ExOne's Year Remains 'Back-End Loaded,' Brean Capital Says

In a report published Monday, Brean Capital analyst Ananda Baruah maintained a Hold rating on

, after the company reported soft March quarter results. ExOne reported 1Q revenues and EPS of $6.8M and ($0.53) vs. Street estimates of $8.1M and ($0.29), respectively. The shortfall was a result of the company's revenue recognition policy which calls for recording revenues only upon installation acceptance. ExOne reaffirmed its FY15 revenue guidance of $58M-$66M. "…if XONE can execute to its revenue guidance (30% - 50%) through '15, predicated on the adoption of new higher ASP production products and on the ongoing adoption of new customer programs, it will have strong momentum into '16 where it can put together a consistent year of both accelerating revenue growth and material margin expansion," analyst Ananda Baruah mentioned. The company's cost structure, which ramped significantly in 2014, is expected to stabilize in 2015. "XONE stands to see additional cash flows in the upcoming quarters due to a material reduction in capital expenditures. The company predicts it will reduce CapEx by about 75% year over year because of the expansions they added onto their facilities last year. This additional cash flow can be used to help further research and development," Baruah added. Increased cash flows will allow the company to write more operating leases and grow in the secondary market. In the report Brean Capital noted "…we're looking forward to seeing ExOne's release of their new Exerial machine. The printing system offers multiple industrial stations along with continuous production and processing."