- Revenue up 22% to $15.9
million
- Machine sales up 32%; Non-machine
sales up 13%
- Reaffirming revenue expectations of
20% to 25% growth in 2017, and positive Adjusted EBITDA in the
fourth quarter
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 third quarter
ended September 30, 2017.
“As we approach the end of this fiscal year, we are reaffirming
our 2017 guidance,” stated Jim McCarley, ExOne’s Chief Executive
Officer. The Company finished the third quarter of 2017 with strong
growth in both machine sales and non-machine revenue, increasing
32% and 13%, respectively.
“We are also very pleased with the progress our teams in both
Germany and the U.S. have made in advancing our machine
capabilities. Of particular note are the improvements in printing
of fine powder materials as well as development of a broader range
of materials for printing by our market-leading sand mold and core
systems,” continued Mr. McCarley.
ExOne expects continued revenue growth and accelerated
technology development through the remainder of 2017, and
throughout 2018. Thus far in the fourth quarter through November 7,
ExOne received purchase orders or is in final negotiation with new
and repeat customers for approximately $8.9 million in future
machine sales. “This positive momentum coupled with our backlog
solidifies our confidence in our expectations for 20% to 25%
revenue growth for 2017, positive Adjusted EBITDA in the fourth
quarter, and our opportunities for continued growth beyond 2017,”
Mr. McCarley added.
Third Quarter and Year-to-date Revenue
– Growth in Both Product Lines
Quarter Ended Nine Months Ended September
30, September 30, ($ in millions)
2017
2016 2017 2016 Revenue by Product Line
3D Printing Machines $ 8.6 54 % $ 6.5
50 % $ 17.1 45 % $ 13.5 41 % 3D Printed and Other Products,
Materials and Services 7.3 46 % 6.5
50 % 20.5 55 % 19.7
59 %
Total Revenue $ 15.9 100 %
$ 13.0 100 % $ 37.6 100 % $ 33.2
100 %
Consolidated revenue for the 2017 third quarter increased 22%
compared with the prior-year period. Excluding approximately $0.4
million of third quarter 2016 revenue attributable to a product
line that the Company has exited, the comparable consolidated
revenue grew 26%.
Machine revenue was up 32%. Compared with the 2016 third quarter
there was one more machine sold in the 2017 third quarter, and
favorable machine mix.
Non-machine revenue was up 13%. Excluding approximately $0.4
million of third quarter 2016 revenue attributable to a product
line that the Company has exited, the comparable non-machine
revenue grew by 21%. The growth was due to an increase in sales
from the Company’s direct production service center (“PSC”)
operations and an increase in maintenance services and replacement
components, due to the growing global installed base of the
Company’s 3D printing machines.
For the first nine months of 2017, revenue was up 13% over the
2016 first nine months. Excluding approximately $1.2 million of
revenue attributable to product lines that the Company has exited,
the comparable consolidated revenue grew 18%. Machine revenue was
up 27%, driven by four more machine sales in the 2017 first nine
months, as well as favorable machine mix. Non-machine revenue was
up 4% year to date. Excluding revenue attributable to product lines
that the Company has exited, the comparable non-machine revenue
grew by 11%.
Given the long sales cycle and significance of a machine’s
average selling price relative to total revenue, fluctuations in
machine-sale revenue vary from quarter to quarter. ExOne does not
believe that such quarter-to-quarter fluctuations are necessarily
indicative of larger trends.
Third Quarter Operations – Impacted by
Exerial Machines and Technology Investments
($ in millions,
except per-share amounts)
Q3 2017 Q3 2016 Change % Change Gross
profit $ 4.1 $ 3.6 $ 0.5 15 % Gross margin 25.8 % 27.4 % Operating
loss ($4.8 ) ($3.6 ) ($1.2 ) (35 %) Net loss ($4.9 ) ($3.6 ) ($1.3
) (35 %) Diluted EPS ($0.30 ) ($0.23 ) ($0.07 ) (30 %)
Gross profit was $4.1 million, resulting in a 25.8% gross margin
for the 2017 third quarter, compared with 27.4% in the 2016 third
quarter. The 2017 gross margin was impacted by the $2.8 million
sale of four ExerialTM machines during the quarter at a breakeven
contribution margin. Excluding these unit sales, the Company
benefited from overall higher realized pricing and better leverage
of its fixed cost base due to higher sales of 3D printed and other
products, materials and services.
R&D expenses of $2.9 million for the quarter were up $1.0
million compared with the 2016 third quarter, attributable to
investments in internal talent and external resources for machine
and organizational development activities.
SG&A expenses increased to $6.1 million compared with $5.2
million in the prior-year quarter. The increase included
investments in internal talent and external resources to advance
technology adoption, as well as approximately $0.5 million of
employee-related costs which are not expected to recur in the
fourth quarter.
The 2017 third quarter net loss was $4.9 million, or $0.30 per
share, compared with a $3.6 million net loss, or $0.23 per share,
in the third quarter of 2016. The increase in net loss was
principally due to increased investments in research and
development and selling, general and administrative activities.
Adjusted earnings before interest, taxes, depreciation and
amortization (“Adjusted EBITDA”), a non-GAAP measure, was a $2.2
million loss in the 2017 third quarter, compared with a $1.6
million loss in last year’s third quarter. ExOne management
believes that, when used in conjunction with other measures
prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”), Adjusted EBITDA assists in
the understanding of its financial results. See the attached tables
for important disclosures regarding the Company’s use of Adjusted
EBITDA as well as a reconciliation of net loss (most directly
comparable GAAP measure) to Adjusted EBITDA for the quarters ended
September 30, 2017 and 2016.
Year-to-date 2017 Review – Continued
Focus on Technology Advancement and Operating Model
Evolution
($ in millions,
except per-share amounts)
YTD 2017 YTD 2016 Change % Change Gross
profit $7.7 $8.9 ($1.2 ) (14 %) Gross margin 20.6 %
27.0 % Operating loss ($17.8 ) ($12.0 ) ($5.8 ) (48 %) Net loss
($18.1 ) ($12.0 ) ($6.1 ) (50 %) Diluted EPS
($1.13
)
($0.76
) ($0.37 ) (49 %)
Gross profit was $7.7 million, resulting in a 20.6% gross margin
for the first nine months of 2017, compared with 27.0% in the first
nine months of 2016. The 2017 first nine months was impacted by the
third quarter $2.8 million sale of four ExerialTM machines at a
breakeven contribution margin as further described above, a $1.5
million charge for obsolete inventories associated with the
completion of a design evaluation of the ExerialTM platform,
approximately $0.7 million of costs associated with the Company’s
consolidation and exit from its North Las Vegas PSC and non-core
specialty machining operations in Michigan, partially offset by
approximately $0.3 million of net gains on the disposal of the
impacted property and equipment. The 2016 first nine months
benefited by approximately $0.5 million from a sale associated with
an exited product line, partially offset by approximately $0.2
million of losses on disposals of property and equipment.
R&D expense was $7.2 million in the first nine months of
2017 compared with $5.7 million in the first nine months of 2016,
attributable to the factors described above for the third
quarter.
SG&A for the first nine months of 2017 was $18.3 million, up
$3.1 million compared with the prior-year period. The increase was
principally due to the factors previously described for the third
quarter, as well as an impairment of intangible assets of $0.3
million associated with an exited product line and an increase in
selling costs to support revenue growth.
The net loss was $18.1 million, or $1.13 per share, for the
first nine months of 2017 compared with $12.0 million, or $0.76 per
share, in the 2016 first nine months.
Adjusted EBITDA was a $10.8 million loss in the first nine
months of 2017, compared with a $6.6 million loss in last year’s
first nine months. ExOne management believes that when used in
conjunction with other measures prepared in accordance with GAAP,
that Adjusted EBITDA, a non-GAAP measure, 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 to Adjusted EBITDA
for the nine months ended September 30, 2017 and 2016.
Capitalization – Cash Used for Inventory Build and Technology
Investments
Cash, cash equivalents and restricted cash as of September 30,
2017 were $18.8 million, compared with $28.2 million at December
31, 2016. Cash used for operating activities during the first nine
months of 2017 and 2016 was $12.9 million and $1.9 million,
respectively. Cash used for operating activities in the first nine
months of 2017 reflects the impact of a higher net loss and
increased working capital usage, primarily due to an inventory
build in preparation for fourth quarter machine sales as well as a
decrease in cash inflows from customers due to timing. Cash capital
expenditures were $0.9 million for the first nine months of 2017
compared with $0.7 million for the first nine months of 2016. The
first nine months of 2017 included $3.7 million of cash proceeds
from the sale of property and equipment, including facility
exits.
Outlook – Introducing 2018 Product Development Plans
Mr. McCarley concluded, “We are making great strides in
assisting our customers to understand how our binder jetting
technology will transform their production processes. In 2018, our
technology roadmap will capitalize on the current strengths of our
machines with a focus on expanding our fine powder printing
capabilities, led by the upgrade of our M-Print™ machine. We will
concurrently drive improved productivity of our workhorse M-Flex™
and S-Max® platforms as well as continue the expansion of our
material and binder sets to respond to customer application needs.
Continued customer adoption gives us confidence that ExOne will
remain a 3D industry leader in revenue growth in 2018.”
Webcast and Conference Call
ExOne will host a conference call and live webcast on Friday,
November 10 at 8:30 a.m. Eastern Time. During the conference call
and webcast, management will review the financial and operating
results for the 2017 third 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 Friday,
November 17, 2017. To listen to a replay of the call, dial (412)
317-6671 and enter the conference ID number 13671788, 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.
The ExOne Company
Statement of Consolidated
Operations
(in thousands, except per-share
amounts)
(Unaudited)
Quarter Ended
September 30,
% Change Nine Months Ended
September 30,
% Change 2017
2016 2017
2016 Revenue $ 15,887 $ 12,988 22 % $
37,555 $ 33,157 13% Cost of sales 11,790 9,428
25 % 29,829 24,215 23% Gross
profit 4,097 3,560 15 % 7,726 8,942 (14%) Gross margin 25.8 % 27.4
% 20.6 % 27.0 % Research and development 2,871 1,898 51 %
7,219 5,737 26% Selling, general and administrative 6,062
5,234 16 % 18,338 15,222
20% 8,933 7,132 25 %
25,557 20,959 22% Operating loss (4,836 )
(3,572 ) (35 %) (17,831 ) (12,017 ) (48%) Interest expense
24 22 9 % 69 276 (75%) Other (income) expense – net (11 )
(8 ) 38 % 134 (306 ) NM 13
14 (7 %) 203 (30 ) NM
Loss before income taxes (4,849 ) (3,586 ) (35 %) (18,034 ) (11,987
) (50%) Provision for income taxes 14
25 (44 %) 23 43 (47%) Net loss $
(4,863 ) $ (3,611 ) (35 %) $ (18,057 ) $ (12,030 ) (50%)
Net loss per common share: Basic $ (0.30 ) $ (0.23 ) (30 %)
$ (1.13 ) $ (0.76 ) (49%) Diluted $ (0.30 ) $ (0.23 ) (30 %) $
(1.13 ) $ (0.76 ) (49%) Weighted average shares outstanding
(basic and diluted) 16,069 15,997 16,048 15,913
NM: Not Meaningful
The ExOne Company
Consolidated Balance Sheet
(in thousands, except per-share and share
amounts)
(Unaudited)
September 30,
2017
December 31,
2016
Assets Current assets: Cash and cash equivalents $
17,706 $ 27,825 Restricted cash 1,098 330 Accounts receivable - net
of allowance of $1,494 (2017) and $1,566 (2016) 6,539 6,447
Inventories - net 16,643 15,838 Prepaid expenses and other current
assets 2,293 1,159 Total current assets
44,279 51,599 Property and equipment - net 49,489 51,134
Intangible assets - net 152 668 Other noncurrent assets 781
777
Total assets $ 94,701
$ 104,178
Liabilities Current liabilities:
Current portion of long-term debt $ 135 $ 132 Current portion of
capital leases 25 72 Accounts payable 4,311 2,036 Accrued expenses
and other current liabilities 5,033 5,124 Deferred revenue and
customer prepayments 7,533 7,371 Total
current liabilities 17,037
14,735 Long-term debt - net of current portion 1,543 1,644
Capital leases - net of current portion 41 10 Other noncurrent
liabilities 9 9
Total
liabilities 18,630 16,398 Contingencies and commitments
Stockholders' equity
Common stock, $0.01 par value, 200,000,000 shares authorized,
16,092,114 (2017) and 16,017,115 (2016) shares issued and
outstanding 161 160 Additional paid-in capital 173,158 171,116
Accumulated deficit (87,226 ) (68,761 ) Accumulated other
comprehensive loss (10,022 ) (14,735 )
Total
stockholders' equity 76,071 87,780
Total liabilities and stockholders' equity $ 94,701 $
104,178
The ExOne Company
Statement of Consolidated Cash
Flows
(in thousands)
(Unaudited)
Nine Months Ended September 30,
2017 2016
Operating activities Net loss $ (18,057 ) $ (12,030 )
Adjustments to reconcile net loss to net cash used for operations:
Depreciation and amortization 4,966 4,280 Equity-based compensation
2,043 1,104 Amortization of debt issuance costs 4 209 Deferred
income taxes - (29 ) Recoveries for bad debts - net (51 ) (256 )
Provision (recoveries) for slow-moving, obsolete and lower of cost
or market inventories - net 1,872 (356 ) (Gain) loss from disposal
of property and equipment - net (322 ) 163 Changes in assets and
liabilities, excluding effects of foreign currency translation
adjustments: Decrease in accounts receivable 288 4,681 (Increase)
decrease in inventories (2,772 ) 399 (Increase) decrease in prepaid
expenses and other assets (1,438 ) 795 Increase (decrease) in
accounts payable 2,032 (1,296 ) Decrease in accrued expenses and
other liabilities (522 ) (1,259 ) (Decrease) increase in deferred
revenue and customer prepayments (938 ) 1,687
Net cash used for operating activities (12,895 ) (1,908 )
Investing activities Capital expenditures (874 ) (690
) Proceeds from sale of property and equipment 3,702
52
Net cash provided by (used for) investing
activities 2,828 (638 )
Financing activities Net
proceeds from issuance of common stock - registered direct offering
to a related party - 12,447 Net proceeds from issuance of common
stock - at the market offerings - 595 Payments on long-term debt
(102 ) (102 ) Payments on capital leases (64 ) (61 )
Net cash (used for) provided by financing activities (166 )
12,879 Effect of exchange rate changes on cash, cash
equivalents, and restricted cash 882 138
Net change in cash, cash equivalents, and restricted cash
(9,351 ) 10,471 Cash, cash equivalents, and restricted cash at
beginning of period 28,155 19,672
Cash, cash equivalents, and restricted cash at end of period
$ 18,804 $ 30,143
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 $
2,363 $ 2,666 Transfer of internally developed 3D
printing machines from property and equipment to inventories for
sale $ 597 $ 1,276 Property and equipment acquired
through financing arrangements $ 48 $ - Property and
equipment included in accounts payable $ 94 $ 15
Property and equipment included in accrued expenses and other
current liabilities $ 84 $ - Advance deposits on
property and equipment $ 12 $ 203
The ExOne Company
Additional Information
(Unaudited)
Machine Sales by Type
Quarter Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017
2016 ExerialTM 4 - 4 - S-Max+™ 1 - 1 1 S-Max® 1 4 7 5
S-Print® 2 1 2 3 S-15™ - 1 - 2 M-Flex® 2 1 6 3 Innovent® 2 3 5 6
X1-LabTM - 1 - 1 12 11 25 21
The ExOne Company
Adjusted EBITDA Reconciliation
(in millions)
(Unaudited)
Quarter Ended
September 30,
Nine Months Ended
September 30,
2017 2016
2017 2016
Net loss $ (4.9 ) $ (3.6 ) $ (18.1 ) $ (12.0 )
Interest expense 0.0 0.0 0.1 0.3 Provision for income taxes 0.0 0.0
0.0 0.0 Depreciation and amortization 1.4 1.4 5.0 4.3 Equity-based
compensation 1.3 0.6 2.1 1.1 Other (income) expense - net
(0.0 ) (0.0 ) 0.1 (0.3 ) Adjusted
EBITDA $ (2.2 ) $ (1.6 ) $ (10.8 ) $ (6.6 )
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 for income taxes,
depreciation and amortization, equity-based compensation, and other
(income) expense - 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/20171109006374/en/
ExOneBrian Smith, 724-765-1350Chief Financial
Officerbrian.smith@exone.comorKei Advisors LLCDeborah K. Pawlowski
/ Karen L. Howard716-843-3908 /
716-843-3942dpawlowski@keiadvisors.com /
khoward@keiadvisors.com
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