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ExOne 2Q16 results ?2
The ExOne conference call has just wrapped up. Management talked
about (cautious) optimism, but is unwilling to provide guidance.
There was really nothing to change my initial take on the
quarter. Though cash increased slightly, that will probably
reverse in the current quarter and EBITDA still negative, though
decreased to negative $1.4M.
The company and business is maturing, and it's good to not see
any further fumbles in operations, but it's still an open question
as to whether sales can out-pace spending. The company is nowhere
near capacity and has had to reduce prices of its consumables. It
has also discontinued some product lines and shuttered its Auburn
facility in order to cut costs. Sales growth in the face of the
continued high operational costs will be the big question going
The high operational costs are necessary because of the shift to
cold hardening phenolic binders that I had already projected.
Adding to that is the introduction of sodium silicate binders, to
enable more environmentally friendly operations. The company will
also have to continue reducing the size of its powders. It has
moved from 60 to 30 micron granules so far, with 5-10 micron sizes
ahead. As a result, R&D spend was up to $1.9M and will have to
remain high or quite possibly increase. This would be fine in the
face of robust demand, but despite management spin, that's
- the 3-year Missile Defense contract will have lumpy revenue recognition, based on milestones, with little or no impact to the bottom line.
- There are still no Exerial sales on the books, and no
projection on revenue recognition for the 4 beta machines that
are in the field. Management talks of automotive interest, but
concedes that is multiple years out.
- Similarly, management talks about penetrating the NIMS industry, but not
in any quantified way.
ExOne has announced its financial results for the second quarter:
This is better than recent reports, but not good enough in my opinion. Guidance is notably absent and will probably come as part of the conference call tomorrow morning. Instead, management continues to highlight the backlog rather than operational losses.
- a loss of 18 cents per share beats by 10 cents
- on revenue of $11.8M, which by beats by $700K.