The main 3D printing companies, 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS), recently hit all-time highs so naturally this would be a great time for a related IPO. Industrial 3D printing firm ExOne Co (NASDAQ:XONE) plans to join the party this week. A major surprise popped up when reading the prospectus. The company harkens back to the technology IPOs of the late 1990s when a stock had as much hope as hype.
The company focuses on manufacturing and selling 3D printing machines for industrial customers and printing products to specification for customers using in-house 3D printing machines. The company has Production Service Centers (PSCs) located in the United States, Germany, and Japan. It also supplies consumables and replacement parts for the machines to print products.
The major difference is that the company lacks size making it uniquely different from the social media IPOs and even other technology firms that recently hit public markets with maxed out revenue growth and billion dollar valuations. The positives are that investors have the opportunity to participate in the growth of this stock that has lately been lacking in typical stocks going public.
The company plans to raise $75M by offering 5.48M shares, which includes 483K shares exercisable for over-allotment to the underwriters. The offering is expected to price in a range between $14 to $16. At the midpoint of that range, the stock would have a valuation of $192M.
The company will only have 13M shares outstanding even after offering 42% of the outstanding shares. A very refreshing IPO from the social media stocks that went public at market caps in the billions with only a limited supply of stock available to the public.
The proceeds will be used to expand operations with a primary focus on tripling the PSCs to 15 by 2015.
The company isn’t much yet
The company focuses on industrial 3D printing machines with large build chambers. Though a relatively small company it does have over 80 machines installed around the world. The company uses a binder jetting process that allows for larger machines that can be used on the factory floor.
ExOne obtains roughly 42% of revenue from machines and 58% from the PSCs and consumables. The revenue base was only $15.3M in 2011 and $15.9M in the first 9 months of 2012. The CFO announced on the roadshow that the Q4 revenue spiked to $12M on the back of the 8 machines sold in that quarter or double the whole total for 2011. In total though, the company doubled revenue in 2012 yet it only amounted to $30M.
Based on the recent technology IPOs for the likes of Palo Alto Networks Inc (NYSE:PANW) or even Ruckus Wireless Inc (NYSE:RKUS), the company offers the retail investors access to a high growth company before all the gains were made. As an example, Palo Alto went public at over $4B and traded at over 10x revenue. Ruckus priced at a valuation of nearly $1B, both limiting the potential gains left for the retail investor.
Not surprisingly, Palo Alto Networks hasn’t provided any gains for investors in the aftermarket while Ruckus has surged to a market cap of $1.6B. An investor in ExOne would see a gain of 700% to reach a similar size.