ExOne Aims to Grow with New CEO
Michael Molitch-Hou posted on August 29, 2016 |
ExOne CEO Kent Rockwell has stepped down to be replaced by James McCarley.

3D printing stocks have been on a wild ride as, first, hype around the technology pushed stock prices well beyond their perceived value and, later, sent them crashing down as the hype evaporated. While 3D Systems and Stratasys in particular led both of these trends, many other publicly traded 3D printing companies were taken along for the ride.

Among them was ExOne, the Pittsburgh-based manufacturer and service provider of metal, sand and ceramic binder jetting technology. After the company's IPO in 2013, ExOne's stock experienced significant highs, reaching up to nearly $69 per share before falling to below $10. During that time, ExOne Executive Chairman S. Kent Rockwell guided the firm as its CEO until August 19, 2016, when, “effective immediately,” he was replaced by James McCarley as CEO.

The phrase “effective immediately” in the firm’s press release about the leadership change could cause investor fright, but based on ExOne’s recent teleconference on the topic, the decision to replace Rockwell with McCarley as CEO has been in the works for some time. In fact, Rockwell will remain on as executive chairman of the Board of Directors while McCarley leads the company.

The teleconference shed some light on the reasoning behind the transition, while also discussing McCarley's established history in manufacturing and hinting at possible future directions for the company. As a recording of the teleconference will be removed shortly from the ExOne website, some of the insights from the webinar are worth keeping on record here.

ExOne's Technology

ExOne is a manufacturer and service provider of binder jet 3D printers. The firm licenses the same patents for its technology as binder jet manufacturers voxeljet and 3D Systems to produce systems that fuse powders with a binding agent to create 3D objects.

ExOne's 3D printers are divided into two classes: indirect and direct systems. The indirect 3D printers, such as the S-Print, S-Max and S-Max+, use sand to fabricate cores and molds for the sand casting process, which sees them transformed into metal parts. In addition to silica sand, these systems can 3D print with ceramic beads, chromite and zircon.

In contrast, the direct machines, like the M-Print and M-Flex, are meant for manufacturing metal end parts that do not need to undergo a casting process, though they still need to be sintered in a furnace, infiltrated with bronze, or impregnated with epoxy after printing. These systems print with such metals as stainless steel, inconel, iron, cobalt chrome, bonded tungsten and tungsten carbide. They can print soda lime glass as well.

The Exerial 3D printer from ExOne. (Image courtesy of ExOne.)
The Exerial 3D printer from ExOne. (Image courtesy of ExOne.)

Last year, ExOne announced the development of the $1.8 million Exerial machine, a massive 3D printer meant to bring industrial-level productivity to 3D printing. The largest of ExOne's systems, the Exerial has two build chambers, multiple printheads and automation capabilities for 3D printing sand parts continuously or simultaneously.

With locations in the U.S., Europe and Japan, ExOne also provides engineering, consulting, 3D printing and casting services. Recently, the company also won a $1.5 million contract with the U.S. Missile Defense Agency to develop silicon carbide components.

Rockwell Steps Down

Rockwell had led ExOne as CEO and executive chairman since just before the company's IPO. As the firm’s major shareholder, he was key in raising funds for ExOne earlier this year, as he channeled $13 million from his other company, Rockwell Forest Products, into ExOne. This comes after Rockwell’s RHI Investments provided ExOne with a $15 million revolving credit.

When the company posted its financial results from 2015, fourth quarter revenue of $16.2 million beat expectations that were closer to $14.7 million, but ExOne reported a large overall loss of $40.4 million for the year. The company’s revenue continued to grow for the first half of 2016, with ExOne reporting a 38.8 percent increase in revenue when compared to the same period last year.

Altogether, this seemed to give Rockwell reason to believe that the company may be climbing out of the rough financial patch it faced starting in 2014. In the teleconference, Rockwell explained that pulling the company out of risk had been his goal, and now that this was completed, he could step down as CEO.

“Why now are we doing this is simple: it’s time for this to occur,” Rockwell said. “I was particularly focused on getting the company out of it is higher risk level of performance that we've seen now in the first half, and we are feeling the continuation of in the second half and movements towards the profitability and stability which is important to our growth along the lines that we’ve talked about since our IPO. We are having that positive momentum coming along. So, we're pleased that our performance is improving. Jim will be able to enhance that a great deal.”

Rockwell then noted that he will now act only as executive chairman in order to focus more on “some of the strategic posturing that we do.” He also said that McCarley had been at the company learning the ropes for some time.

McCarley Takes Over

McCarley comes to ExOne by way of RTI International Metals, where he served as executive vice president before it was purchased by Alcoa in 2015. While RTI had been in the business of manufacturing specialty metal and titanium components to aerospace, defense, energy and other industries via traditional means for some time, the company purchased a 3D printing firm called Directed Manufacturing in 2014.

This subsequently laid the basis for Alcoa’s 3D printing capabilities, with Alcoa further expanding these capabilities through a $60 million investment in its metal 3D printing center in 2015. Alcoa’s acquisition also occurred just after RTI invested in Norsk Titanium and its direct energy deposition metal 3D printing technology that year.

In other words, McCarley, who was the highest-ranking operating officer of RTI during his five-year tenure there, likely played an important role in the moves that the company was making in the 3D printing space. Before that, McCarley was CEO of engine and combustion developer General Vortex Energy, Inc., and served in various management positions with a number of metal manufacturing companies.

All of this experience could be used to guide ExOne in particular ways that McCarley hinted at in the teleconference.

Upcoming Moves for ExOne

McCarley stated that, as he takes the realm, he plans to grow ExOne from an “entrepreneurial state” to something larger. There were a few important notes that McCarley made during the teleconference, which suggested that ExOne could execute a few strategies, including making partnerships with established aerospace, defense and energy companies; acquiring smaller, relevant businesses; and developing new technologies.

McCarley pointed out that, in his past roles, he had partnered with important players in the aforementioned markets. “In each of the prior assignments I had, we had very significant contracts with the Boeings of the world, the Airbuses of the world, the General Electrics, Shell. You name any of the pedigree people in any of those industries. In those markets, we were part of a supply chain. And not just a small member, but, in often cases, a very significant partner to the level that we had strategic discussions with customers on a regular recurring basis,” McCarley said.

He plans on leveraging the relationships he made with those companies in previous positions for developments with ExOne. This, of course, is essential to ExOne's growth and place in the larger manufacturing sector as numerous metal 3D printer manufacturers partner with such corporations as Airbus to integrate their technologies into the larger manufacturing supply chain.

McCarley also indicated that new equipment designs are in store for ExOne. “First off, my initial career was in equipment design and, not only equipment design but equipment design to do specialized manufacturing,” McCarley said. “Most of the companies that I worked for, we designed our own equipment and used it in the factories, so I do have a very comfortable feel in terms of walking around looking at what we’re doing here at ExOne, particularly on the equipment design side.”

Finally, McCarley noted his past experience with acquisitions and indicated that this experience might be brought to ExOne. “I have a pretty good eye for small business and how to bring those into large companies and how to operate them as small businesses, and ExOne is in a transition now from what is arguably a little more of an entrepreneurial state now to the next level of where the business needs to go. And I think I've held jobs and positions that are uniquely positioning me to understand how to help make that transition,” he said.

McCarley was not specific about any plans to execute any of these strategies, and it is difficult to determine whether or not the company will rebound entirely. However, if McCarley is able to apply his experience in past positions, it is possible that he will bring the company out of an “entrepreneurial state” and establish ExOne as a larger player in the 3D printing industry.

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