The ExOne Company (XONE)

[Minding]

ExOne's Product Development And Pricing Strategies Are Catalysts

From http://www.gurufocus.com/news/307682/exones-product-development-and-pricing-strategies-are-catalysts

ExOne (XONE) has implemented some key pricing strategies to expand large volume orders in its PSCs. These innovative large-frame orders are believed to enhance both the company’s margins and revenue, going forward.

Promising end markets

The Asian markets looks promising particularly the Chinese market where there are significant pending orders and ExOne has shipped few into China last quarter. However, Japan illustrated poor performance and sold nothing in three quarters due to the fact that the Japanese government financed a program to contend with the X1 machining process and to successfully defend the company’s process.

There’s a declining rate of machine orders for this year, owing to the fact that ExOne is currently shifting these machines into silicate and Phenolic materials instead of just remaining sand and allowing printing for providing several innovative applications for these machines.

ExOne continues to build on its people capacity and has added nearly 100 people since the launch of IPO and year to date. It is also focusing keenly on its R&D activities, on marketing and sales, and on building capacity for enhancing the revenue base.

ExOne is investing significantly to develop into a leading company in all aspects. It aims to achieve ISO certifications, turning it into a quality behemoth. In the quarter itself other two of its US facilities gained ISO certification. By this year end, ExOne expects all five of its U.S. facilities to get certified.

These investments illustrate the robustness of the company’s balance sheet and outline its significant cash flows.

Innovative systems will be catalysts

ExOne plans to release an innovative ERP system in several phases with its initial phase of ERP rollout expected by January 1. The complete rollout is estimated to continue positively through 2015 and perhaps into 2016 for all the modules to get successfully integrated and implemented.

Hence, ExOne is adding considerable needed capacity in Europe. Apart from just adding capacity, ExOne is uniting five single locations into one and thus enhancing the affectivity and efficiency, going forward into 2015.

ExOne has also opened an Italian production sales center and service center. It is currently installing new machines at the facility and has just started to print customer parts. The expansion plans of ExOne in North Huntington are well in progress, and the facility is forecast to become operational prior to the end of the year.

ExOne is primarily centered on investing significantly into both machine technology and materials development.

Considering materials development, ExOne is recently focused on the type of materials that have either extremely poor thermal conductivity or are highly thermally conductive such as ceramics, graphite and carbon.

These materials are believed to be highly suited for the aerospace industry as well as the oil and gas industry, and ExOne is making significant progress in both these industry verticals, going forward.

ExOne has lately developed 3D printed metal holography which leverages a SPL file of the digital picture which can be printed on both sides. This is believed to become a significant business opportunity for ExOne, moving ahead.

These unique and innovative developments put ExOne way ahead of its rapidly growing competition and defines a new path for improved revenue growth and enhanced profitability.

ExOne is focused on machine development as well. It has built a new lab machine in North Huntington which is estimated to start shipping in 2015.

The 3D printing major plans to convert its print platform to allow direct printing of metals and expects to ship its first M Print during the first quarter. Going forward, ExOne targets on shipping the S-Max Plus machine and three other machines during the fourth quarter.

ExOne plans to introduce its series production machine at the GEFA Show in Dusseldorf in June of 2015. This machine is believed to be leveraged for mid-volume production only.

Conclusion

ExOne is strategically employing its capital for developing its infrastructure and facilities. By September end, it has about $45 million cash and almost no debt. These significant investments into its facilities are estimated to get completed by the year end.

Moving ahead into 2015 and beyond, ExOne expects to have free cash in $36 million to $40 million range by the end of 2014, which will give it enough resources to pursue growth.