The 3D industrial printer manufacturer ExOne (XONE, Financial) had a big miss in the third quarter due to delay in the shipment. Its revenue came at $9.6 million against the analysts’ estimates of $15.3 million. Also, its net loss of $0.31 per share was higher than analysts’ estimates of $0.13 per share for the quarter. However, ExOne is ready to ship the order that should possibly make up the loss in the fourth quarter 2014.
Non-Machines segment looks promising…
Looking ahead, ExOne looks good with lots of growth initiatives and turnaround strategies that will drive its growth in the long-run. It is investing in the business and remains quite upbeat on the non-machines sales that are building momentum. It is experiencing tremendous growth in each of the categories of non-machine sales. It expects the non-machine sales to contribute more than 50% to overall sales over time. The non-machine segment is expected to grow at CAGR of 28.3% for next five years. The non-machine sales were up about 40% in the third-quarter 2014.
In addition, ExOne is now able to process large orders with better prices through its production service center or PSC, which is still maturing. It is now able to dictate better terms and orders for its large customers. The non-machine sales have been robust in Europe and United States. Moreover, its new headquarters facility in Germany is nearing completion. This North Huntingdon expansion facility should provide two times additional capacity going. Also, it is expanding its United States R&D facility. The company expects this facility to offer more space for its metals development activities. These investments should certainly drive its growth in the long-run.
Moreover, the company is reassessing Russian sanctions and remains quite confident to crack the deal. This once done should accelerate its non-machine and machine order delivery. Also, it is seeing tremendous growth in Asia particularly in China and Japan. ExOne has recently shipped M Classes into China in the last quarter. Also, the failure of X1 machine in Japan should alleviate sales for its machine in the region.
According to CNBC report, the 3D market is expected to grow 500% in the next five years with CAGR of 45.7%. The size of the global market comprising 3D printer sales, materials and associated services are expected to go past $16.2 billion in 2018 from just $2.5 billion in 2013 while the services and materials are expected to grow $10.8 billion by 2018 from $1.8 billion in 2013 at CAGR of 43.8%.
Furthermore, the company is creating innovative printing platforms. Its new printing platform is capable of direct printing of metals. Its M print and S-Max machines are precisely designed to enable the customers to use inorganic and semi organic binders. The company considers these machines to provide the best binder combination in the testing world, where a lot of applications are being used. ExOne is all set with the initial shipment of S-Max in the fourth-quarter and plans to ship M Print in the first-quarter of 2015.
ExOne is additionally conducting GEFA show in Dusseldorf in June 2015. It will be announcing new series production machines along with automated features. These machines will be used in connection with mid volume production. It is looking forward to GEFA show that should enable the company to accelerate its machine and non-machine sales.
Ending remarks
ExOne is investing in growth that should drive its results in the long run. It considers 2015 a transition year that could reflect some softness in its financial results. It is currently engaged in various development activities. The analysts expect its earnings to grow at CAGR of 56.00% higher than average industry CAGR of 13.95% for the next five years. This indicates tremendous growth for the company. Also, the stock offers better short term return as earnings are expected to grow 56.70% by next year.
Its rival like 3D System (DDD, Financial) and Stratasys (SSYS, Financial) has relatively low CAGR. The analysts expect these companies to grow at CAGR of 21.33% and 23.33% for the next five years.
