- Machine revenue growth drives
consolidated first quarter revenue up 29%
- Backlog grew 19% to $23.5
million
- Confirming 2017 expectations for at
least 25% revenue growth and positive Adjusted EBITDA by year
end
The ExOne Company (NASDAQ: XONE) (“ExOne” or “the Company”), a
global provider of three-dimensional (“3D”) printing machines and
3D printed and other products, materials and services to industrial
customers, reported financial results today for the first quarter
ended March 31, 2017.
“As we expected, 2017 is off to a solid start and on track to
achieve full year revenue growth that exceeds 25%. In addition to a
29% increase in revenue, first quarter orders were strong, allowing
us to sequentially grow backlog by 19% during the quarter, to $23.5
million,” stated Jim McCarley, ExOne’s Chief Executive Officer.
He continued, “Additionally, we are making good progress towards
our operational goals and directional changes. Despite significant
charges we experienced this quarter, some of which will continue
into the second quarter, we are driving improvements in our core
technology and moving the Company on a path to profitability. Worth
noting, our team understands that achieving positive Adjusted
EBITDA is an important goal, and we remain on course to accomplish
this by year end.”
First Quarter Revenue – Machine Revenue Growth Demonstrates
Momentum
Quarter Ended March 31, (in millions)
2017
2016 Revenue by Product Line 3D
Printing Machines $ 4.3 39 % $ 2.2 26 % 3D Printed and Other
Products, Materials and Services 6.6 61 % 6.2
74 %
Total Revenue $ 10.9 100 % $ 8.4
100 %
Consolidated revenue for the 2017 first quarter was up 29%
compared with the prior-year period. Machine revenue nearly doubled
to $4.3 million, compared with $2.2 million in the first quarter of
2016. On a machine unit basis, five machines were sold in the first
quarter of 2017 compared with one in the 2016 first quarter.
Non-machine revenue increased 6% to $6.6 million, compared with
$6.2 million in the first quarter of 2016, with the growth driven
by increased consumable materials and service due to a larger
installed base of machines.
Given the long sales cycle and significance of a machine’s
average selling price relative to total revenue, fluctuations in
machine-sale revenue vary from quarter to quarter. ExOne does not
believe that such quarter-to-quarter fluctuations are necessarily
indicative of larger trends.
First Quarter Operations – Margins Impacted by Realized
Pricing, Restructuring and Other Costs
($ in millions,
except per-share amounts)
Q1 2017 Q1 2016
Change
% Change Gross profit $1.6 $1.9 ($0.3) (15%) Gross
margin 14.7% 22.3% Operating loss ($6.7) ($5.3) ($1.4) (27%) Net
loss ($6.8) ($5.5) ($1.3) (24%) Diluted EPS ($0.42) ($0.35) ($0.07)
(20%)
Gross profit was $1.6 million, resulting in a 14.7% gross margin
in the 2017 first quarter, compared with 22.3% in the 2016 first
quarter. The 2017 quarter was impacted by an unfavorable mix of
sales and lower realized pricing, as the Company has made strategic
investments to support its directional changes. The 2017 quarter
includes $0.7 million of employee termination costs and asset
impairments, $0.6 million of which is non-cash. These charges were
associated with the Company’s exit from its non-core specialty
machining operation and combining its Las Vegas production service
center into its Troy and Houston facilities. Further, the 2017
gross profit was unfavorably impacted by a $0.2 million charge
primarily to record certain indirect printing machine platforms at
net realizable value.
R&D expenses of $2.0 million for the quarter were relatively
comparable with $1.9 million in the 2016 first quarter. SG&A
expenses increased to $6.3 million compared with $5.3 million in
the prior-year quarter. The 2017 quarter included $0.3 million of
higher selling expenses associated with higher sales, $0.3 million
for a non-cash intangible asset write-off associated with the
Company’s exit from its non-core specialty machining operation,
$0.3 million of incremental non-cash stock compensation, and $0.1
million of bad debts. These increases were partially offset by
lower consulting and professional fees. The 2017 first quarter
operating loss was $6.7 million, compared with a $5.3 million
operating loss in the first quarter of 2016.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), a non-GAAP measure, was a $3.8
million loss in the 2017 first quarter, compared with a $3.6
million loss in last year’s first quarter. ExOne management
believes that, when used in conjunction with other measures
prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”), Adjusted EBITDA assists in
the understanding of its financial results. See the attached tables
for important disclosures regarding the Company’s use of Adjusted
EBITDA as well as a reconciliation of net loss (most directly
comparable GAAP measure) to Adjusted EBITDA for the quarters ended
March 31, 2017 and 2016.
Capitalization – Positive Cash Flow from Operations
Cash, cash equivalents and restricted cash as of March 31, 2017
were $28.3 million, up from $28.2 million at December 31, 2016.
Cash provided by operations was $0.2 million for the first quarter
of 2017 compared with cash used for operations of $1.0 million for
the prior-year period, with the improvement reflecting the
Company’s ongoing focus on working capital utilization. Cash
capital expenditures were approximately the same at $0.2 million
for both the first quarter of 2017 and 2016.
Outlook – Path to Profitability
Mr. McCarley concluded, “Industry research predicts that the
marketplace will continue heavy investment in 3D printing design
and manufacturing. The strength of our market position in the
industries we serve gives us increasing confidence in our binder
jet technology and in ExOne’s ability to experience revenue growth
in excess of 25% even beyond 2017, driving operating leverage that
leads to consistent profitability.”
Webcast and Conference Call
ExOne will host a conference call and live webcast on Thursday,
May 11 at 8:30 a.m. Eastern Time. During the conference call and
webcast, management will review the financial and operating results
for the 2017 first quarter, along with ExOne’s corporate strategies
and outlook. A question-and-answer session will follow. The
teleconference can be accessed by calling (201) 689-8470. The
webcast can be monitored on the Company’s website at
www.investor.exone.com/
A telephonic replay of the conference call will be available
from 11:30 a.m. ET on the day of the teleconference through
Thursday, May 18, 2017. To listen to a replay of the call, dial
(412) 317-6671 and enter the conference ID number 13659688, or
access the webcast replay via the Company’s website, where a
transcript will also be posted once available.
About ExOne
ExOne is a global provider of 3D printing machines and 3D
printed and other products, materials and services to industrial
customers. ExOne's business primarily consists of manufacturing and
selling 3D printing machines and printing products to specification
for its customers using its installed base of 3D printing machines.
ExOne’s machines serve direct and indirect applications. Direct
printing produces a component; indirect printing makes a tool to
produce a component. ExOne offers pre-production collaboration and
print products for customers through its network of ExOne Adoption
Centers (EACs) and Production Service Centers (PSCs). ExOne also
supplies the associated materials, including consumables and
replacement parts, and other services, including training and
technical support that is necessary for purchasers of its 3D
printing machines to print products. The Company believes that its
ability to print in a variety of industrial materials, as well as
its industry-leading volumetric output (as measured by build box
size and printing speed) uniquely position ExOne to serve the needs
of industrial customers.
Safe Harbor Regarding Forward Looking Statements
This news release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act with
respect to the Company’s future financial or business performance,
strategies, or expectations. Forward-looking statements typically
are identified by words or phrases such as “trend,” “potential,”
“opportunity,” “pipeline,” “believe,” “comfortable,” “expect,”
“anticipate,” “current,” “intention,” “estimate,” “position,”
“assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,”
“seek,” “achieve,” as well as similar expressions, or future or
conditional verbs such as “will,” “would,” “should,” “could” and
“may.”
The Company cautions that forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over
time. Forward-looking statements speak only as of the date they are
made and the Company assumes no duty to and does not undertake to
update forward-looking statements. Actual results could differ
materially from those anticipated in forward-looking statements and
future results could differ materially from historical
performance.
In addition to risk factors previously disclosed in the
Company’s reports, the following factors, among others, could cause
results to differ materially from forward-looking statements or
historical performance: the Company’s ability to enhance its
current three-dimensional (“3D”) printing machines and technology
and develop new 3D printing machines; its ability to qualify more
industrial materials in which it can print; timing and length of
sales of 3D printing machines; demand for ExOne products; the
Company’s ability to achieve cost savings through consolidation or
exiting of certain North American operations; the impact of
increases in operating expenses and expenses relating to proposed
investments and alliances; the availability of skilled personnel;
the impact of market conditions and other factors on the carrying
value of long-lived assets; the Company’s competitive environment
and its competitive position; the Company’s ability to continue as
a going concern; individual customer contractual requirements; the
impact of customer specific terms in machine sale agreements on the
period in which the Company recognizes revenue; the impact of loss
of key management; risks related to global operations including
effects of foreign currency and risks related to the situation in
the Ukraine and the United Kingdom’s referendum to withdraw from
the European Union; demand for aerospace, automotive, heavy
equipment, energy/oil/gas and other industrial products; the
Company’s plans regarding increased international operations in
additional international locations; the scope, nature or impact of
alliances and strategic investments and the Company’s ability to
integrate strategic investments; sufficiency of funds for required
capital expenditures, working capital, and debt service; the
adequacy of sources of liquidity; the effect of litigation,
contingencies and warranty claims; liabilities under laws and
regulations protecting the environment; the impact of governmental
laws and regulations; operating hazards, war, terrorism and
cancellation or unavailability of insurance coverage; the impact of
disruption of our manufacturing facilities, production service
centers or ExOne adoption centers; the adequacy of the Company’s
protection of its intellectual property; expectations regarding
demand for the Company’s industrial products, operating revenues,
operating and maintenance expenses, insurance expenses and
deductibles, interest expenses, debt levels, and other matters with
regard to outlook; and material weaknesses in the Company’s
internal control over financial reporting.
These and other important factors, including those discussed in
the Company’s Annual Report on Form 10-K, may cause its actual
results of operations to differ materially from any future results
of operations expressed or implied by the forward-looking
statements contained herein. Before making a decision to purchase
ExOne common stock, you should carefully consider all of the
factors identified in its Annual Report on Form 10-K that could
cause actual results to differ from these forward-looking
statements.
FINANCIAL TABLES FOLLOW.
The ExOne Company
Statement of Consolidated
Operations
(in thousands, except per-share
amounts)
(Unaudited)
Quarter Ended
March 31,
%Change
2017 2016 Revenue $ 10,869 $ 8,414 29 % Cost
of sales 9,266 6,538 42 % Gross profit
1,603 1,876 (15 %) Gross margin 14.7 %
22.3 % Research and development 1,999 1,893 6 % Selling,
general and administrative 6,263 5,325
18 % 8,262 7,218 14 % Operating loss
(6,659 ) (5,342 ) (25 %) Interest expense 22 232 (91 %)
Other expense (income) – net 110 (93 ) NM
132 139 (5 %) Loss before income taxes
(6,791 ) (5,481 ) (24 %) Provision (benefit) for income
taxes - (4 ) (100 %) Net loss $ (6,791
) $ (5,477 ) (24 %) Net loss per common share: Basic
$ (0.42 ) $ (0.35 ) (20 %) Diluted $ (0.42 ) $ (0.35 ) (20 %)
Weighted average shares outstanding (basic and diluted)
16,029 15,745
NM: Not Meaningful
The ExOne Company
Consolidated Balance Sheet
(in thousands, except per-share and share
amounts)
(Unaudited)
March 31,
2017
December 31,
2016
Assets Current assets: Cash and cash equivalents $
25,671 $ 27,825 Restricted cash 2,663 330 Accounts receivable - net
of allowance of $1,703 (2017) and $1,566 (2016) 5,473 6,447
Inventories - net 16,137 15,838 Prepaid expenses and other current
assets 2,071 1,159 Assets held for sale 3,420
- Total current assets 55,435 51,599 Property and
equipment - net 46,384 51,134 Intangible assets - net 303 668 Other
noncurrent assets 337 777
Total
assets $ 102,459 $ 104,178
Liabilities Current liabilities: Current portion of
long-term debt $ 132 $ 132 Current portion of capital leases 60 72
Accounts payable 2,753 2,036 Accrued expenses and other current
liabilities 4,989 5,124 Deferred revenue and customer prepayments
10,689 7,371 Total current liabilities
18,623 14,735 Long-term debt - net of current portion 1,611
1,644 Capital leases - net of current portion 48 10 Other
noncurrent liabilities 9 9
Total
liabilities 20,291 16,398 Contingencies and commitments
Stockholders' equity
Common stock, $0.01 par value, 200,000,000
shares authorized, 16,045,949 (2017) and 16,017,115 (2016) shares
issued and outstanding
160 160 Additional paid-in capital 171,677 171,116 Accumulated
deficit (75,960 ) (68,761 ) Accumulated other comprehensive loss
(13,709 ) (14,735 )
Total stockholders' equity
82,168 87,780
Total liabilities and
stockholders' equity $ 102,459 $ 104,178
The ExOne Company
Statement of Consolidated Cash
Flows
(in thousands)
(Unaudited)
Quarter Ended March 31, 2017
2016 Operating activities Net loss $ (6,791 )
$ (5,477 ) Adjustments to reconcile net loss to net cash provided
by (used for) operations: Depreciation and amortization 2,307 1,413
Deferred income taxes - (27 ) Equity-based compensation 561 312
Provision for bad debts 123 5 Amortization of debt issuance costs 2
206 Gain from disposal of property and equipment (8 ) - Changes in
assets and liabilities, excluding effects of foreign currency
translation adjustments: Decrease in accounts receivable 944 4,494
Decrease (increase) in inventories 132 (312 ) (Increase) decrease
in prepaid expenses and other assets (902 ) 467 Increase (decrease)
in accounts payable 787 (1,091 ) Decrease in accrued expenses and
other liabilities (195 ) (1,005 ) Increase in deferred revenue and
customer prepayments 3,203 23
Net
cash provided by (used for) operating activities 163 (992 )
Investing activities Capital expenditures (249 ) (180
) Proceeds from sale of property and equipment 37
-
Net cash used for investing activities (212
) (180 )
Financing activities Net proceeds from
issuance of common stock - registered direct offering to a related
party - 12,461 Net proceeds from issuance of common stock - at the
market offerings - 596 Payments on long-term debt (35 ) (34 )
Payments on capital and financing leases (22 ) (20 )
Net cash (used for) provided by financing activities (57 )
13,003 Effect of exchange rate changes on cash, cash
equivalents, and restricted cash 285 92
Net change in cash, cash equivalents, and restricted cash 179
11,923 Cash, cash equivalents, and restricted cash at beginning of
period 28,155 19,672
Cash,
cash equivalents, and restricted cash at end of period $ 28,334
$ 31,595
Supplemental disclosure of noncash
investing and financing activities
Transfer of internally developed 3D
printing machines from inventories to property and equipment for
internal use or leasing activities
$ 131 $ 1,459
Transfer of internally developed 3D
printing machines from property and equipment to inventories for
sale
$ 395 $ - Property and equipment acquired through
financing arrangements $ 48 $ - Property and
equipment included in accounts payable $ 25 $ -
Property and equipment included in assets held for sale $ 3,351
$ - Property and equipment included in accrued
expenses and other current liabilities $ - $ 50
Common stock offering costs included in accrued expenses and other
current liabilities $ - $ 15
The ExOne Company
Additional Information
(Unaudited)
Machine Sales by Type
Quarter Ended
March 31,
2017 2016 S-Max+™ - 1 S-Max ® 4 -
M-Flex ® 1 - 5 1
The ExOne Company
Adjusted EBITDA Reconciliation
(in millions)
(Unaudited)
Quarter Ended
March 31,
2017 2016 Net loss $ (6.8 ) $ (5.4 )
Interest expense 0.0 0.2 Provision (benefit) for income
taxes - (0.0 ) Depreciation and amortization 2.3 1.4 Equity-based
compensation 0.6 0.3 Other expense (income) - net 0.1
(0.1 ) Adjusted EBITDA $ (3.8 ) $ (3.6 )
ExOne defines Adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) as net loss (as calculated under
accounting principles generally accepted in the United States
(“GAAP”)) plus interest expense, provision (benefit) for income
taxes, depreciation and amortization, equity-based compensation,
and other expense (income) - net. Use of Adjusted EBITDA, which is
a non-GAAP financial measure, as defined under the rules of the
U.S. Securities and Exchange Commission, is intended as a
supplemental measure of ExOne’s performance that is not required
by, or presented in accordance with, GAAP. Adjusted EBITDA should
not be considered as an alternative to net loss or any other
performance measure derived in accordance with GAAP. The Company’s
presentation of Adjusted EBITDA should not be construed to imply
that its future results will be unaffected by unusual or
non-recurring items.
The Company believes Adjusted EBITDA is meaningful to its
investors to enhance their understanding of ExOne’s financial
results. Although Adjusted EBITDA is not necessarily a measure of
the Company’s ability to fund its cash needs, the Company
understands that it is frequently used by securities analysts,
investors and other interested parties as a measure of financial
performance and to compare ExOne’s performance with the performance
of other companies that report Adjusted EBITDA. ExOne’s calculation
of Adjusted EBITDA may not be comparable to similarly titled
measures reported by other companies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170510006495/en/
The ExOne CompanyBrian Smith, 724-765-1350Chief Financial
Officerbrian.smith@exone.comorKei Advisors LLCDeborah K. Pawlowski,
716-843-3908dpawlowski@keiadvisors.comKaren L. Howard,
716-843-3942khoward@keiadvisors.com
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