Garrett Gough - IR Kent Rockwell - Chairman and CEO Hans Sack - President Brian Smith - CFO and Treasurer

Brandon Wright - Stephens Inc. Lee Sandquist - Credit Suisse Saliq Khan - Imperial Capital Jason North - Jefferies James Medvedev - Cowen and Company Weston Twigg - Pacific Crest Securities

Thank you, Kevin, and good morning, everyone. We appreciate your time today for our fourth quarter and full year 2015 financial results conference call.

On the line with me today are Kent Rockwell, Chairman and Chief Executive Officer; Hans Sack, our President; and Brian Smith, our Chief Financial Officer and Treasurer of the company. They will be reviewing the results that were published in the press release distributed after yesterday's market close.

If you don't have that release, it's available on our website at exone.com. The slides that will accompany our discussion today are also posted on the website.

Referring to the slide deck, on slide two is our Safe Harbor statement. As you may be aware, we will make some forward-looking statements during this discussion and may also do so during the Q&A.

These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These risks and uncertainties and other factors are provided in the earnings release, as well as other documents filed by the company with the Securities and Exchange Commission.

These documents can be found at the company's website or at www.sec.gov. Kent will get started by providing a strategic perspective, Hans will then review our operational progress during the year, and Brian will go through the detailed review of the financial results.

Then we will turn it back to Kent to close before we open up the line for question-and-answer. With that, I'll turn it over to you, Kent.

Thanks very much, Garett, and good morning to all of our investors. Thank you for joining us on our call today.

In general, ExOne was pleased with our Q4 performance, which has already been provided to you. It did offset what was a fairly difficult year for us otherwise in the development of our business, but the Q4 itself did provide indicative results that we can achieve good performance when we have a lot of the larger machines in the sales mix and that did occur in this past quarter.

As a result of having the larger machines, we also were able to demonstrate some good operating leverage with good gross margins. And that again is reflective of the margins on the machine sales.

The result of the higher volume and the gross margin permitted us to earn an EBITDA versus the second time. Actually, we had a heck of one positive quarter back in 2013, but trending in the right direction and while we did have a drop-off in revenues from year-to-year, we've built a very large year-end backlog, which will benefit us as we burn off this backlog in the coming quarters of 2016.

So, all in all, the performance of this period we thought was quite positive. Looking at the customer demand for our non-machine activities, we've had good growth there.

The chart is showing that we had in excess of 20%. That 20% comes on top of in the 2014 to 2015 time, but mostly in 2015, we had very dramatic decreases in pricing, and so the real output is substantially up far more than the 20%.

And we even had in addition to pricing changes to benefit getting more customer activity on machines, which has to happen as we move into more volumes in machine activity. We also had currency in the period that negatively affected our overall revenue performance, so we've really seen a better growth than that in the non-machine area.

Taking a quick look at the state of adoption in machine sales, you will recall that we have a common technology in Binder Jetting and it's broken down into indirect printing, where we print a core and mold package. The larger machines are principally in the indirect printing side and they principally go to foundry applications where they pour a variety of different metals in very different applications depending on the materials that they are trying to create.

We are in the direct-printing side; they are the smaller machines that we have. We've introduced the Innovent last year and it's been successful.

The M-Flex is a small-batch production type machine and a prototyping machine and we have the M-Print, which we sold a couple of this year. The M-Print now has printed, I think, one of the largest parts ever printed, at over 55 pounds, and that has been able to be demonstrate a 100% density.

This is a huge opportunity for us as we move into the future with the development of larger parts at full density in a variety of materials, as well. So, we have in the direct business -- it's still a nascent business but it has very, very high potential.

It has a longer development cycle as you look at the bottom-line there. The maturity of direct printing, it takes about three years to get customers to move from the kinds of materials that they are using into a 3D printed material and get it certified.

And because we've been doing that now for more than two years, we're starting to get customers to move into actual production type activities. So, we're seeing more materials qualify for direct printing and that's coming along quite well.

Looking at the machine sales slide, again you see the number of machines in direct was at 15. Everything that we shipped, it's very easy to get revenue recognition on the smaller machines because of the way they are being used and the users being universities and research institutes.

So, we generally will see a one-to-one ratio with revenue and shipments in the smaller machines. In the larger machines, there is a much longer installation and acceptance cycle, and so we will record revenue only when the machines are fully accepted and doing what the customer wants it to do.

As a result, we shipped more of these machines in 2015, and that leaves us with a lower than anticipated revenue, but it's pay-me-now or pay-me-later. We're going to see that revenue all start to fall into the early quarters of 2016 and give us an overall greater growth opportunity as we move through this year.

We also had some leases. I think we had five leases that we put out.

One of them turned into a lease purchase and so we show that when there's four machines that were actually in the net lease position. We do believe as we move into 2016, we're going to see a lot more leasing opportunities and that's something that we're trying to progress with our customers.

Different sectors of the economy are more positive than others. One is that it's positive for us right now is the automotive industry.

The Binder Jetting technology there has gained very good acceptance as a rule tool across -- almost every automotive manufacturer is using our technology and developing it for moving it into batch production and ultimately into series productions, where they will take and replace some of their current production processes with multiple machines. And so they are evaluating it.

They have gone from evaluating it now to tendering for large orders with their -- the people that do the installations for them, and so it's not a question about when they are going to -- whether they're going to buy, it's just a question of when will this technology be fully in place in the production lines of various automotive companies. We do, as a result of that, anticipate multi-machine orders in that area and they are just now starting to occur.

This is particularly relevant to the Exerial line, which is our largest production line activity. So, the automotive industry is moving now towards series production and we're comfortable that we're going to get a good piece of that business.

I'm going to make some other comments at the end of this, but I'm going to let Brian and Hans take you through the operations and the financial performance now. Go ahead.

Thank you, Kent. Good morning.

Kent has already touched on a number of themes I'm going to talk about, just adding a little bit more color on my part. My first slide, number 10, reiterates what our priorities were for 2015 and reviews these themes focused on customer-centric improvement that we have made substantial progress.

At the end of my presentation, I will go over a slide summarizing our priorities for 2016, which will provide some contrast. Slide 11, please.

Highlights of 2015 in terms of machine sales are the following. We sold 10 of our new Innovent machines.

These machines lend themselves particularly to R&D purposes in industry and universities for the evaluation of the technology for the advancement of materials development or for educational purposes. We also have learned that some customers use these machines for small part production, as well.

For the Innovent machine, we developed a new capability to handle much finer powders to below 10 micrometers. The finer powder enables parts with greater density and better surface finish, which are key factors for success in industrial application.

On the indirect printing side and sand printing for foundry applications, we have introduced a new binder system, Cold Hardening Phenolic. It achieves high strength levers and molds and cores without the need for microwave heating.

As a result, the customer saves time and capital, while using less footprint, which creates greater efficiency. Customers have shown a lot of interest in this system.

The most significant event of the year was the introduction of the Exerial model. This series production indirect printer is getting lots of interest.

During 2015, four units were shipped and another was ordered but has not yet shipped. There are multiple additional customers evaluating the Exerial and we're working with them to move that process forward.

We have been offering leases to some customers, as Kent already mentioned in order to accelerate the placement into service of several machines. This option has also helped a few of our customers overcome budgeting hurdles.

Next slide, in 2015, we introduced a new system for the printing of layered tools in sand or similar media. These tools are used to fabricate components from composites in various industries, but especially in aerospace.

When a closed or tubular shape is made, a water-soluble binder is used, in which case we refer to it as wash-out tooling. The significant improvement we achieved in 2015 is that we have lowered the cost of consumer goods for our customers both by finding lower cost sources and through strategically pricing consumables to accelerate the acceptance of the technology.

By now most of our PSCs are ISO certified. The remaining ones in Germany and Japan have their certification pending.

We have introduced a new model for creating a PSC in Sweden in cooperation with an industry institute. It is operated by the partner's staff and production output is shared.

In Texas, a machine owned and staffed by ExOne is operating on a customer's property dedicated to their needs. In slide 13, we provide some other important events in 2015.

As I reported previously, we have made efforts to strengthen the organization in a number of areas: a new German CFO; a new global IT leader; a new R&D leader for the indirect printing side; and a new tax manager were added. We also reorganized our sales group to help increase the focus of the organization.

Simultaneously, important processes were improved. I mentioned quality systems already.

In addition, the sales and service processes were fortified in several ways, but notably with Salesforce and ServiceMax, two very helpful software solutions. To support machine sales and customers in the application of their machines, we created the DREAM Center in North Huntingdon and the ExTEC Academy in Gersthofen.

The Design and Re-Engineering for Additive Manufacturing Center, hence the word DREAM, virtually and physically supports customers in modifying parts in order to obtain the greatest impact from additive manufacturing. The ExTEC Academy in Gersthofen provides training and optimization support to customers.

Slide 14, please. For 2016, accelerating the adoption rate remains our top priority.

We aim to further improve our sales organization's knowledge base and effectiveness, enhance our representative network globally, and make our machines more desirable by enhancing flexibility and broaden their applicability, as well as their performance and increase the availability of our consumer base. In our PSCs, we will seek enhanced utilization rates and endeavor to lower the breakeven point of each facility.

Finally, we have embarked on project aimed at lowering the working capital employed at our machine manufacturing operations, generally speaking through lean production concepts and optimizing the design for manufacturability. With that, I hand it over to Brian Smith.

Thanks, Hans. Hello, everybody.

This is Brian. First I'd like to comment on the delay in this call.

When we sent out our initial announcement, we believed that we would be in a position to have the call. We subsequently determined that we needed a little more time to assure ourselves of the accuracy of our numbers and so we felt ourselves prudent to defer the call till now.

We take accuracy of our reporting to the highest level, so thank you for your patience in that. Turn to slide 16, please, where we talk about revenue and backlog.

We finished the year at $40.4 million, with a strong fourth quarter. Guidance was approximately $40 million, and as you can see, our mix of non-machine, with the growth in the non-machine, was very strong this year and so that mix is stronger in non-machine than machine.

The backlog growth principally relates -- a large part of backlog is machine backlog, so you can see how the backlog growth then impacted on the revenue side. Slide 17, again that non-machine revenue you can see growing at 19% in the quarter and 18% for the year.

Kent mentioned that's in spite of some FX headwind, principally the change in the euro year-over-year, as well as some change in the yen year-over-year. Also, we, through some supply chain efforts, as Hans mentioned, and qualifying materials, we have been moving toward reducing some of the pricing relative to certain of our consumable, so in spite of that, we felt very good about the good growth in our non-machine area.

Machine sales on page 18, as I mentioned earlier, in the quarter, we felt good about the $9.6 million. It's not far off of where we were at the end of 2014.

And again, the year of 2015 was impacted by shipments and growth in our backlog, and therefore, we had lower overall machine revenue in 2015 than 2014. Page 19 just reflects that for more information relative to the breakdown between machine revenue.

We have sold a couple of machines to a Fortune 500 company, of which one of our Board members is employed by, as well as shipped one machine to another related party. The page 20, or slide 20, talks about the quarterly gross profit and annual gross profit.

As you can see, the current quarter shows a strong gross profit, and so when we've said before, we need volumes to get to higher margin levels, and those higher volumes get us to a higher gross margin in 2015. 2014 was impacted by the move that we had in 2014 relative to moving all of our five different facilities into one facility in Gersthofen, Germany, when we opened that facility.

That was principally in Q4 2014, as well as some other moves here in North Huntingdon relative to our expansion of our PSC here. And also would reflect some continuing operating improvements and an offset of fixed costs with higher volumes, particularly in the non-machine area.

If you look at the annual margin, it is impacted by the lower sales volume and the offset of those fixed costs, particularly earlier in the year, in Q1 and Q2. Slide 21 shows our SG&A.

As you can see our SG&A is beginning to level off. At $5.1 million, we are running the way we were running back in Q1 and Q2 of 2014.

We do have generally a little higher G&A in Q4 and Q1, principally related to year-end activities and financial reporting and those matters. So we feel good about some of our efforts around costs and efficiencies.

If you look at R&D, R&D on slide 22, is largely employees and facilities. When we see fluctuations in our R&D, those are usually relate to some type of material usage, either development of machine or other materials that we were qualifying, and so we are right in the range of what our expectations were relative to the year for 2015 in R&D.

And so those were all at expectations in our guidance. Slide 23 discusses CapEx.

You can see the large decline in CapEx 2014 to 2015, which we said earlier that we had largely built out our facility expansions. The facility expansions in 2015 were really finalizing the payments for those facilities that we opened in 2014 that I had mentioned previously, as well as some expenditures around things like the DREAM Center that Hans mentioned.

The machines and related equipment are PSC machines and R&D machines, as well as machines that Kent mentioned that we put out on lease this year, the net four machines that went out on lease. And then our ERP system CapEx has continued to decline, as we've got that ERP system over in Gersthofen, Germany up and running and we're just making refinements to it going forward here.

Slide 24, if you remember, we in the first quarter, second quarter, and third quarter, we just had this broken down in beginning of the period, end of the period. We thought it was -- it showed that the slowdown of both the working capital improvements that we have been making, as well as the slowdown in the utilization of cash, both from a CapEx and operating losses, showed a good picture relative to the second half to the first half, and showed some of the progress that we have been making in that area.

Slide 25, you'll see our cash went from $36 million to $19 million, reflective of the breakdown that we provided on slide 24. We have very little debt.

We also added about $13 million of gross proceeds relative to the share issuance we had with an entity controlled by Kent. With that, I'll turn it back to Kent.

All right, thanks, Brian. Talking about the 2016 outlook, we have tailwinds and headwinds that we have to consider in how we look at the coming year.

Helpful in the tailwinds is the fact that we have a good backlog that will burn off in the first couple of quarters of deliveries of machines that are presently out. And more than that, we have a very active pipeline that we're expecting to see continued revenue growth and good record performance in 2016.

The issue is the timing of this. We lack visibility early in the year on capital goods shipments.

There's a cycle to the shipments for large machines where we almost never see orders in the first and second quarters. They start in the second quarters, but the orders really consummate in the third and fourth quarters, and then it becomes a question of, depending on what the order mix is, what falls into revenue.

Certain machines can fall immediately -- of the larger machines can immediately fall into revenue. Sometimes, there's a larger cycle, particularly with something like an Exerial, where there's an awful lot of automation that the customer has to do to be able to -- and each customer is specific in their automation needs.

So there's some good opportunity. As Hans said, we just started using Salesforce on a global basis and we've had a lot of new customer visibility show up.

We also have a much larger sales force this year that we built last year to put this all in place. So we are enthusiastic that we will see an active pipeline build into good orders as we move through the year.

We do have some headwinds. The headwinds are the depressed energy sector.

The energy sector is a very vibrant economy for our applications of printing, particularly because anytime you can make a balloon shape for something like a pump or a compressor or a valve, these are really bread-and-butter type activities for our 3-D printing, but as everybody recognizes, the energy sector is in a little bit of their doldrums. We do have some interesting programs going even though it's been slow, but we are starting to see some order signs even in energy that they are making us feel better about that expectation.

Capital spending, on an international basis, currency is a huge factor. China represents 50% of the casting business in the world.

We have been very fortunate to see a lot of growth in China starting last year, and our question is, will they constrain capital spending or will they continue to grow, as a result of the economic pressures they have within their own country. We are -- I saw three new names that hadn't seen 30 days ago on our order book, so the Chinese do seem to be spending, but the rate at which they will spend and install is still not visible enough to us that we should start trying to load it into the quarters yet.

I do believe that we will have a very positive growth rate in the 2015 year but we are not ready to trip over ourselves trying to give a market forecast at this point in time. The key words here is that we are approaching 2016 with a cautious optimism.

We feel comfortable that we are going to see good growth. We are not ready to put it into sectors of the quarters yet because it's just too hard and difficult on this global basis.

We are, however -- we did have a slower adoption rate in 2015, as things started to slow down, and so we are considering how to be moderating our spending to be more prudent cost management, systems, given the lower than anticipated growth in revenues. This will be an important consideration for us as we move through the year.

In terms of where we go, we're in the next month, we still hold -- I still believe very much that the vision of the opportunity that we presented in our 2013 IPO, we said that in a five to seven year period, we could make a $150 million, $200 million company with good margins operating in this sector and that, that we believe that, that opportunity still has a chance to grow greatly beyond that. We do know that the 3-D printing in the global industrial sectors is still a growing priority, and that priority -- it's now not a question are we going to be -- this technology's not going to be adopted, but it's just at what rate will it come into play.

So when I look at the indirect printing, it seems to be stabilizing and we are getting more activity there. The direct printing is a longer cycle for development, but I've always stated that I believe that the direct printing will overcome if market size and opportunity as it starts to develop into production activities and we are seeing signs that, that's starting to come to life now.

More as a function of getting the materials formally recognized and approved by the users in the different production applications. And we have a lot of that going on in our market place today.

So the opportunity for direct growth will be very substantial, certainly as we move through the latter quarters here, really as we move into ‘17 and ‘18. Those opportunities could be $5 million, $10 million, $15 million in one sum opportunities because they're fairly large.

So we are committed to successful execution of the strategies that we have been working on for some time. We continue to review them and make sure that they are the right strategies.

We always have to amend them when you're in an emerging growth market place, but we believe that we will increase the enterprise value for all of our constituents as we move forward, and we are looking forward to a very good year to demonstrate that capability. With that, we will move to questions, please.

Hey, Kent and Brian. Thanks for taking my question.

This is Brandon in for Ben. Just on the top line for 2016, I understand the cautious optimism.

Just curious, for the full year, are you guys looking at it as a flat year or maybe slight growth? I know that's what we're hearing out of some of the larger guys, like the 3D and Stratasys'.

Just trying to get a feel for any of the top line on a full-year basis, and if it would deviate from that industry outlook? Thanks.

I have to say that we do not see anything close to flat, and it's really the question of how much growth can we consume in this year. We've got the capacity in place to move to much, much higher levels.

And right now, just with the backlog that we have, that we're going to be able to burn off if -- we have to have a substantial double-digit growth at the very minimum in this year.

Understood. That's great color.

I appreciate it. And then, on the gross margins and OpEx in 2016, I'm assuming gross margins just keep around the same cadence based on timing of machines.

And then on OpEx, for SG&A, should we look at the 4Q number on an absolute basis as a run rate for 2016, or how do we think about that? Thanks.

This is Brian. From a margin perspective, again, as volumes increase, margins will improve.

You can see that in our quarterly cadence there. Particularly in the fourth quarter when we get to those types of volumes, we really throw off better margins.

So, volume means margin, and I think you can model from there. Relative to G&A, or OpEx, to tell you that 4Q is a run rate would be giving you some level of guidance, which we are not in a position to do at this point in time.

But we are looking at OpEx. We are looking at generating positive cash.

And so, we will be taking a hard look at where we're spending our money, prioritizing it in the right place, and being prudent with our spend. Those were the comments that Kent and Hans were making in their comments.

Understood. Appreciate the color there.

Thanks, guys.

Hi, this is Lee Sandquist on for Julian Mitchell. Given the late timing of this call, could you talk about near-term demand trends you've seen develop in January and February?

Well, as I said earlier, the use of our sales force and a much more mature team that's been working together across the globe, we are getting more visibility, and we've got substantially more input into that system. The question is, at what rate will these people move with spending?

At one point, we've had very substantial business in Russia, and now we have a lot of considerations about whether Russia does anything. We don't have anything in our forecast at this point for Russia, even though they could represent $5 million, $10 million if they turn on.

But the currency shut them down. But they need our product and they like our product.

So, those are opportunities that can open up very, very rapidly if certain conditions change. China, my biggest concern has been is that China was very, very aggressive about wanting to do a major machine program across the country.

And we have had a lot of different Chinese companies coming to us, most in indirect and direct. We are concerned that China may very, very well restrict capital outlook spending, given their currency issues and their banking issues within the country.

If that constrains it, then we'll just have to wait. But I will say that, again, cautiously optimistic.

We are seeing signs of new customers in China already, early here in the year that are customers that will be for sure placing orders. And then it's a question of, okay, does that order turn into a revenue-recognized shipment, and in what cycle?

But I think that we're going to continue on the growth path that we had hoped for last year.

Great. Thank you.

How should we think about capital allocation priorities, now that it looks like cash levels have stabilized?

I don't think -- as we said before, we declined -- our CapEx declined significantly year-over-year, 2014, 2015. Absent investment in leasing facilities, and perhaps a machine here or there within our own PSCs or for some R&D efforts, I wouldn't think that we will have much in the way of CapEx in 2016; so, further decline in CapEx from 2015 to 2016.

The only CapEx might be in leasing.

Yes, that's what I said. We would have ….

Because we do have a lot of customers asking for leasing, and we are working with some third-party leasing agents now to try and transfer that to other accounts, but we don't have anything completed on that regard yet.

Great. Thank you very much.

Thank you. Hi, Kent.

Hi, Brian.

Hi, there.

Hey, Saliq.

Guys, first off, some of the competitors have exited the consumer business altogether, and are focusing a lot more on the commercial -- on the investor side. What impact could this have on your Business and your overall strategy as you look at 2016?

You are correct. They are trying to move towards where they see more stable markets, which is what we saw from the very beginning.

And we do not see -- they're still working mostly in polymer. You do have some of them saying that they are working in metals, but the technologies that are out there that are competing against our binder jetting technologies -- they are more expensive.

At the end of the day, the one benefit that binder jetting has is that it is a low-cost alternative to higher volume production. That's been proven out by -- a lot of our customers have come back and told us that, and some of the research institutes that we are working with.

So, we feel no immediate threat from anybody that's out there, even though there's a lot of people throwing new stuff out there. We certainly have to be aware of it.

But we are pretty comfortable where we are in the mix of things that the markets that we are now addressing are going to get us to that point. We really don't sell any machines to consumers.

We just sell parts to consumers, so it's a different demand pattern for us.

Guys, throughout 2015, as I take a look at the numbers, you sold more of the S-Max printers than some of the lower priced machines like the M-Flex. Are you seeing an industry-wide shift in the types of customers that are purchasing the 3D printing machines, or is this just a byproduct of your sales guys targeting a particular industry and particular customer base?

Right. You have to understand that the smaller machines all are going to a total different application and customer base than the large machines, which are going into the world of foundry applications, where they pour -- finish the product in cores and mold packages.

So, they are apples and oranges in every sense of the word. You can't interrelate why somebody buying an M-Flex versus an S-Max.

The S-Max is our bread-and-butter machine, the S-Max Furan. We've got over 60 of them out there right now.

They are the second generation of our S-15. We still have S-15s that we're actually taking on trade and putting back into the marketplace, and those machines are sometimes 10 years old.

So, the technology isn't faltering and going away. We are cleaning them up, re-having them, and putting them out in third world applications.

So, we think that we are well positioned. And we do have some competition in the large indirect machines, but for now I think that we really dominate what's taking place in that market.

And then the last question I had for you is -- right with some -- maybe someone else had asked previously, but during the second quarter, or the second half of 2015, you had secured a $15 million credit facility. The idea behind that was to go ahead and increase the overall adoption, and get a high number of leased machines turning into full blown purchases.

Now given the optimism that you had talked about earlier in the call regarding the automotive sector, how will this automotive sector bring in a better outlook for 2016? How will that impact your overall capital structure for 2016 and beyond?

Well, the $15 million credit facility that I had put in place was replaced with $13 million of equity. So, we had a very negative, small change in total capital availability to address that need.

With regards to the automotive folks, the automotive teams, they are not the ones that are leasing. When they do lease, we lease them sometimes a machine that's really a test that machine for adapting the technology.

But when they go to the principals of the Exerial, we're not leasing Exerials, which is a $1.8 million machine. So, I don't think we have a capital availability issue.

We also are starting to find that there are leasing companies out there that are willing to take on our machines in third-party independent leases. I'm working very hard on that, so that we don't have to use our capital in that manner.

The world of the leasing groups out there now understand that our machines aren't going to be eclipsed in values in a three or four-year period. So, they're more willing to deal with the residual value issues.

Great. Thank you, Kent.

Sure.

Hi. Can you give an update on when you think you'll be able to recognize revenues on the four Exerial printers that have already been shipped?

Hi, Jason. This is Brian.

How are you? We will recognize those this year.

Again, we're not going to point to a specific quarter at this point in time, but they are being installed in our customers' facilities. We don't have a lot of specific control over that.

Our customers are dictating that. But they will be recognized in this year.

Yeah. Keep in mind, please, that they are 100% paid for.

And they were sold under a discount term because of the volume purchase and in fact that they are helping us introduce this new technology and evaluate it. This is a customer that we believe will buy more machines.

They have a couple of our S-Maxes as well. And they are a satisfied provider that's important for us in the Chinese market.

And for the fifth Exerial that you sold is that to a different customer or the same one? Is that at a reduced price similar to the first four, or is that the standard ASP you sold it at?

That's a better price. That is a large automotive customer and so we feel very good about that.

But that machine -- again, that is working into capital programs at a large company, and so that's not a near-term item. That would be later in the year.

Okay. Later in the year for--

Jason, just let me add, we feel really good about that order. We feel really good, and that gives us a lot of confidence on that--

It's a customer that has other of our machines. And the European manufacturers are very, very focused on the 3D printing technologies for production -- series production.

They are ahead of everybody else.

Is that later in the year in terms of a shipment, but not recognized as revenues?

It will be a shipment. It's 50-50 as to whether it gets recognized this year.

It really depends on what kind of automation they want and if this is a customer that has the opportunity to buy 10 more. So, we're going to be very, very aggressive in pleasing that customer and we've already got the deposit on this one.

Okay. Then last one from me kind of following up on the auto opportunity.

When you're saying it's for series production, is that for end-use parts or is that for large scale prototyping or test runs for them? And then either way what size production runs are you talking about for these parts that you're making?

Is it like the range of 1,000, 10,000, 50,000?

Yes, it would be probably in the range of 10,000 or more. The whole advantage, the whole psychology for using our technology is it gives them much, much more flexibility to be able to shut down the line and shift to other production series, so that they can make smaller production runs, which will allow them a much better inventory management process.

And you can almost build the suit on cars in this manner. So, this -- the whole psychology for adoption is accepted and it's happening.

And it's just a question really right now of the integrators that are integrating these systems to replace some of the things such as the blow mold lines that currently are out there making pistons, water jackets, and other parts of the engine systems.

Great. Thank you very much.

Hi. Good morning, and thanks for taking my questions.

Just a housekeeping question first, what do you anticipate the weighted average shares outstanding to be in Q1?

Yeah. Outstanding shares -- what's that after the acquisition and the ATM?

I'll get that number for you. Give me a minute; I don't have it right in front of me.

Okay. Thanks.

And on the $16.5 million in backlog, I just want to -- is there -- the 12 machines that shipped but weren't recognized, is that included in backlog or is that separate?

Yeah. If it's shipped but they haven't been recorded in revenue, they are in backlog.

That's right. We wouldn't ship off of anything but a firm PO, which would mean we would be in backlog and the share count is 16,067,954 at March 22.

That was in yesterday's 10-K also.

That's right.

Okay. Thanks.

So, the 12 that have shipped but weren't recognized comprises the entire $16.5 million? Or is there additional -- at what point does a machine that's in the pipeline actually be recorded as backlog?

Backlog is -- no, there are a number of machines in backlog and backlog is a firm commitment, firm purchase order from a customer. We don't put anything on a wish-list in that.

It's a GAAP definition, if you will -- our commitment.

Some of the backlog also is in non-machine. So, there's a certain portion that is not machines.

It's in other orders.

Could be a non-machine; could be in a contract.

Yeah.

Okay. So, just to recap, the $16.5 million consists of the 12 that have not been recognized, plus some additional machines, plus some non-machines, is that correct?

Yes.

Yes.

Okay. And I noticed that -- I would've expected to see a jump in deferred revenue to go along with any payments that have been received on those 12.

So, what's the status of cash collection on those 12?

Depending on the timing of the PO, typically the PO has a 30-day timing where we would -- our typical terms are 30, 60, 10, so we would get a payment 30 days after the PO date. So, depending on the arrival of the PO, our pre-payments would relate to the timing of the receipt of that 30, 60 or 10.

That number will fluctuate, but $7 million is still a good, strong number for us relative to deferred revenue. Again, those are all pretty much all pre-payments.

Okay. Thank you.

Okay. Thank you.

Hi. Thanks for taking my question.

First, just wondering if you could give us some commentary, some color on the orders in Q4, given that the backlog declined, but earlier in the call you said that Q4 is usually the strongest order quarter.

Yeah Wes. We did ship some that came in, in the quarter and went out in the quarter.

And we did expect a couple more orders that came in really subsequent to year end. So, we feel good about that number.

We are going to have periods where we are going to recognize backlog faster than we receive. But we had a good second quarter and good third quarter in receipts of POs last year, so I don't see any macro trend there that bothers us in any way.

I'd like to correct that thought just a little bit, though, Wes. I don't think that we should be saying that the fourth quarter is the largest order quarter because I think that you'll see that they start towards the end of the second quarter, and a very, very active order rate in the third quarter, and possible orders in the fourth quarter week, along with people that order in the fourth quarter want shipment in the fourth quarter.

But the build-up rate is not that we can -- we don't build and ship these big machines in 90 days. So, I think you have to look that there's a build-up that starts in the second quarter and we'll have good visibility by the end of the second quarter.

June/July, we'll have good visibility on what our full year is going to start to look like.

Okay, that's very helpful. And then, just related to those orders on the same track, did you have a number of new customers, or can you tell us how many new customers came in, in Q4 and ordered equipment?

I don't have that right in front of me. We will think about that and get back to you.

But each quarter we've got a mix of both customers that are previous customers and new customers. I don't think the fourth quarter reflected anything different from that.

It's always a mix and it varies by quarter-to-quarter.

Okay. And just also wondering, on S-Max, it looks like the ASP declined last quarter.

Can you help us understand the S-Max ASP in Q4? And if it declined, is that a number we can use moving forward?

So, ASPs are a tough one and we've wrestled with these questions all the time. We can have a bunch of ancillary equipment with those machines that raise the price because each piece of ancillary equipment could be higher.

We could sell a used machine in our -- out of our PSC. We converted a lease in the current period.

So, those numbers are going to fluctuate a little bit with all those items and it's certainly not a macroeconomic trend. Some of those ancillaries could be a couple of different job boxes, they could be extra print heads, they could be other ancillary equipment that helped move the job boxes, those types of things.

So, it's a tough one just to pin down on a singular quarter basis.

Okay, yeah, that makes a lot of sense. And since you mentioned leases, maybe, can you help us understand leases as a percentage of revenue in 2015 and what you think that percentage might be in 2016 leases?

I don't have it right in front of me, but we had five leases during the year that were entered into during the year. And we converted one of those into a sale that we said we would convert into sale in 2015, and we did convert it into a sale.

We said that in the first quarter. I don't have the number in front of me.

It was running -- here, I am going to get it, about 2%, 2.5%, somewhere in the neighborhood of 2%, 2.5% of revenue in the current year. So, we do expect that number to grow.

We are looking at a few leases in Q1.

Great. Thank you.

Very helpful.

I'll just reiterate again, the visibility that we have on this year is just restrictive enough that we don't want to get into issues of trying to provide guidance and then have it shift dramatically into later quarters. So, we're going to hold to just saying to you that we have got a lot of confidence in where we're going.

It's growing. We've got multiple orders for certain customers that know our business.

And we believe we're going to see substantial growth in this year and we're quite confident with where we're headed.

Okay, thanks a lot everybody. That concludes our call and looking forward to next quarter's report.

Thank you.