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ExOne Slowly Approaching an Inflection Point ?6

11:04 17-Mar-15


The biggest takeaway from the conference call is that ExOne is working toward an inflection point.  While research & development will continue, it has achieved the goals that were projected to make the company viable on an ongoing basis.  Capacity build out has also been mostly completed, so expenses will level and begin to taper.  ExOne has pursued a "build it and they will come" strategy.  They've done the first part, the second remains to be seen, but management mentioned that if there is not progress they will curtail spending appropriately.

Although business in the states was good, the global stage seems to be working against ExOne to some degree.  The company took a small currency-related hit, largely from the collapse of the ruble, in the last quarter and that effect is likely to intensify in the current quarter.  Additionally, guidance still includes some Russian customers, who are currently clear of sanctions, but Putin's actions and a soft European market bear watching.  On the brighter side, Japan may rebound as policy shifts back in favor of using ExOne as a supplier.

Domestically, management reports that the Sikorsky project, where ExOne previously made costly mistakes, is proceeding to its second phase.  The project is not yet in production, which is when the real revenue would come, but the customer is happy.  New government projects are being eyed, with two similar collaborations in the works.  Similarly, color was given that 5 customers are looking at becoming repeat buyers and revenue is expected shift back towards machines (from service centers) in 2015.

The overall impression is that the technology has progressed and is working fine.  The one exception to this is that I would expect further advancement in machines (as opposed to materials or processes) over the coming year or more.  The recently introduced Exerial machine is a huge step forward, but clearly not the end of the line.  ExOne continues to see seasonal weighting of sales toward year-end.  Given this, global headwinds, and management's inability to forecast so far, I continue to think there's plenty of time to pick an entry point for those that are inclined towards high risk/reward propositions.