Tinkerine Studios (web site) which trades under ticker TTD.V on the TSX Venture Exchange and TKSTF on the U.S. OTC market has been hit hard along with other pure play 3D printing stocks, closing yesterday over 70% below the highs for the year. Because Tinkerine remains under the radar of most investors in 3D printing stocks, shares are often thinly traded and volatile.
However, I believe the volatility may be to the upside in 2015 based on a conversation I had with the CFO, Martin Burian recently…a conversation which I received permission to share publicly, in which he stated: “Given our current sales trajectory, our stated goal of achieving $5 million annualized run rate in sales by Q4 2015 is within reach”
For those new to the company, Tinkerine Studios began trading in March of this year following 2 years of success in manufacturing award-winning printers targeting the maker community. The Tinkerine brand name is derived from early DIY 3D printing adopters, often referred to as “tinkerers.” Based in Vancouver, Tinkerine is Canada’s leading 3D printer manufacturer.
During Q2 of this year Tinkerine had a soft launch their new flagship printer the DittoPro, for the prosumer and education markets. Last month the DittoPro won high praise from MAKE Magazine’s 2015 Ultimate Guide to 3D Printing. The magazine’s editors who tested the DittoPro concluded:
“The DittoPro is a great-looking machine with print performance to match. It scored as well as some of the best printers we tested, while far less expensive than most of them… we believe that the combination of good design and easy to use software would make it ideal for new users.”
If you look at the company’s financials on Sedar, you’ll see that over the last 9 months revenue generation has been modest with just under $250,000 reported. However, the majority of that revenue came in the most recent quarter ending 9/30/2014, where the company reported a loss of only .01/share. This compares to a loss of .06/share in Q2, and the improvement is due to early sales of DittoPro hitting the books in Q3.
What is the possibility of Tinkerine turning that .01 loss into .01/share gain some time next year? I’d say it’s much higher than voxeljet and ExOne have of turning earnings positive.
Now, I’m not arguing that Tinkerine should have a $130 million – $230 million market cap as voxeljet and ExOne have… but a market cap of $6.5 million is absurd.
Why Tinkerine will have a record Q4 followed by rapid acceleration of sales and net income in 2015
- Recent stamp of approval and exposure for DittoPro printers from MAKE Magazine in their “2015 Ultimate Guide to 3D Printing” This came out after the Q3 was reported.
- Tinkerine’s online STEM/STEAM education pilot (see press release) is in full swing from now – January 31. The pilot includes over 250 educators and administrators from Canada, the USA, Europe, and Asia.
See also: Tinkerine U web site, article in 3DPrintingIndustry.com, and video below.
Tinkerine U’s academic lessons are written by teachers, for teachers, and are aligned with government/state prescribed learning outcomes.
Even very modest penetration into the education market with DittoPro printers could, (and I believe will), have a big impact on revenue and earnings growth in 2015
Director of Business Development, Rob Smith, told me that “The pilot is going well and includes user testing, data collection and analysis running to late Q1 2015. Q2 we be the official Tinkerine U launch, comprised of Academia course content, and STEAM based learning content with continuous upgrades and developments”
- Tinkerine will be at CES 2015 January 6-9, showing off the new DittoPro printers along with Tinkerine U educational content for teachers. Exposure at the world’s largest consumer electronics trade show will undoubtedly bring awareness to the Tinkerine brand, DittoPro, and the company’s online education platform
- In Q3, Tinkerine brought in Ben Yan as Channel Manager. Prior to joining Tinkerine, Ben was in charge of global sales at Hewlett-Packard, something I suspect most investors in 3D printing stocks aren’t aware of yet. I also suspect most aren’t aware that Tinkerine’s board includes the former Director of Distribution at MakerBot Industries, RJ Wafer.
2015 Cash Flow
In my conversation with CFO Martin Burian, he said he believes the company will be cash flow positive within the next 12 months, that:
“Given our current sales trajectory, our stated goal of achieving $5 million annualized run rate in sales by Q4 2015 is within reach”
“We would also show a profit once we achieve that sales level.”
While there are no guarantees, I like the risk/reward at these share price levels…a lot. Show me a 3D printer manufacturer with a market cap of $6.5 million that has a genuine shot to turn EPS positive sometime next year, and I’ll buy those shares also.
As for cash burn rate…”Our rate of expenditure/burn is approx $150k a month and declining as sales increase.” I think investors have priced Tinkerine as though a dilutive financing is already in the cards. However, with the company’s $1.8 million cash balance in the Q3 report is combined with increasing sales of DittoPro and a concurrent decreasing cash burn rate, the need for a secondary offering appears less likely.
Given the market cap of only $6.5 million and the realistic potential for the company to turn cash flow (and possibly EPS positive during 2015) and I believe the risk/reward in Tinkerine Studios is very favorable here.
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Disclosure: I am long shares of Tinkerine Studios Ltd. I was not paid by the company or any third party for this article.
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