FBR Ltd (ASX: FBR) shares are having a terrible start to the week.
In morning trade, the ASX robotics stock is down 49% to 1.9 cents.
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Why is this ASX robotics stock crashing down to earth?
Investors have been rushing to the exits this morning after the company released a disappointing update.
FBR designs, develops, and builds dynamically stabilised robots to address global needs in a safer, more efficient and more sustainable way. These robots are designed to work outdoors using the company's core Dynamic Stabilisation Technology (DST).
The first application of DST is with Hadrian X. It is a bricklaying robot that the company claims to build structural walls faster, safer, more accurately and with less wastage than traditional manual methods. Hadrian X provides Wall as a Service, FBR's commercial offering, to builders on demand.
As a reminder, the ASX robotics stock has been working towards a launch in the United States over the past 12 months.
This has seen the company team up with CRH Ventures in Florida for a demonstration program. The program saw FBR construct the external walls of nine homes, with one of the homes being built in a single day. Each structure was confirmed by independent structural engineers to meet applicable building standards.
Investors were excited by this news as the two parties were looking to form a joint venture if it went well. This joint venture would be very lucrative for the ASX robotics stock.
It notes that upon commencement of the joint venture, there was a binding conditional purchase order for 20 Hadrian X construction robots for US$2 million per unit. There would then be further purchases once defined metrics relating to gross margin and fleet utilisation were achieved.
After which, the company advised that after the supply of the first 100 robots, the joint venture would be granted options to purchase 200 more units at US$2.5 million+ each.
This means 300 units in total with an estimated combined value of US$700 million or A$1.1 billion. Clearly this joint venture would have been a game-changer for the company.
Joint venture talks end
This morning, FBR revealed that CRH Ventures has not exercised its option to form a joint venture by the deadline of 16 February. As a result, the option has expired and FBR is now on its own.
However, it is worth noting that while this is a bitter blow, it may not be the end of the story.
Management advised that it has been progressing negotiations with third parties in connection with Hadrian X financing options as an alternative arrangement to the financing that would have been provided for a period of time under a joint venture.
It has also engaged with governments in Australia and a number of state governments in the United States to canvas support for its robotic construction technology, and these discussions can now progress to the next stage.
FBR's managing director and CEO, Mike Pivac, said:
We have successfully introduced our technology to one of the largest and most important markets in the world, building 10 code-compliant house structures in suburban developments in Florida, United States. We achieved significant milestones in our Demonstration Program including the completion of a house structure in a single workday with a three-person crew. Our activities to date have opened up excellent future opportunities for FBR in the United States, and very importantly have confirmed the certification and viability of our wall system, creating go to market routes with major builders and proving out the commercial model.
FBR is now unrestricted in its dealings and operations in the United States and is engaged in discussions with builders, counties and industry incumbents, not just in Florida but across the United States, including in California. FBR will provide further updates on its United States operations in the coming weeks, including its transition to the Liebherr facility in Miami as an operating base.
