Takeoff for Structural Monitoring Systems: Shares surge ~55% on US approval for its tech to detect aircraft cracks
Investors sent shares in Structural Monitoring Systems (ASX:SMN) soaring more than ~50% today, after the company announced clearance by the US Federal Aviation Authority (FAA) for their sensor technology that detects cracks in aircraft.
The FAA has granted a Supplemental Type Certification (STC) approval for using SMN’s CVM sensor technology on the B737-800 Intelsat (Gogo) Wi-Fi antenna support structure inspection.
The long-awaited FAA certification essentially will enable B737-800 operators to perform inspections using the CVM sensors in lieu of handheld Eddy Current probes, eliminating requirements to remove overhead ceiling panels, pneumatic ducting and insulation blankets.
SMN said the approval marks an “extraordinary milestone in aviation history, the first-ever in the world regulatory agency approved sensor technology validated and certified for detecting critical structural cracks on aircraft”.
The certification is expected to reduce maintenance operating costs for the industry. Inspections using the CVM product to provide real-time monitoring for crack initiation and/or propagation on aircraft structures can be performed at the gate with an impressive turn-around of ~30 minutes.
It also marks a major milestone to global commercialisation of CVM, with the company to “re-engage with the major US airlines who indicated strong interest in CVM technology to better understand their current fleet plans and maintenance requirements going forward.”
The company the STC approval establishes a basis for certifying additional inspection applications beyond the Wi-Fi antenna structure. Its revenue model goal for SMS remains to provide point-of-sales and to provide licensing agreements for use of the latest equipment (PM200).
For the immediate future, the company will focus on working with airlines who have Intelsat (Gogo) 2Ku Wi-Fi antennas installed. SMN is working with Boeing and Delta Air Lines in pursuing an approval for use of CVM sensors for the B737 Aft Pressure Bulkhead inspection requirements, while talks will be stepped up with Airbus and Embraer.
“We will initiate contact with third party engineering firms to advise them of the FAA approval, which will provide them an opportunity to incorporate CVM into their new modifications or designs,” the company said.
While shareholders may be relishing in today’s surge, its been a bumpy ride for long-term holders of the stock. SMN has been in and out of trading halts and even lost a legal fight with Tulip Bay Pty Ltd.
On November 30, 2021 SMN disclosed that the arbitrator had ruled in favour of Tulip Bay with the company to pay a claim for royalties amounting to $561,865 . The claim related to the sale of the CVM technology to SMN.
The company has also completed capital raises and is still to return a positive cash flow with a net profit of -$2 million.
While the stock has risen ~146% in the past year, it is still down ~39% over 5 years, where it peaked at ~$1.88 in August 2017. For investors though the FAA backing may be just what is needed to get it back up in the air.