manufacturing partner for FBR.
- The search for a new partner will require more time and working capital.
- FBR successfully demonstrated its technology to Samsung Heavy Industries on February 24.
- The demonstration aims to assess the feasibility of applying FBR’s technology in the shipbuilding industry.
- Negotiations for a business agreement between FBR and SHI are set to begin, focusing on joint development and prototyping.
Saville Capital
31 Dec 2024
$0.04
- FBR announced the completion of the Demonstration Program with CRH Ventures in Florida.
- Nine homes were constructed using the Hadrian X® and concrete masonry blocks from CRH Ventures.
- One home was built in a single day, confirmed by independent structural engineers.
- The completion of the program triggers a 45-day period for CRH to exercise an exclusive joint venture option with FBR starting January 2, 2025.
- This option includes a US$400k payment to FBR upon exercise.
- FBR and CRH aim to build additional homes for major US builders outside the program.
- CRH, a major construction materials company, has a market cap of ~US$60B.
- A US$40m rolling loan facility will support the construction of Hadrian X® units once the option is exercised.
- The joint venture plans to execute a binding conditional purchase order for 20 units and has options for more units, subject to metrics.
- Exclusive concrete block supply from CRH subsidiaries will enhance profit sharing from the JV.
- Revenue potential of deploying 300 units at 70% utilisation exceeds US$1.1B annually.
- Target gross margins are expected to exceed 50%.
- Completion of the program has not yet influenced FBR’s share price, possibly due to perceived risks.
- FBR is positioned for significant value creation for shareholders moving forward.
Saville Capital
30 Sept 2024
$0.05
- FBR has launched its US Demonstration Program, achieving a milestone by completing the first home walls in Florida.
- This completion represents the first international build by Hadrian X®.
- Collaboration with New Century USA, a participating builder, showcases the technology's adaptability.
- FBR plans to construct walls for four additional homes for New Century in the Demonstration Program.
- Christopher Alan Homes, another builder in the program, adds credibility as the largest homebuilder in Southwest Florida.
- The Demonstration Program aims to highlight the versatility and compliance of FBR's technology across different home styles.
Saville Capital
31 Aug 2024
$0.04
- FBR raised $12.5m via a placement to fund its working capital during important phases for US JV Option exercise with CRH Ventures.
- Completed a Site Acceptance Test at Fort Myers facility, triggering a US$600k payment, yet stock declined from ~$0.05/share to placement price of $0.038.
- Currently undergoing a US Demonstration Program, constructing five houses with potential for five additional houses funded by CRH Ventures.
- Houses will be certified by an independent structural engineer upon completion.
- Completion will yield US$400k from CRH Ventures and begin a 45-day period for exercising joint venture option for Wall as a Service®.
- Significant event anticipated for FBR upon formation of the joint venture.
Saville Capital
31 July 2024
$0.05
- Saville Capital continues to hold due to FBR's surge on the arrival of Hadrian X® in Florida.
- The surge is viewed as a delayed reaction to earlier positive developments and a capital raising in challenging markets.
- In January, FBR announced a binding suite of agreements for a US Demonstration Program with CRH Ventures Americas, Inc.
- CRH is a major player with a market cap of ~US$55B and is one of the largest construction materials companies globally.
- On exercising the joint venture option, a US$40m rolling loan facility will fund construction of Hadrian X® units.
- Orders for 20 units under a binding conditional purchase order are anticipated, with additional conditions for further orders.
- Revenue potential of 300 units at 70% utilization exceeds US$1.1B annually, with target gross margins over 50%.
- FBR may need to raise additional capital to fund operations during the Demonstration Program.
- Upon clearing financial hurdles and exercising the JV Option, FBR's value could increase significantly from current levels.
Saville Capital
28 Feb 2024
$0.02
- FBR continues to trade below its recent capital raise price.
- Successful completion of the Factory Acceptance Test for CRH has triggered a second milestone payment of US$800k.
- The test structure achieved an effective lay rate of 330 blocks/hour, exceeding the required 285 blocks/hour.
- Preparations are underway to ship the Hadrian X® to Florida for the Site Acceptance Test.
- This will precede a 5 – 10 house Demonstration Program.
- FBR’s Hadrian X® will be serviced at Liebherr’s facilities in Florida, facilitating knowledge transfer.
- This collaboration aims to accelerate manufacturing ramp up following a long-term Manufacturing and Commercialisation Agreement.
Saville Capital
31 Jan 2024
$0.02
- FBR has executed a binding suite of agreements for a US Demonstration Program in Florida to construct external walls of 5-10 single storey houses.
- Partnership established with CRH Ventures Americas, Inc., which is part of a NYSE-listed company with a market cap of ~US$50B.
- CRH is one of the largest construction materials companies globally, with operations in the US, Europe, and Australia.
- Upon exercising the exclusive Option, a US$40m rolling loan facility will be set up to fund construction of Hadrian X® units.
- Initial binding conditional purchase order for 20 units will be executed, with potential additional orders based on utilisation and gross margin metrics.
- CRH subsidiaries will supply concrete blocks exclusively to the US joint venture, sharing profits as units are hired out.
- The revenue potential from deploying 300 units at 70% utilisation is estimated at over US$1.1B annually, with target gross margins over 50%.
- FBR needed to raise approximately $12m to continue operations amid share price decline due to capital raise challenges.
- Saville Capital continues to hold investments in FBR due to the long-term potential of these agreements and revenue generation capabilities.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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