ExOne (NASDAQ: XONE), a manufacturer of industrial sand and metal 3D printers, raised over $150M in 2013, benefiting from the significant interest from investors in 3D printing technology. Since then, ExOne’s cash position has sharply decreased to $15-20M at the end of 2015. XONE share price has followed the same trajectory as its peer’s with a near 10x reduction since the 2013 peak.
Focus on Metal and Production 3D Printers
ExOne’s binder jetting technology is centered around larger industrial 3D printers that can produce metal parts (stainless steel, bronze, iron…) and industrial series production. It’s a mid-size 3D printing player founded in 2005 as a spin-off of Extrude Hone Corporation. Annual sales have plateaued since 2013 at $40M. Services represent over two-thirds of the sales, a higher than usual percentage.
CEO is Further Investing to help Grow the Business
ExOne’s cash position depleted significantly in 2014 and 2015 to a level of less than $20M. In January 2016, ExOne decided to go on the road to raise a further $50M. Considering the volatility of the markets, it’s good news for the company that the CEO has deep pockets and full trust in the capacity for ExOne to reach profitability soon. S. Kent Rockwell, CEO, invested 13M$ on the 11th of January to bring his shareholding just under 30%. He commented, “We believe customers, globally, are adopting our 3D printing technology and transforming their manufacturing processes at an accelerating rate, which is requiring ExOne to have the availability of additional working capital. I expect that these funds will provide the Company proper liquidity to meet our 2016 objectives of growth and profitable performance.”
ExOne Needs More Capital and… a Better Margin
It’s always nice to see a CEO investing further into their own business. The size of S. Kent Rockwell’s new investment in ExOne coupled with his very significant shareholding are a very strong message to the investment community. Nevertheless, ExOne is facing significant challenges: the share of systems revenues (revenues from the sale of 3D printers) is low, revenues have plateaued at $40M since 2013, and the gross margin is low, at under 20%. To bring their margins in line with its peers, at over 40%, ExOne will need to significantly increase the share of systems revenues, and it needs to do it quickly as cash consumption is significant at over $20M a year. Following Rockwell’s investment, the company has enough cash to finance its operations in 2016. Failing to raise more cash in the next 6 months will certainly push the CEO to look for a buyer…