What Brexit means to S-Ray

Posted on June 30, 2016 in CEO Perspectives

Some of our shareholders have asked about the impact of the recent “BREXIT” decision on S-Ray. In addition to that specific factor, I’d also like to address the health of the global economy as it might impact the company.

Michael Dunn, S-Ray’s ClearView LAB Product Manager, has developed five year revenue projections for S-Ray. These projections were subject to review by industry advisory board members as well as some potential strategic investors. Those projections are the basis for our sales and marketing plans.

At this time, we have not projected ANY revenue from the market area defined as Great Britain. Because we have not anticipated entering that market in the next five years, Britain’s economy would not have any impact on S-Ray revenue. While our projections do include individual countries in the European Union, we do not believe the BREXIT event will have an impact on sales projections from individual EU members.

Regarding the global economy: We are seeing growing hesitancy in capital expenditures. That may impact the sales of expensive equipment. In the dental market, this would include equipment such as cone beam computed tomography (CBCT) systems that are often priced at $70,000 and higher. Maintaining a low price point for our planned offerings shelters the company from that hesitation.

On the consumer side, we are seeing growing hesitancy in spending. This hesitancy is reflected in the way consumers buy – not in the volume of purchases. In the dental industry it means patients will be more deliberate in accepting (and purchasing) dental treatments. One of the key values of the S-Ray products is easy to understand, very realistic 3D scans of a patient’s teeth. This enables much better presentation of the problems and the solutions proposed by the dentist. Again, S-Ray is in alignment with this market condition.

Even with a slowing of the global economy, the market for dental products is projected to grow to $55 billion by 2019. This is an annualized growth rate of 2.9% showing the relative strength in the market segment chosen by the company.

There is a potential of one change in the global economy that could lead to risk to S-Ray. That change is widespread panic which would drive liquidation of stock portfolios and move capital away from all companies. While the BREXIT vote did cause some short term volatility in currency and stock markets, it did not create global panic.

Management is positioning the company’s strategic relationships with very strong leaders in the dental industry. One common trait is developing a long term horizon for capital expenditures, including growth by acquisition of innovative companies such as S-Ray. Having a long term perspective enables a company to avoid sudden reactions to panic which could include actions such as termination of products, development and growth initiatives.

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