Company Spotlights / Market Commentary

How ALUULA’s Breakthrough is Disrupting a Multi-Billion Dollar Market

  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

Edge is publishing this content on behalf of the Company and is compensated for investor relations services.

ALUULA Composites (TSXV: AUUA) is the brand you may not yet know about, but soon will. The Canadian material manufacturer creates some of the lightest, most durable, and high-performing technical fabrics in the world.

Already a leader in innovation in the windsports industry, ALUULA is branching out into the outdoor gear industry, partnering with big brands in spaces such as aerospace, backpacking, airships, footwear, rafting, harnesses, cycling, and apparel.

The secret to ALUULA’s success in so many different industries lies in its materials’ ability to bond to itself, zippers, and seam tapes without the need for any glues or sewing. This results in a finished product that is super lightweight and durable. What’s more, ALUULA materials are heat-weldable, waterproof, airtight, UV-resistant, and recycle-ready, making them the ideal fit for so many products while also offering a more environmentally sustainable solution.

On October 31, 2023, ALUULA announced a collaboration with Arc’teryx Equipment, globally renowned for technical high-performance outerwear and equipment, to evolve Arc’teryx’s product offering using new and innovative ultralight fabrics.

Amer Sports, owner of Arc’teryx, recently announced their latest financials, and by brand segment, revenues for technical apparel, were up 45 percent year-over-year in 2023. As an industry leader, it is nearly an $8 billion company, and their decision to work with ALUULA only underscores the massive potential of ALUULA, which in 2023, saw revenue jump 168% to $7.7 million!

Given that this is only the start of what ALUULA plans to achieve, you can be certain that this company has plenty of potential moving forward. With that said, let’s explore what this innovative composite materials company has to offer.

ALUULA’s Humble Beginnings

ALUULA is a Canadian brand, based and manufactured on Vancouver Island by a group of experienced chemists and engineers who share a common passion for exploring the outdoors.

This all started in 1992 when ALUULA founder and CEO Richard Myerscough stepped away from a highly successful windsurfing career (including several world titles, a Pan Am Games medal, and the opportunity to represent Canada in the 1988 Olympics in Seoul, Korea) to kickstart his entrepreneurial journey.

CEO Richard Myerscough at the Olympics | Ocean Rodeo

First with Whites Manufacturing, a drysuit innovator, Richard built an industry-leading business offering a variety of drysuits for sport, commercial marine, and survival and military applications. This initial venture was highly successful and eventually led to The Aqualung Group acquiring Whites back in 2010.

But this was only the beginning as he would soon launch Ocean Rodeo, an offshoot of Whites targeting the then-new sport of kiteboarding, in 2001. Originally, Ocean Rodeo focused on delivering high-quality drysuits for the watersport market. However, the company quickly expanded in 2002 to include kites, bars, and boards into its product mix after successfully recruiting Head of Design, Ross Harrington (a champion windsurfer in his own right) to the team.

Around this time, innovation in windsport materials had hit a standstill as designs and safety systems matured. This lack of variation and modernization, in a sport that both men deeply cared for, left them determined to find a solution.

Through trial and error, the proprietary manufacturing process that produced ALUULA’s first mono-polymer textile was born. This was a game changer as it meant that they could significantly reduce the weight of their kites while offering superior durability and strength. More importantly, it made Ocean Rodeo the first and only 100% recyclable windsports product in the world.

In just two years since its discovery, Ocean Rodeo launched a first-of-its-kind surfing kite that was half the weight of the competition’s. This sent shockwaves through the market as Ocean Rodeo suddenly emerged as a key player in the industry.

So where does ALUULA fit into the picture?

The team recognized the value of the material they had created and the diverse range of products that it could be applied to. They knew that there was a great opportunity to partner with other brands to improve their product development.

This led to the creation of ALUULA Composites, a company driven by science and chemistry, and focused on delivering superior products that overcome the challenges faced by traditional gear fabrics.

Now a globally recognized brand, ALUULA is proving to be a world-class business despite trading at a market value of $36.3 million. Not only have they demonstrated that they can deliver a superior product but also that the team is determined to take the lead in product development across many markets.

This is only the beginning for this company and you better believe we are keeping a close watch. With that being said, there is much more to ALUULA’s story than meets the eye. Let’s explore the business a little deeper to help you understand it all.

ALUULA’s Proprietary Tech

ALUULA’s composites use a patented fusion technology that bonds materials at the molecular level, without the use of heavy glues or fumes. This process creates fabrics and films that are eight times stronger than steel and significantly lighter than comparable products while being UV-resistant, waterproof, and recycle-ready.

Because ALUULA textiles are mono-polymers and made without the use of adhesives, they can be recycled at the end of their useful life. This is different from most manufacturers in the world whose glues and solvents cause their composites to end up in a landfill.

I will let the results speak for themselves…

ALUULA’s Market Opportunity

One of the most prominent things that stands out about ALUULA is its versatility. Though the company started as a windsport material manufacturer, they quickly discovered that their composites were useful across a long list of markets and applications.

As mentioned before, ALUULA is working with various brands that are building and testing sample products in unique ways. A few of the names include Arc’teryx, Thin Red Line Aerospace, Naish, DuoTone, Durston, Black Diamond, and Rockgeist, with more to announce as products are commercialized. This level of customization is a major value-add for any business looking to create materials that are lighter, stronger, more durable, and more sustainable than the competition.

ALUULA is so confident in its technology that it comfortably writes, “Bring us your most critical demands and let us try to dial in a custom material,” on its website.

With that said, the company remains focused on four primary markets: Windsport, Outdoors, Sailing, and Aerospace. Together, these markets have a combined Total Addressable Market (TAM) of $430 billion and a Serviceable Obtainable Market (SOM) of $750 million, annually.

As you can see, ALUULA has a major runway for growth and is in a prime position to capitalize on its competitive advantage. Keep in mind that these are just four of the many markets the company will eventually serve; ALUULA mentions the industrial, sports, and defense markets to name a few. If it can execute its objectives, you should expect this business to generate hundreds of millions of dollars in revenue per year in the foreseeable future.

ALUULA’s Business Model

It is one thing to tout the superiority of a product; it is another to demonstrate its growth and profitability. Fundamentally speaking, two things stand out about ALUULA’s operations:

First, ALUULA Composites describes itself as an ingredient brand, similar to GORE-TEX™, Intel®, or SHIMANO™. What this means is that ALUULA is co-branded on the products and marketing materials of the brands it serves. This allows the company to generate significant exposure at no additional cost. By simply tying itself to the world’s most recognizable brands, in a variety of industries, ALUULA has the potential to increase its market share and brand awareness quicker than it otherwise would.

Second, ALUULA has a simple business model with multiple revenue streams and low operating expenses. The company generates revenue by incorporating its composite materials into a variety of products across multiple brands. From a cost standpoint, ALUULA has an advantage over the competition in that its operations are extremely efficient and scalable.

Combined, these revenue streams and cost advantages are highly important for a company of its size, allowing it to scale effectively. With this much potential, there seems to be a significant runway for growth and plenty of opportunities ahead.

Wrapping Up

Though it’s still early in its development, it is clear that ALUULA Composites (TSXV: AUUA) is on the right track to success. If you look at its latest financial report, the company grew revenue by 168% to $7,347,300 in FY 2023, onboarded six new windsport brands, developed additional products like ALUULA Durlyte® and ALUULA Graflyte™, and a whole lot more.

In just four years, the company went from an unknown name to one of the leading players in the market. This has led to multiple podium appearances in windsport across the world, as kites and wings made with ALUULA dominated the competition in recent years.

Now, the company is targeting several new markets, partnering with new brands across varying industries who will be commercializing their products made with ALUULA.

If you’d like to learn more about ALUULA, its one-of-a-kind products, clients, and future growth opportunities, check out its website by clicking the button below.

Learn More About ALUULA Composites, CLICK HERE.

Disclosure/Disclaimer:

We are not brokers, investment, or financial advisers; you should not rely on the information herein as investment advice. If you are seeking personalized investment advice, please contact a qualified and registered broker, investment adviser, or financial adviser. You should not make any investment decisions based on our communications. Our stock profiles are intended to highlight certain companies for YOUR further investigation; they are NOT recommendations. The securities issued by the companies we profile should be considered high risk and, if you do invest, you may lose your entire investment. Edge Investments and its owners are compensated by ALUULA for Investor Relations Services. Edge Investments and its owners reserve the right to buy and sell shares in ALUULA without further notice, which may impact the share price. Please do your research before investing, including reading the companies’ public filings, press releases, and risk disclosures. The company provided information in this profile, extracted from public filings, company websites, and other publicly available sources. We believe the sources and information are accurate and reliable but we cannot guarantee it. The commentary and opinions in this article are our own, so please do your research.

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  • Declan O’Flaherty

    Declan holds a Bachelor of Commerce from the University of Alberta and has over 4 years of experience investing in financial markets. As a fundamental investor, Declan embraces the investment principles of Warren Buffett and his disciples. This puts a focus on finding businesses with healthy financials, competent and accountable leader, enduring competitive advantages, and those that are selling at discount to what they are worth.

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