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ExOne conference call notes -5

09:47 10-Nov-15


Perhaps the most important part of this morning's conference call was the silence, as CEO started the call on mute.  He then went on for well over 20 minutes to tell us, again, what we already know: that ExOne has received money for machines but not shipped them and/or completed the installation and qualification process.  Currency also impacted the results, and this speaks to my general market warnings.  Nonetheless, I put it the way I have because the major issue for XONE going forward is likely to be management credibility. 

This is material for investors.  Both ERII and this morning, OCAT, are examples of stocks where the technology eventually won out, but not before investors saw each stock drop to  a fraction of their eventual prices due to issues on the business side.  If management can not estimate conservatively and handle internal matters, such as ERP, that can matter almost as much as the actual product.  Thus when Rockwell says something like, "I never contemplated how much time I could spend thinking about revenue recognition", it is a sign that they don't know how to run a publicly run company.  This matters, and analysts were openly challenging on the point.  I do like that management is not engaging in gimmicks and remaining focused on the technology, but the business details matter too.

That said, the latest management guidance, just in case anyone still believes it, is for $40M in sales for the final 3 months of year.  12-16 machines are expected to ship in the fourth quarter, but the associated revenue will not necessarily be recognized.  None of those are Exerial, the company's most expensive machines.  Management stated that it does not intend to draw on its newly arranged credit facility; so that, at least, is positive.