ARXS: Purpose-Built Industrial Compounder; Initiate Overweight

研报英文原文证据摘录

ARXS: Purpose-Built Industrial Compounder; Initiate Overweight

Arxis, Inc. Equity Research

Investment Summary

ARXS designs and manufactures proprietary engineered components including connectors, bearings,

and capacitors for aerospace, defense, space, and industrial applications. The components that ARXS

produces are typically mission-critical, but represent less than 1% of each total platform (aircraft,

etc.) cost. ARXS products are built upon 67 proprietary technologies, and the company serves 5,000+

customers on 600+ platforms. Management describes its strategy as VCPA: volume, cost, price,

acquisitions, with more focus on volume than price.

ARXS targets LDD+ organic EBITDA growth through HSD organic revenue growth with 50%+

incremental EBITDA margins. Of HSD+ revenue growth, half relates to new business opportunities and

half relates to volume + pricing. ARXS forecasts HSD growth for Defense & Space and Aerospace end

markets, and MSD-HSD growth for Industrial Technology.

ARXS is managed as a decentralized structure with dozens of business units and an M&A-focused

strategy. It was founded in 2019 by Arcline, a growth-oriented private equity firm focused on building

industrial compounders.

We forecast revenue increasing to $2.5B in 2030, a ~9% CAGR (from pro forma 2025). Our forecast

reflects similar HSD organic growth across both Electronic Components and Mechanical Components,

including HSD growth across Defense & Space and Aerospace end markets, MSD-HSD growth for

Industrial Technology, and does not include any future M&A.

Exhibit 1 - Pro Forma Revenue ($M), 2024-30E

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

2021 2022 2023 2024 2025 2026E 2027E 2028E 2029E 2030E

Source: Company reports and Wells Fargo Securities, LLC estimates