Karen Howard – IR Kent Rockwell – Chairman and CEO David Burns – President and COO Brian Smith – CFO and Treasurer.

John Baliotti – Janney Capital Markets Peter Misek – Jefferies Holden Lewis – BB&T Capital Markets BG Dickey – Stephens Inc Sherri Scribner – Deutsche Bank Ajay Kejriwal – FBR Capital Markets Jonathan Schaffer – Credit Suisse Hendi Susanto – Gabelli & Company Cindy Shaw – DISCERN Investment Analytics.

Greetings, and welcome to The ExOne Company First Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ms. Karen Howard, Investor Relations for ExOne. Thank you, Ms. Howard. You may begin..

Thank you, Doug, and good morning, everyone. We certainly appreciate your time today for our first quarter 2014 conference call. On the call with me this morning are Kent Rockwell, Chairman and Chief Executive Officer; David Burns, President and Chief Operating Officer; and Brian Smith, Chief Financial Officer of the ExOne Company.

We will be reviewing the results for the quarter that were published in the press release distributed after yesterday’s market close. If you don’t have that release, it is available on our website at www.exone.com. The slides that will accompany our discussion today are posted there as well.

Referring to the slide deck, on Slide 2, is the Safe Harbor statement. As you may be aware, we may make some forward-looking statements during this discussion, as well as during the Q&A.

These statements apply to future events and are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from what was stated here 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. Those documents can be found at the company’s website or at sec.gov. We’ll have Kent first provide an overview.

David will review our revenue results, as well as our 2014 Q1 progress. And then Brian will provide a detailed review of the financial results. Then we’ll turn it back to Kent to discuss our outlook. With that, I turn it over to you, Kent..

Thank you, Karen, and good morning, and welcome to all of you to our 2014 quarter one review. In our last quarterly report, we took an hour and a half between our presentation and the questions. And so we’re going to try and expedite our presentation in order to allow more time for questions. And the best way to do that was ask me to speak less.

So I’ll try to be more brief. In our last quarterly discussion, we outlined a three-pronged approach to our strategic development and that was, first, a continuation of our machine sales efforts, where we have excellent margins and a growing line of machines.

Secondly, it was in the production service center sales, where we have production service centers and we’re increasing production service centers around the globe, and our intent to try and increase the output of those sales, and again a business that when they are up and maturely running, have excellent margins.

Finally, we addressed an ongoing change in strategy that’s come up over the last 12 months, which was the ExCast strategy, which is a much more vertically integrated production service center strategy that incorporates a lot more effort for specific OEM customers that are requesting that we give them a final new net product or a final machine product.

The demand for that is very, very substantial. We’re going to talk about it a little bit more.

All three of these strategic efforts again have good margins and good opportunities, and I am frankly very comfortable with the direction that we’re taking and achieving that, despite the fact that the quarterly reporting this quarter was slower than anticipated.

David and Brian will address the numbers issues and I think I am going to just pass on that at this point. We have a slide up that says, this is an affirmation of binder jetting technology. As a global company, we are, as you must recall an international company.

And as an international company, we look at global media reports just as much as we do the domestic reporting. And within that, I thought I’d quickly highlight just a couple of articles that were in the paper, so actually in media.

The first one is on the upper left corner, there is a picture of a BMW slide, where there is – it came from a BMW article in Germany. They show you the operator taking out a casting from one of our machines. The quote in that particular article from the German magazine which we didn’t see until it was actually printed.

We didn’t have any participation in this, but I think it’s an important quote that you need to understand. As 3D printing technology becomes more competitive, it will be possible to transfer all of its technical advantages to high-volume series production. Now, we have been working with BMW as a customer for several years.

They have gotten multiple machines from us. We meet with them every 30 days to advance our technology and how they are going to use it.

We believe that they are extremely satisfied with where we’re headed, and that the next generation machines that we’re looking at are indeed the high-volume series production machines that they need to be able to advance their business opportunities, just as been highlighted here.

We said as far back as 2012, that this was probably a five year kind of an effort, right now I believe they are focusing around 2016 to really start implementing this, but the progress that we’re making with the machines in this effort I think is quite substantial.

And so this is the affirmation that binder jetting is considered by one of the largest players in 3D to be capable of high-volume series production. And I wanted to point that out. To the right of that is another article that came out in a manufacturing machine in Germany.

It’s on the Bosch Rexroth foundries, and it shows that they’re relying on the 3D printing of our machines. And you see in there, a very nicely presented the ExOne machine and some of the complex design product that’s coming out of that.

This again, if you want to know, and I’m not going to try and read this article, talks about the complexity that they’ve been able to achieve with this product application from our machines and we are extremely pleased about that. Both of these articles are going to be, I believe on our website for you to see, if you haven’t seen them otherwise.

In the lower left hand corner is the Sikorsky S-97 Raider program. This particular program is very, very applicable to our development of our ExCast strategy.

Sikorsky came to us sometime ago and identified that our technology was the only technology that they can see that could get them to where they could get the kind of finished product for some very complex casting parts. And we have worked with them at great length.

And its costs a lot of money, it costs us a lot of money in this quarter, which will be described later. But Sikorsky has identified for us, very large sums of revenues that can come from this. This program award is due to come early next spring I believe, and there is a test flight due I think in the last quarter of this year. This is a big program.

It’s let us into other programs with Sikorsky where we’re presently meeting about doing other castings where we do have a second award of casting efforts that starts I think towards the end of this quarter. And all of this is developmental. So we’re continuing to learn and improve how we can deliver the final product for a program like this.

And I can say that it’s, to us, looks like a highly rewarding opportunity, multiyear, very, very large revenues for this and other customers like this.

And if you believe that this company can get up to be in the couple of hundred million in the next couple of years, that we believe we can get to, you’ve got to fund the development programs like this and David will address that in a little bit. Finally, and this is a reiteration of our new technology, we have the Inconel 625.

This is a picture of a turbine blade that we printed to full density. And it’s a very accurate. The customer was very pleased with this product. This is in participation with customers under NDAs that have asked us to do this work. The release of Inconel was completely independent.

We now can do this for multiple customers and we are participating with increasing load of customers looking at using Inconel in various aerospace and energy applications. So we’re very pleased with where we are on a technical basis.

And with that, I am going to let David go ahead and give you his guidance in how we’re moving in the quarter and some of our performance issues..

Thanks, Kent, and good morning, everyone. This is David Burns. If you flip to Slide #6, you see the revenue review for the quarter, on left hand side by product line and on the right hand side by region. Our revenue for the quarter was $7.3 million.

We’ll address by segment, both expectations and the reality of what happened in the first quarter, but a couple of interesting things to note, of course in Asia since we didn’t have a machine sale, Asia only accounted for 11% of our revenues and that was entirely in the PSC.

And this is the first quarter that I remember where we actually have this juxtaposition of PSC revenue versus machine revenue, indicating growth in the PSCs and of course relatively weaker machine sales. If you flip to Slide #7, we take a look quick look at non-machine revenue. We’ve got increasing volumes in all categories.

We approached $5 million for the quarter. Consumables, parts, everything in general, we saw a growth, as well as the beginnings of our ExCast revenue beginning to kick-in for the quarter. So, we’re very satisfied that – and you could see the annual growth rate over three-years quarter-to-quarter. Our PSCs are building out the way we would have hoped.

And as you recall, we had said strategically quite some time ago that we need to build out our non-machine revenue to create a good solid base of stable flow-style revenue, which helps us deal with the volatility of machine sales. And of course we’re seeing some of that volatility in the first quarter of 2014.

At this point, we’d also like to affirm as we have said in the past, that we are in the process of opening two new combination production service centers and sales offices, and we expect those announcements to be coming out very soon. Flipping to Slide #8, a look at quarterly machine sales.

Left hand side, you can see Q1 on each of the last three years. We said on our last call that we expected that our Q1 revenue for 2014 was going to exceed our Q1 revenue for 2013. And that of course did not happen. There is a large single order that we expected to have realized in Q1. We haven’t lost the order. It is a question of timing.

It will be the largest single order that we’ve had as a company, over $2 million, and we had a shift from Q1 to Q2 for that order.

With the presumption that you understand something about our gross margins, you can imagine the impact that the shift of that revenue had on our gross margin base, but if we look at trailing 12 months on machines sales, we see good consistent growth. And we’re confident in the machine business. We’re confident in our forecasted revenue for this year.

I think the emphasis for the quarter is simply that the machine business is lumpy, and it’s going at times to be difficult to deal with. And as we get larger as a company in terms of revenue base, individual machine sales will have less impact on us. Slide #9.

What I’d like to do over the next three or four slides is just touch on what I would view as news of the quarter. So what’s happened in the ExOne world in the last 12 weeks that we think you’d be interested in. On the people side, our overall full-time headcount increased 14% in the quarter.

We added, of course our new Chief Financial Officer, Brian Smith. We added a new U.S. Chief Operating Officer, but I think we would characterize where we are at this point is that the bulk of our build-out with people is done. We feel as if the infrastructure we need is in place.

It doesn’t mean we’re going to be doing zero hiring, but the rate of expansion is slowing significantly. And we feel we are positioned to get to be the size company that we need to be. On sales and distribution side, we named our representative in our Scandinavian region.

And as well about two weeks ago, we hired a new Director of Sales for Europe, a very key hire for us. We’re thrilled and pleased with the addition of this gentlemen, and you’ll be hearing more about him, I’m sure, as we go forward. Slide 10. We’ve talked a lot about why we raise money and what we’re doing with it.

And the build-out of our German facility is the largest single expenditure that we’ve got in progress today. That is a picture of the building as of about three weeks ago. I think as some of you know, it’s about 170,000 square feet. The building itself is going to allow us to combine multiple production facilities into a single facility.

And the building itself will be well representative of us than the image we want to portray as our European headquarters. So we’re excited. We’re on schedule. We expect the building to open late in 2014. Slide 11. In the ISO – and ISO is a quality certification process. We now have quality management and leadership in place in both the U.S.

and in Germany, leading our ISO efforts. We expect certification at all our major facilities on ISO by the end of 2014. And as we enter this world of ExCast, we’re becoming the provider of end-parts to customers, quality certification become more and more important to us.

So this is a very important initiative, not necessarily the most expensive initiative we are going, but certainly critical. On the ERP side, the business system side, during the quarter we committed to proALPHA, a company that provides ERP systems. We expect our Phase 1 go-live to take place right at the end of 2014. And this is important.

Again, we’re spending a lot of money on the ERP, but much more important than that is a single global management information system. And what we need is a system that yields reliable real-time information to us that allows us to do better job as management team.

We have a variety of systems that don’t integrate, and as a result, you can imagine some of the difficulties of trying to understand where you are. And so we’re thrilled and excited about ERP and it is critical and high priority for us. Slide 12.

Kent mentioned Inconel, and I only want to restate it, because from my perspective the rollout of Inconel is a critical moment for us as a company. For the first time with the single metal alloy, we’ve achieved greater than 99% density.

It has been publicly and privately debated about whether the binder jetting technology was going to be capable of yielding this kind of result in direct printing. And we’re here to say that the answer is yes, we have done it. Aerospace, chemical and the energy markets are all critical markets for us, as we rollout Inconel.

But much more importantly, it is a validation of binder jetting as a process for efficient, cost effective, direct part manufacturing. And we’re excited about the next round of materials that we’re going to release. Within the quarter, we announced two acquisitions; MWT and Machin-A-Mation.

One being a machining house in the U.S., the other being a microwave technology provider in Germany. And both of those relate directly to our strategy of vertically integrating and trying to take more control of the pre and post-printing steps that we need to accomplish our ExCast strategy.

And finally, just a word about ExCast development, because if it’s anything that has had an impact on our first quarter results, it is this. We substantially have completed our first major ExCast project, and that is with Sikorsky.

There is a little bit of work left to do that’s going to spill into the second quarter, but we’re mostly done with our first large order.

What have we discovered in this process? Well, what we discovered is that our concerns about our ability to execute an ExCast strategy, our ability to interface with a variety of steps that both precede and follow 3D printing of sand molds and our concerns about the supply base to help us get through that process have been in a sense validated.

Getting ourselves through this project, managing supplier base where we had difficulty accomplishing our objectives has not been an easy process. And unfortunately in the first quarter, we’ve got a chunk of development costs that we’ve endured to try to successful complete this and make sure that we had a satisfied and happy customer.

While I can’t say that all of the costs necessary to develop ExCast are behind us, we believe that the substantial portion of them have been realized, and it did in fact negatively impact our margins in the first quarter.

And while it has been difficult of course to endure this, what I do want to do is point out that some of the struggles we’re having are in fact almost vindication of the rationalization of why we need to execute ExCast, because if the supplier base and we were able to interface seamlessly, we wouldn’t have gone down this road in the first place.

And so while it’s been a little difficult to endure, we believe that we are now executing from an operational perspective, what we need to do to be a high-end supplier of these sophisticated parts.

And as Kent pointed out, we see a very, very large market and a large demand for high-value, highly complex casting to support especially the aerospace market. So Brian is going to talk a bit more in a second about margins, but clearly the effect of trying to build on ExCast negatively affected our margins for the quarter.

Now, I would like to introduce Brian Smith, our CFO to talk a little more in-depth about the numbers.

Brian?.

Thanks, David, and good morning, everyone. If you’ll please turn to Slide 14, we’ll talk a little bit more about our margins. The lower revenue base, some of the cost that David talked about, impacted us more significantly than we would have expected with a higher revenue base on our margin percentage.

Due to that lumpiness, we presented that the trailing 12 numbers. If you’ll look at the trailing 12 for Q1 ‘13, that includes about $1 million one-time gain in 2013 for our MIT royalties.

The second point I wanted to make around absorption, again with a lower revenue base, absorbing some of our new facilities as they get up to speed and get up to production levels, impacted our gross margin percentage more significantly. If you’ll turn to Page 15, we’ll talk about SG&A.

Our SG&A reflects our investments for growth and public company costs. Those are the more significant increases. In 2013, in the trailing 12 month numbers, there is about $7.7 million equity comp charge. That was a one-time charge back in the end of ‘12.

And if you compare that to the equity comp charge in 2014, the equity comp charge was about $1 million. In addition, in the quarter, we had about $100,000 charge in Q1 ‘13 for equity comp and about $450,000 in Q1 ‘14. Our SG&A is in line with that our expectations are.

Our SG&A is slightly higher in the first quarter and in the fourth quarter due to our year-end costs. There is one other item that I want to point out in our SG&A cost, and that’s transaction cost. We had about $200,000 in transaction costs relative to our transaction activities in the first quarter of this year.

And in our trailing 12 for 2014, there is approximately $600,000 of transaction costs. If you’ll turn to Page 16, we’ve summarized our R&D expenditures for the quarter and in the trailing 12.

These were as expected, principally related to the release of new materials and our next generation machines and the salary and materials costs and other costs that are required to get us to that next level. Turning to Page 17, from a capital standpoint and a cash standpoint.

Our cash was at $98 million at the end of ‘13 and was $77.5 million at the end of the first quarter.

Roughly we spent approximately $9 million in our transaction activities, about $6.5 million in our CapEx activities, both, principally spending on our German facility construction, as well as building our own machines for use in deployment in our facilities in our PSCs.

And then we build inventory of about $4 million for working capital for our expected machine sales during the year. In the last call, we had projected out where we would be – where we expected to be towards the end of the year in cash, which was over $50 million without any further transaction activities. Page 18, is our CapEx budget.

Because of the significance of our CapEx budget, we wanted to reiterate again, that of that $31 million to $34 million, we spent about $6.5 million to-date. Germany, Japan and North Huntington facility build-outs will total $21 million to $22 million in the current year.

And then our machines to support our growth as well as the ERP system that David had mentioned, that we are in the middle of deploying would be the remainder of our CapEx for the period. And with that, I’ll turn it back over to Kent for other comments on our outlook..

Okay. Thanks, Brian and David. We have a upcoming guidance on Slide 20, where we’re reiterating basically the revenue guidance that we had from before. We used to state this in terms of percentages, but the percentages are easily translated into revenues and so we’re stating a $55 million, $60 million basis. That’s the base level of the business.

It doesn’t include any of the anticipated M&A type growth. This is all organic growth. In this guidance, we did drop gross margin down for the reasons that have already been stated. And that is primarily the development expenses and along multitude of fronts in all honestly of simply have gotten a little bit higher than we had assumed that they would.

In the scheme of things, I consider it to be rather nominal, but scheme of the quarter, it comes out in a very pronounced and diminished effort. Our SG&A is stable and shouldn’t have to grow nearly as much anymore. Our R&D is still pretty much in the same level. We see more opportunities in R&D. We’re actually constraining ourselves.

We’re very pleased about getting the Inconel out. We are working on another titanium and other reactive metals, and we’re very confident that these things are going to come online in a near-term manner and a similar fashion to the way Inconel has, and we’ve got a lot of customers working with us to see that that happens.

So our guidance is slightly modified. We said it was a transition year. This has transitioned fast. We should have measured them more accurately and communicated them more accurately and we did not.

And for that, I apologize, but when you’re growing as rapidly as we are, the ability to capture all of this in real-time while you’re trying putting in the process – all these new processes that we’re putting in between Q&A and the quality we’re having and the ERP and everything else. Sometimes these things just slide by, but we’re working on them.

There is nothing in there that concerns me from a personal point of view that we won’t achieve – we could cut back on some of these expenses and go to a lower growth rate and hit profitability without much difficulty at the $60 million level, but I don’t think that that was the – our focus is as a management, we believe that this should be a much, much larger business, and if we’re going to get there quickly, we need to spend the money much more aggressively.

Brian has identified that we have plenty of cash to be able to do that. So it’s not about cash that we’re concerned. I might close with one quick story. I sat in the same chair yesterday at 8:00 A.M. listening to a global oil and gas customer that came in.

And he was highlighting to us his company’s experience, and this is one of the biggest companies in the world. And how they had started off in 3D sometime ago and then sort of walked away from it saying, this really wasn’t going to work and they were primarily working in the laser technologies in their early phases.

And then they were recently challenged by their senior management to come back in and they put together a team of several people that said, you’ve got to get back in there. And they started getting some parts from us, and showing them to management. The management got very excited about it and said, you’ve really got to do something.

So he was up here to forge a very good agreement with us about the mutual development of a lot of opportunities. His particular requirements sounded very similar to the Sikorsky story, they want a lot of ExCast type support.

So that company alone could represent the kind of growth that we will require to get to the expectations that we’ve spoken about. And they are very excited about what they’ve seen. We’re working with them on a variety of different materials. And so it’s a lot of excitement from a lot of different growing customer involvements.

Our collaborations are increasing and they are really for us the essence of our future. So it’s happening every day. You see these people that were there. They are coming back. They are saying, now I see it, now I get it. And they are more excited about it than they were in the past.

And we believe that we’ve got enough customers that if we just work with the customers that we’ve got, then we’re going to be able to get to those goals over the next couple of years that we’ve described. I’m going to close on that point. Just remind you that there is a RAPID show on June 12 in Detroit.

And that we’re hosting an investor luncheon meeting there followed by our tour of our facility in Troy, Michigan. And if you need any information, please contact our IR firm and key advisors and they’ll give you all the information that puts you in the line to come visit us and see how we’re progressing.

You will be able to see some of the ExCast opportunities when you visit that facility. So, all of its progressive well. Our customers are very enthusiastic about what we’re doing. We thank you for your time. Again, we were not enthusiastic about having to report the quarter that we did in the scheme of things. It’s not meaningful from our perspective.

We don’t provide quarterly guidance, but we had anticipated we would've seen a better quarter. We still are very up as the numbers I just put up for guidance show, we’re still very enthusiastic about where the year goes. And with that, we’ll move onto questions, Karen..

Great. Thanks Kent. And Doug, we’re ready to open up the lines for questions please..

Thank you. (Operator Instructions) Our first question comes from the line of John Baliotti from Janney Capital Markets. Please proceed with your question..

Good morning guys..

Hi John..

Hi Brian, I was wondering, obviously given the sensitivity and the size of the company, you pointed out that the absorption of cost, it can be significant to the margin.

And I’m wondering, can you give us a sense in terms of ExCast, what you think the impact might have been to the gross margin in the quarter, in terms of the investments you guys were making?.

Yes. We’ve been analyzing that a little bit, John. It’s probably to the volumes that we had. It’s probably a good 5 points, in that neighborhood..

Yes, because I was seeing that even $500,000 could have like an almost 700 basis point hit. So obviously you’re very sensitive to the dollars..

Yes. And it’s a tough number to capture, John. We’re not calling that R&D, right..

Right..

Because it’s associated with that job. If we were really aggressive here, we’d be trying to carve out a bunch of cost and put them in R&D. That’s just not our nature..

Right. And you guys have been pretty enthusiastic about ExCast for a while. And I think given things that we’ve been researching that obviously, it still seems that it’s the adoption rate, the educational process that I think you’re helping with by doing this.

David, to your point earlier, the lessons learned that you’ve gone – that you’ve built up to the ExCast this process.

Do you think that helps you with customers who were going to buy the S machines in terms of things that you can now help them with that maybe you weren’t aware of before, that might help them with their adoption and their learning curve?.

Well John, absolutely. And I think what I’d like to do is just – let me give you two little short of anecdotes so we understand this question of development cost. We had a case where we were on a very short schedule to deliver one of the castings under this program. We printed thousands of dollars worth of sand molds and delivered them to a foundry.

And the foundry itself mis-poured. And we ended up having to reprint molds on an expedited basis and fly them to another foundry across the country to get the pour we needed to stay on schedule with the customer. So that kind of learning is exactly what is developmental cost is. So I think if you want some essence to it, that’s part of what it is.

But having said, absolutely, the linkage between design and what the outcome is of the sand printer, because remember now all the printer does print what you design and what you want to do is design for manufacturing in this new world of thinner wall castings with different gating systems and all this other stuff.

So yes, our ability to be a learning organization and to turn that information around and reflect it back to customers is critical as we rollout more and more machines..

Great. Thank you..

Our next question comes from the line of Peter Misek from Jefferies. Please proceed with your question..

John, maybe we could try two things.

One, could you give us a sense for the pipeline or how the opportunity set looks like as we go forward? If we try and take a longer term view, what kind of growth rates should we be expecting for the out-years for next year or the year out, or how should we frame the pipeline of opportunity? And then, could you give us a sense for what is the fixed cost structure or breakeven point for ExCast, and what kind of levers can you pull there to try and either accelerate growth, or try and accelerate profitability? Thanks..

Well, this is Dave. Let me talk about the pipeline first. We had said in our last call that we expected the first half of 2014 to be about 35% of our revenue for the year and second half to be about 65%. And we said that we thought that we would show growth at the annualized rate that we expect through the first half.

So as we model this thing out, we view the second quarter as positive. We’ve got a variety of machine programs that are completing and shipping. So we expect the quarter to support those numbers we gave on the first quarter call. In terms of the out-years, a lot of our enthusiasm is about products that aren’t even off the boards yet.

Kent alluded to this work we’re doing with BMW and we’ve talked about the machine and we’re going to release at the end of this year, which again is a leap forward in terms of lead our output per hour. It’s going to be better suited for production environments.

We’ve got one customer that has pre-ordered four of these machines and the design is not even done yet. So we’re very enthusiastic about the pipeline.

And the second thing that we’re sure of now is as we rollout direct printing and Inconel is a great example of how binder jetting can lead to direct printed parts that are full density, we’re converting our print platform, which is our second largest platform to be ready to accept direct printing, which gives us a large build chamber for either larger parts or higher volume of smaller parts.

So the conversion of the print platform for direct printing, as well as the next generation of sand machines gives us great optimism about the robustness of the machine business going forward. In terms of breakeven on ExCast, I’m not sure I exactly know how to answer the question.

What I can tell you is that the fixed costs necessary to execute ExCast from the ExOne end are in place. The designers are in place, the design software is in place, the stations are in place, the printers are in place. And yet the rest of the value chain is not in place. And that’s what we focused on with M&A.

So I think the decisions about what we pursue in an M&A environment will change that question of what the breakeven looks like. So I’m not sure exactly how to answer the question. I guess that’s probably the best I can do..

Okay, thank you, gentlemen..

Our next question comes from the line of Holden Lewis from BB&T Capital Markets. Please proceed with your question..

Good morning.

Did you say that you, kind of were estimating that the ExCast impact on Q1 was worth 5 percentage points to the margin? Is that the number you used?.

Yes, Holden. This is Brian. Yes, we estimated 5 percentage points that we could identify. Again it’s wrapped up in a project..

Sure..

And we’re pretty conservative with what we want to use..

Okay. And so, I mean if you add that 5 percentage points on though, you’re still talking about a gross margin that’s 27% on a volume number that’s kind of comparable to last year when you got a 36% type of number.

It sounds like in your guidance you’re kind of saying that the Q2 to Q4 gross margin is 43% to 46%, and that’s the only reason for the drop in the guidance in the Q1 number, but how do you sort of bridge 27% up to 43%, 46% for the rest of the year?.

Good morning, Holden. It’s Dave. There were multiple impacts in the first quarter on the margin side. One was, what we would view as one-time stuff associated with ExCast that Brian has put about 5 points on.

We got a larger cost base, and we’ve built-out some new PSCs and some other stuff and there is at least in my view 4 margin points probably just associated with build-out that isn’t being absorbed yet. So my view of this thing is that we were in the low 30s margin-wise with just those two issues alone.

And quite honestly if this large single order had shipped at $2 million-plus, at 50% gross margin, we would have been looking at margins that were probably 40-plus for the quarter. So I think in the sense that’s the confidence that we feel. If you take away the one-time stuff associated with ExCast.

If we continue to expand the revenue base in the non-machine side and get better absorption and we began to get a lot of these machine programs with 50% plus margins, then the margins are going to bounce right back..

Okay.

But I am right in sort of reading this that you’re kind of thinking 43% to 46% is good for the final three quarters of the year?.

Holden in my opinion – this is Kent. In my opinion, you could see a little bit of this continuing in the second quarter as we work through the rest of the development aspects of ExCast.

I think the other pieces are probably been non-recurrence, but ExCast margins on the new Sikorsky work may still be a little bit less than what they will be when we get fully integrated, which is our plan. And so we still have a lot of subcontracting that goes into the current ExCast strategy.

And we need to eliminate some of those subcontracting margins to be able to bring our margins back up to full value..

Okay. And then, can you just kind of talk about the burn rate. In Q4, you burned off I think $15 million, $16 million of your cash balance. In Q1, you burned off another $20 million.

Can you talk about the burn rate in upcoming quarters that you would expect relative to what we’ve seen over the past two quarters?.

I’ll take that Holden. This is Brian. We had $10 million in the current quarter around the two transactions that we had. And we had relatively slow quarter. We also build additional inventory. And if you remember, we talked about this I think in our previous call. We’ll have a move in our German facilities in the second half.

And so we’ve got to get enough machines build up to support our machine program.

And so we’ll have some usage of working capital here in the next quarter or so, and then we’ll start selling those machines and improve our working capital in development, and get cash from working capital, but we will use some cash in the next quarter in working capital.

Relative to our build-out of our facilities, like I said, we’re $6.5 million into a $31 million to $34 million a year. And if you kind of run those numbers, you get down into a low 50s kind of end of the year balance.

This quarter, we won’t burn as much cash in the second quarter as we did in the first, because we’ll be absent of – absent any other transactions. We’re certainly absent to two transactions we had in the first quarter. I think that helps..

Got it. So you’ll burn less and it’s for no other reason than because of acquisitions in Q2. And then in Q3, Q4, you might get a little bit of benefit from working capital, although, it looks like your CapEx will probably be up.

So you’re kind of thinking about more of like a $10 million type of burn rate per quarter, absent acquisitions?.

Yes. That’s framing pretty good..

Okay. All right, thank you..

Our next question comes from the line of BG Dickey from Stephens Inc. Please proceed with your question..

Yes, thanks guys. So, if I could just switch over to revenue for a second.

And I know you guys don’t give quarterly guidance, but just trying to get a sense since you maintained your guidance for the full-year, kind of a pattern in what we should expect in terms of revenue? And if I heard you right, you’re still saying that you expect that kind of split of 35%, 65%, one half versus two half, because obviously you’ve got some delayed orders in terms of – and so we’ve got some timing issues here.

I think that you called out a very large order in 1Q that was delayed in the magnitude of $2 million.

I’m just curious, is that related to the large government opportunity that you alluded to last quarter? And then, since we’re on this subject of kind of delayed orders, can you give us an update on the five machines that were pushed out from 4Q in first half of this year? And give us any help on kind of – because you’ve got a lot of seasonality, and I think that just giving us some – as much color as you can on, kind of where 2Q is progressing at this point would be very appreciated.

Thanks..

Yes, good morning, Mr. Dickey. This is Dave. Again, I’ll reiterate we believe 55% to 60%. We believe a 35%, 65% split, first half, second half. When we had our last call, we saw things forming up this way and that’s I think the way it’s going to happen.

The orders that rolled from last year, four of them are parked clearly in Q2 and one appears to be in Q3 at this point, but that our ordered machine opportunities come and go. So other things have happened since then that augment our opportunity set. So I am at this point feeling pretty confident that the revenue split is of that magnitude.

The order that we’re talking about had nothing to do with the government opportunity. This is a program in Russia. And the dynamics of the Russian market right now are simply such that we have a PO in place. We have a willing customer. We got a purchase order. The customer has funded what he needs to make this happen.

There is a third-party involved in this thing, a leasing company, and we’re simply waiting for funds flow from the leasing company. When that happens, the order will be shipped. We extremely confident that is going to happen and we’re watching it almost by the day.

So generally speaking, the roll from last year all parks in the first half, and we think when we report out June that we’re going to have shown significant growth year-over-year half-to-half..

Okay, great. Thanks. And then just, kind of a follow-up on some previous callers talking about ExCast.

You said that you are substantially complete there on the expenditures it sounds like, but should we still expect a little bit in the second quarter and in subsequent periods, or is it going to be pretty de minimis at this point?.

Well, I think Kent emphasized the fact that we feel as if the development costs that we’re dealing with are not completely washed out of the system, and they are not. The fact is that we’re still wrestling with controlling a supplier base. It’s spread all over the U.S.

And in order to expedite and hit schedules that we need to hit, very often we’re putting big heavy parts on planes to get them from to place to place to get operations done.

But what I want to do is try to flip this around and turn it into a positive discussion, because our sense for why we want to execute the ExCast strategy is almost reinforced by these strong winds we’re going through.

So what I will tell you is, as we build out our sense of what ExCast can be and we create a value chain that delivers these parts the way they need to be delivered, it is going to be an exemplar for how to execute this kind of business.

So while it’s painful now, I honestly believe this is almost an indicator that the reasons we’re doing it are still valid and right..

Okay, understood. Thanks. I’ll pass it on..

Thanks..

Our next question comes from the line of Sherri Scribner from Deutsche Bank. Please proceed with your question..

Hi. Thanks. I just wanted to dig a little bit into the parts, materials and services segment. Obviously, you guys saw nice growth year-over-year and quarter-over-quarter. I would assume that business would be a bit more stable than the machine business, although it sounds like the ExOne – or the ExCast business is in that number.

So I wanted to understand, should we assume that that business is more stable going forward? Will it be lumpy with the ExCast business, and how should we think about that?.

Well, thank you, Sherri. This is Dave. I think if you laid out our non-machine quarter after quarter after quarter, it is stable and growing. And the TTM numbers show that, side-by-side numbers show it. Our ExCast is clearly part of a non-machine business, and so it will always be in that segment.

And ExCast helps us to accelerate the growth of our non-machine business, but in a sense, we perceive this for a while so it’s not as if we’re going to see some big change in trajectory because of ExCast. That in the end, as we’re doing it today, won’t change the trajectory significantly, but what I will say is this.

The customers we’re working with, while we’re working at million dollar opportunities with them now have many, many multiples of that size opportunities behind that.

And the first sign that we’ve got, that we’ve moved steadily into a production environment, which would many millions of dollars we will be sure to announce that and lay it out in a timed phase kind of way, so you’ll understand what the effect will be..

Okay. So I don’t think – I just want to understand, because I don’t think I asked the question maybe the right way, but you would assume that that segment of the business, the parts, the materials and services which is mostly recurring would continue to grow throughout the year.

Is that the right way to think about it?.

Correct..

Okay..

Of course, everything in the world is lumpy when you’re dealing with industrial. It’s a lot less lumpy than the machine business. I think you can expect that aggregate – year-over-year if you aggregate ‘13 versus ‘14, we’re going to show the kind of growth rate in non-machine in total that we’re trying to achieve overall..

Okay. That’s very helpful..

Dave, it’s Kent. You just made the most key point there is that you just have to understand that it’s trying to look at in a quarter one order for a consumables can be $400,000 in some instance. And so you can’t look at the quarterlies, you really need to be looking at the TTMs and the trend lines of all that to get the best perspective..

Okay, understood. And then just….

Go ahead..

Just looking at the cash conversion cycle, it went up significantly this quarter.

I understand you’re holding more inventory but how should we think about cash conversion cycle as we move through the year? I assume inventory will continue to be higher until you move into the German facility and you have other things going on, but just wanted to understand how to model that cash conversion cycle?.

Yes. Sherri, this is Brian. As we see the demand for our machines, obviously we’re going to build inventory, but at this point in time, we see, based on our budget and based on our cycle that we’re going to build more inventory in the second quarter again.

And then we’ll have a decline in inventories in the third and fourth quarter as we move to our new facility and slowdown some of our production. We have the plan for that. We’ve got a plan ahead. While it doesn’t take six months to build a machine, we need to plan ahead for that move, so that we can do that as efficiently as possible.

So we will again – we’ll have a growth in our inventory this quarter and then a decline in the third and fourth quarters. So that’s our expectations..

Brian, you might point it out what is the non-recurrent nature of the expense of that move as well, because that does hit the….

Yes. And we did mention in our guidance that we would have somewhere in the neighborhood of $1.5 million to $2.5 million of additional margin hit in the current year relative to the move, duplicate facilities, getting up to speed, those items too. So those will impact us principally in Q3 and Q4..

Okay, but the accounts receivable going up a decent amount and accounts payable going up, is that related to the delay in the machine sales? How should we think about those as we move through the year?.

Accounts receivable will fluctuate with our sales in our collection cycles. And so – but we don’t have projected right now a significant growth in AR. And we could have a growth in maybe 9/30 quarter, but that would then decline again in the 12/31 quarter..

Okay. And then, can I just ask a little bit about the Inconel product. It sounds like this is something that nobody else has, 99% density.

Do you see anyone that has a competitive product maybe in the SLS side, or is this really sort of revolutionary?.

Well, I don’t know that we’ve looked across the entire landscape. So I don’t think I can necessarily tell you what everybody is doing on the SLS side.

What I will say only is that if you read the popular discussions about 3D printing, one of the things that was pointed out by a variety of people was this question about density and the question about the single alloy.

And so from our perspective, this is a tremendous vindication that binder jetting is in fact a process that’s going to be applicable for direct printing of parts.

I think if you want, we can do a much deeper dive on technology questions side-by-side and actually I’d be happy to do that offline, but I don’t think I am necessarily in the business of judging what other people are doing as much to say this is what we’ve done and we know from our customer base that there is tremendous demand for this material within aerospace, chemicals and the energy business..

Okay. So it sounds like customers have expressed an interest in it. Have you started to sell this and does – can you use – can customers use it in your older machines or do they have to buy new machines? Thanks..

Yes, we have announced that we’re going to commercialize on June 1. And we are prepared to do that, which means taking orders. And any of our particle printers has the capability of Inconel production with the understanding that we need recorder adjustments and we have to make sure that the furnace cycles are ready and coming out.

So it’s not a question of – we don’t have to sell a new machine because somebody wants Inconel. Our Flex platform is well suited for Inconel production and we would assume that we’re going to see demand as a result of that..

Perfect. Thank you..

Our next question comes from the line of Ajay Kejriwal from FBR Capital Markets. Please proceed with your question..

Thank you. Good morning. Just to clarify on the inventory build question, so the $3 million sequentially.

How much of that’s related to the Russian order that was pushed out versus some of the build-up that might be related to your expectations for the balance of the year?.

Really, there is no increase relative to that. That machine was ready back in the fourth quarter. So there is no increase relative to that delay in that program.

I’m sorry, what was your second question there?.

Is this related to the Russian order, or did you have other machines that you’re building for the balance of the year? So it sounds like based on your answer, it is the machines that you’re building for the balance of the year..

Yes, that’s right. We’ve got in our facilities over in Germany, we’ve got limited space. That’s why we’re moving to the new facility. So we’ve got to build schedule that keeps us moving to be able to build-out enough machines, to be able to sell in our machine program. So yes, that’s why that number is building.

It’s kind of a steady production path, if you will..

Okay.

And then, could you maybe provide numbers on how much the two acquisitions contributed in the quarter?.

They did not contribute significantly. Revenue-wise, $150,000 somewhere in that neighborhood..

Got it, that’s helpful. And then on the PSC, the non-machine revenues. Good to see that business kind of growing.

Any color on how much of that growth was related to the new PSCs versus the ones that have been operational for more than a year?.

Hi Ajay, this is Dave. The answer is not a lot. We’re just beginning to see product flow out of the new PSCs. And so I wouldn’t say it was necessarily consequential. We expect to see significantly more volume here as we go through the rest of the year..

Got it.

So, that 32% is more reflective of same-store sales, if you will?.

Yes, including the fact that we got major invoicing because of our first ExCast order..

Got it. And then, Kent, maybe one for you.

As you pursue this ExCast and this vertically integrated model, are their processes or technologies that you need to acquire? I know you had acquired a couple companies in 1Q, but are there still any processes or technologies that you think could help you position ExCast better?.

Ajay, the ExCast process incorporates literally 16 different steps to satisfy in the most effective manner the needs of our customers.

Of those 16 steps, we have – some of them were critical IP steps, already involved with our machines and our internal processes, but there are a lot of those steps that incorporate, I mean heat treating is one of those steps that has to be employed.

Heat treating is not something that we have internally and most people wouldn’t own it internally at this point in time. And so you have to go to outside heat treating sources and you have to put that in your calculation of things.

So there is various aspects of those steps where you will use outside contractors, but our objective in order to optimize the turnaround time for customers is to bring in processes that will – we will go out and acquire some of those steps either by bringing them in-house or making acquisitions related to some of those steps, but each one of them adds margin, because it takes away margin that is being paid to an outside subcontractor and gives us greater control over the process.

And the customers that we’re talking to, the aerospace and energy customers that are most interested in this are very, very focused on timeliness. And they are also focused on not high volume production. They’re generally looking at moderate volume on an annual basis production.

You don’t make thousands of helicopters in a year at Sikorsky, you make a couple of hundred, but you do it for several years. And so it’s perfect for their needs and our abilities to meet them are a perfect match. And what we need to do is optimize our ability to do that.

And we’re willing to spend whatever money it is to keep that customer happy right now, because that program matures and starts in 2015..

Got it. Thank you..

Sure..

Our next question comes from the line of Jonathan Schaffer from Credit Suisse. Please proceed with your question..

Hi, good morning. It sounds like the ExCast process is obviously growing relatively well. And kind of in the anecdote that was cited, it seems like a lot of the additional costs was actually related in this quarter to challenges around, kind of the foundry and the pouring process.

Is it time that you guys just kind of bring that foundry process in-house? And I know you’ve discussed on prior calls, it’s been a continuing problem, and some of the micro-foundry technology is no longer that expensive. So I was just wondering if you could talk about that a little..

It is a natural consequence of studying the ExCast process to consider that we must either make strategic alignments or own the process. And that’s part of our commitment to the vertical integration that will get us the best solution for our customers’ needs..

Sure.

I mean I guess, just more specifically though, is the foundry process itself one of those technologies that you think is probably critical to bring in-house?.

I’d say it is the critical process..

Thanks..

Our next question comes from the line of Hendi Susanto from Gabelli & Company. Please proceed with your question..

Good morning, and thank you for taking my questions.

I would like to learn more about the Inconel materials? Could you share your expectation on how long customer qualification process may take, how many potential customers of Inconel you are seeing for 2014, and whether you have qualification process in place to have Inconel on an the S machine platform beyond the M-Flex and X1-Lab that you have?.

David will take that..

Good morning, Hendi. Let me think about your questions. How long the qualification process will take? Well in the sense, we’re finished..

I mean on the customer side..

I think that’s a matter of, it could be a few months or it could be several months depending on the end application. As you well know, if this is going to be used in a filtration application in the chemical industry, it could be pretty quick. And if we’re qualifying flight-worthy part for aerospace, it could take them very, very, very long time.

That said, we are prepared at this point to print on the M-Flexs and we’ve got plenty of capacity to do so. And as I mentioned before, we are transitioning to on the new print platform to be able to print direct materials.

The job box difference is multiples bigger, and therefore giving us access to either singular bigger parts or much higher quantity within a job build. Well, we’re obviously excited about the Inconel rollout. We feel as if there was a great collaboration with the customer.

It led us to a bunch of applications and we are already getting a great resonance in the marketplace..

And then the later part.

Do you have any qualification process to have Inconel on your S machines?.

Yes, that’s what I was referring to. Taken the print platform and converting it to be Inconel ready, we are in process and expect that in 2014..

Okay. So it’s still within 2014 timeline..

Yes..

Okay.

And then, last question for me, like do you have an expectation on the number of ExCast projects for 2014?.

I can tell you that in backlog, what we would consider ExCast, we have between $1 million and $2 million today with the expectation that we are going to book more programs for completion sometime late this year or early next year. And as we get major orders, I think we would be open about sharing that we’ve taken major programs on..

And then, could you share like, what ExCast pricing model looks like?.

No, I mean it’s totally application specific. So I don’t think there is any singular way to do that..

So there is not a specific, let’s say, profitability target or margin target?.

Well, I think we talk about being in this 40% to 50% margin range on nearly everything we do. So if you wanted a starting point, I think you should think about that..

Got it. Thank you..

Our next question comes from the line of Cindy Shaw from DISCERN. Please proceed with your question..

Thank you, and good morning. On the new Inconel material, I know you were reluctant to talk about of any other machine to offer that kind of density, and I know a number of the competing metal technologies do offer that density, but it was my impression that they don’t come close to the speed that your machines have.

And I’m wondering, with this new material are you able to maintain that speed advantage?.

Cindy, this is Dave. And let me make sure that I clarify what I thought I was saying. I thought the question was specific to the density and Inconel 625. And so that’s the case where I don’t know. It’s clearly the laser processes offer high density materials, and so I am not trying to imply they don’t.

I don’t know whether a specific laser company produces Inconel 625 in high density. That was my only answer. But having said that, there is absolutely no difference in volumetric output for Inconel versus any other material we print. The process is the same. Now the difference as you all know is a function of layer thickness and particle size.

So within the Inconel world, we may make adjustments because we want thinner layers for surface finish or some other reason. But that said, generally speaking the volumetric output for Inconel is no different, and you should expect it to be no different than any other particles that we print..

Okay, that’s helpful.

And as you look at the customers who are interested in this machine, how much do you expect it to be taken up in the near-term at least by people who already own machines, and how much do you think it’s going to actually drive incremental machine sales, and how long would it take? I know you’ve got quite a long lead time on a new machine sale, particularly with a new customer.

If it’s going to drive an incremental machine sale with a new customer, what’s the sort of lead time we should be thinking about for that?.

Well, I think that what Inconel provides us, in a sense we’re able to sit here with binder jetting extremely cost effective solution to direct printing of parts. I would say that it’s unlikely that our current customer base that has brought machines pre-suppose that Inconel was going to be available.

So I would believe that from the machine side, any machines we sell specifically for Inconel production are likely to be our new customers or new opportunities. That said, we presume some of this in our sense of growing 40% plus this year. So I don’t think – we’re not changing our view of how many machines we’ll sell.

We’ve got to sell 18 M-Flex machines this year and we would expect some of them would be related to Inconel, but we thought about that back in the planning process before the year started..

Okay. So it’s in guidance, as we think about it past this year.

It certainly does open up that opportunity to keep the top line moving and open up to the customer?.

Absolutely. Yes. And I hope what it does is strengthens your sense that as new things are happening, our guidance is something we’re going to have more confidence in..

Okay, good. If I could switch gears to ERP system, the first phase due at the end of this year. What sort of benefit should we expect from that first phase in terms of – I know it’s tough to manage a global business without it.

Anything we should think about in terms of next year, just being maybe more manageable from your end?.

Well, this is Brian. A couple of things. We hope to remedy a lot of our control issues with that system. And as David said, we expect to be able to get more real-time consolidated information into the hands of our management team to be able to make decisions quicker and to close more quickly. So, all of those things are all benefits.

This is probably as we’ve talked before about ERP systems and you all know it’s a long phased process. But this first phase is a significant step for us and we’re excited about it. And I think what you may see is us getting to be able to close more quickly and provide our information earlier during the after the quarter..

Good..

And Cindy let me just add one – I just want to add one point here, because I want you to think for a second about, let’s say Germany today. We’re in six buildings, we’ve got products scattered all over the place. We don’t have good information flow.

And now imagine, a brand new facility, ISO certified, a new ERP system where we’ve got tremendous real-time information. That’s why we’re so excited about this company, because if you vision that for a second and the power of that as a tool, full of capability, that’s really exciting. And that’s why we’re so bullish on this company..

Good. One final question. It sounds like there is a desire to be more M&A, if nothing else around the foundry process.

Should we think about future acquisitions as well as the recent ones, how should we think about them in terms of being dilutive or accretive to the bottom line?.

Well, I don’t think that we have to worry about doing something that would be dilutive at this point. The pieces that we might be adding in are all small and the margins that we feel we can add in the ExCast process, they should be between what they can reduce in our cost and what we can do to help the volume of their business.

I would say that they should almost all be accretive. I don’t see any reason to expect any dilutive acquisition..

Good. Well, thank you, and I look forward to seeing you in Detroit next month..

Very good. We’ll certainly be there and hope you’re coming to see our facility there..

Absolutely..

We have time for one last question. Our last question is a follow-up question from the line of Holden Lewis from BB&T Capital Markets. Please proceed with your questions..

Great. Thank you again. A bit of a bigger picture one I think maybe hard to answer, but I’d like to get your perspective. Are you able to give some sense of how much the potential customer base has expanded, because you’ve always had your traditional customers, the BMWs, things like that.

But the key to the story obviously is not only selling more to the traditional customers, but significantly expanding those who could be customers for you.

Do you have any way for us to look at how you look at sort of the customer target today versus what it might have been a year, year and a half ago?.

You want to take it, David?.

Sure. Holden, it’s Dave again. Sure, anecdotal. Within this three week period, we are either speaking at technical conferences for presenting to the management of three Fortune 100 companies that we probably weren’t talking to a year ago. And I don’t mean we’re going to make a lunchtime presentation to three engineers.

I am talking about being invited to symposiums, including the major management groups of three companies that jump off the page in terms of who they are.

And so I don’t know how to quantify exactly what that means, but any one of these companies needs desperately the kind of things that we can provide and could – as Kent said before, could easily provide tremendous revenue for us just within their segment. And in every case, they’re in one sort of industry slice.

So the horizon remains very, very bright. The exposure level is tremendous. That’s both the function I think of media exposure as well as internal accomplishment. And even I think our IPO process help bring us into focus with a bunch of folks.

So we’ve got a lot of people with, titles like CTOs walking in and said, my boss said I have to come and figure out who you guys are. And a year ago, this was all evangelizing from our end trying to reach out and grab people. So again reasons that we remain very, very bullish about where we are..

So it’s getting easier....

I might just a follow-up by saying that what’s really happening and we see it from a customer base, but the NDAs really don’t allow us to say much about what they are seeing, but the vindication of binger jetting as a viable cost-effective technology, and in many cases, a good alternative to some of the laser and e-beam technologies is being verified by the customer base.

And we just get repeated visibility of that, and it’s increasing. Every month, we’ve got a couple of more instances where they are saying, holy cow, this is really working well for us. And it’s going to manifest itself as we go through the year in some of the customers that have started buying machines..

If I can add, Kent. This is Brian, Holden. Two of the three machines were to new customers. Two of the three machine sales were to new customers. One was to recurring customer in the current quarter..

And when you say that these customers desperately need what you do, is that you trying to convince them of that, or is there – in this whole pull versus push thing, are you having customers come in and saying, we don’t need to be educated on the technology, we need to buy something and we want you to tell us why you’re it?.

I think that we have a little bit of both of that, but what we are really doing is getting them to understand that binder jetting isn’t just some small subset of the 3D printing experience.

It is a major alternative in terms of applications that are specific to their needs, because they are coming back and giving us more and more R&D funds to pursue specific applications that meet their requirements..

Okay. Thank you, guys..

Thank you. I think that with that we’re at the end of our time..

I’d like to hand the call back over to management for closing comments..

Okay. I want to thank everybody. Again, it’s hard to say I apologize, but I do. We were disappointed, but in the scheme of things as we see this performance, it doesn’t scare us from the opportunities that we’re facing, the opportunities that we’re addressing.

We’re still maintaining our forecast and I think that the story for binder jetting continue to get more and more exciting in each quarter. We have other materials that are coming online that are going to significantly advance the application of our machines into a variety of new settings. And so with that, we’ll move on.

So thank you for your time today..

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day..