seeking alpha Q&A article:
How Small Cap 3-D Helps Investors Find Alpha: A Conversation With Tinkerine's EVP And CFO, Martin Burian
Oct. 21, 2014 11:08 AM ET | 1 comment | About: Tinkerine Studios Ltd. (TKSTF)
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
Desktop technology is the key to expanded yield in the 3-D printing industry.
Alpha is available to investors if small-cap companies have a plan for market expansion.
Historic results do not necessarily factor when it comes to the 3-D printing sector because of the growth rates the industry is currently experiencing.
Martin Burian, EVP & CFO of Tinkerine (CVE: TTD), (OTCPK:TKSTF) has over eighteen years of investment banking experience in Canada with Haywood Securities, Bolder Investment Partners and Canaccord Capital. Burian has a wealth of knowledge and expertise in ?nance, business planning and execution for growth companies. As such, he is a CPA-CA and a Chartered Business Valuator and serves on the boards of several public companies.
Burian's focus has been on small and midcap companies, particularly helping growth companies obtain equity financing. The first seven years of his career, Burian was with KPMG initially in audit and accounting and then in the Firm's M&A advisory services. After KPMG, he joined a client company as its CFO and grew with it for two years including taking it public.
He has come full circle, having left investment banking to find himself back in the corporate development side. Tinkerine Studios is the first company he joined in June of 2013, helping the company to raise capital. When the Company went public in April of 2014 on the TSX Venture Exchange he became CFO.
Mike: What is the range for topline growth an investor can expect from your business strategy over the next four quarters?
Martin: Our objective is to achieve an annualized run rate of $5 million in sales by Q4 2015. We see an opportunity for our Company to achieve sales of $30 to $50 million in approximately three years by getting to a three percent to five percent share of the desktop 3-D printer market.
Mike: How do the current year-over-year results reflect, or not, the Tinkerine's success?
Martin: In Tinkerine's case historical operating results are not a good guide to our probable future results. We have just launched our flagship model 3-D printer, the Ditto Pro, over the past two months and our online education content. The latter, for which a pilot starts on October 27th, will see a commercial roll out by the second quarter of 2015. These two factors will make revenue over the coming quarters very different from the past.
Mike: How long do you foresee returns in the 3-D sector in general remaining in the 30 percent range?
Martin: We tend to agree with analysts that the whole 3-D printing sector, industrial and desktop, will continue to grow in the range of 30 percent a year. Within this our desktop sector has been growing 60 percent to 100 percent a year; and we believe 60 percent to 80 percent growth is sustainable, as this technology is increasingly implemented by schools, universities and technical colleges and "prosumers" - professional users like architects, engineers, product designers and artists. The wild card is if there were mass consumer adoption for general home use, then desktop growth rates would really skyrocket.
Mike: Are there any partnerships that the Tinkerine hopes to capitalize on in the future and--are these on the software, hardware or materials?
Martin: Yes, in early September we signed a MOU with Softbank (OTCPK:SFTBF) Commerce Korea Corp to be our master distributor for printers and education content in the Asia Pacific region, starting with Korea. This partnership should see a full roll out in 2015. Looking forward, we have a number of content partnerships discussions under way with large education focused companies and active dialogue with software companies, as well our on-going internal software development efforts. On the material side of things we have some developments that should be ready for announcement in the coming months.
Mike: What do you anticipate will differentiate Tinkerine from your competitors with regards to balance sheet objectives?
Martin: Tinkerine is publicly listed company and, beyond Stratasys (NASDAQ:SSYS) and 3D Systems Corp. (NYSE:DDD), most of our competitors are not. We have a supportive core of institutional shareholders and have access to expansion capital as our business grows.
Mike: How has your investor strategy helped grow Tinkerine thus far?
Martin: We secured investment from several tech and institutional investors, who liked our business strategy of building out an entire 3-D printing ecosystem. Our focus and commitment to education and online teacher training also resonated with them, and provides Tinkerine with a significant differentiation and advantage over competitors.
Mike: How does the Company's business strategy compare to Stratasys, Ltd. , Autodesk, Inc. (NASDAQ:ADSK) and/or 3D Systems Corporation?
Martin: These companies each have multi-billion dollar market caps. Autodesk is a software company that makes CAD, drafting and design programs, including several for 3 dimensional object design and drafting - Autodesk's applications are complementary to us, not competitive. Stratasys and 3D Systems Corp., are primarily industrial 3-DP companies with approx. 15 percent of their business coming from the desktop segment. Tinkerine differentiates itself from Stratasys and 3D Systems Corp. by being a pure play on the desktop segment and having a focus on edtech through our online education offering.
Thank you.
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