This is a highly competitive industry where only a few competitors have captured more than 5% of the market (see Table). We don't think there's much room for growth beyond that, though.
In October, the company finished building a second manufacturing facility in St Leonards, Sydney, which increases production capacity from 3,000 units per month to 8,000, and there's room to expand by 25% if staff work additional shifts.Īll up, the company can handle $100-180m of sales. Management hasn't disclosed its long-term sales targets, but we can get a sense by looking at recent capacity additions. On that scale, CleanSpace has a market share of less than 3%, but with its improved design and ultra-lightweight models, we think it can grow its market share for some time. Still, it's a decent market worth US$1.5-2.5bn on a sustainable basis. We also need to make an adjustment for management's inclusion of disposable and non-disposable respirators in its estimate of market size because the company is focused on the latter. We think that's probably on the high side - 2020 has been an unusual year, after all - so a modest contraction in 2022 and beyond seems likely. Capacity boostĪs of 2020, the market for air-purifying respirators is worth around US$6.3bn by management's estimates. Gross margins have risen from 68% to 74% this year and they should continue to increase as sales grow. That's why 2020 was such a landmark year for the company - it encouraged rapid adoption of its respirators, which will continue to generate sales over several years.ĬleanSpace's installed base of respirators has swelled to more than 70,000 across 1,000 different customers, with more than half being fitted over the past 12 months - the company's sales have grown from $8m to $53m since 2018. Historically, around 45% of revenue generated by a respirator sale is from consumables and services for every $1,000 respirator the company sells, it can expect $100-200 more in each of the next 5-7 years. As the installed base of respirators grows, so too does the proportion of recurring earnings from consumables, repairs and accessories. Service businessĬleanSpace's best quality, however, is its 'razor and blade' business model - the respirators themselves are sold relatively cheaply at around $1,000-2,000 a piece most of the money is made from the ongoing sale of high-margin consumables, such as mask and filter replacements, padding and adapters. Growth was slow for the company's first decade, but it eventually nailed its respirator design - the 'CleanSpace EX' respirator won the Injury and Disease Prevention category at the 2018 Edison Awards, thanks to its higher level of protection and lighter weight than existing products.
Management spotted the opportunity to create a light-weight respirator for industrial uses and went about building it. The company was founded in 2009 by a team of senior designers and engineers who previously worked at ResMed. The company's products purify the air of pathogens and particles as you might imagine, they've been selling like hotcakes this year. First, a bit of background: CleanSpace makes and sells respirators and masks for healthcare and industrial applications.
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