Business Wire | Aug 6, 2020 04:10PM EDT

The ExOne Company Reports 2020 Second Quarter Results

Aug. 06, 2020

NORTH HUNTINGDON, Pa.--(BUSINESS WIRE)--Aug. 06, 2020--The ExOne Company (Nasdaq: XONE) ("ExOne" or the "Company"), the global leader in industrial sand and metal 3D printers using binder jetting technology, today reported financial results for the second quarter ended June 30, 2020.

"ExOne's global team continued to perform admirably despite challenging market conditions as a result of COVID-19," said John Hartner, ExOne's CEO. "During the quarter, we continued to install machines around the world, increase adoption of our technology and expand our backlog. At the same time, our recurring revenue streams showed resiliency and growth, and our offering of products and services has grown, showcasing the diversity of our business model."

Recently, ExOne won the first commitments for its X1 160Pro(tm) printer, the industry's largest metal 3D printer, and a significant contract with the U.S. Department of Defense for a field deployable binder jet 3D printer. The Company also expanded its Quick Ship metal 3D printing services, and launched Scout, an app that provides real-time machine monitoring and analysis.

Q2 2020 Revenue Summary

Three Months Ended

(in millions) June 30,

Revenue by Product Line 2020 2019

3D Printing Machines $ 4.9 44 % $ 9.3 60 %

3D Printed and Other Products, Materials and 6.2 56 % 6.0 40 %ServicesTotal Revenue $ 11.1 100 % $ 15.3 100 %

Q2 2020 Financial Results Summary

The following summarizes ExOne's financial results for the second quarter ended June 30, 2020:

* Revenue was $11.1 million, compared to $15.3 million in last year's second quarter. The revenue decline resulted from a 47% decrease in revenue attributable to 3D printing machines driven by lower volumes (eight units sold in the current quarter versus 13 in the prior year period) and an unfavorable mix of machines sold. This decrease was partially offset by a 3% increase in revenue attributable to 3D printed and other products, materials and services driven by funded research and development contracts. Revenue for both product groups were impacted by COVID-19, including disruptions to domestic and international shipping and travel in addition to the negative macroeconomic effects. * Gross margin was 27.8%, compared to 33.7% in the second quarter of 2019. The decrease was primarily due to lower revenue volumes, partially offset by lower fixed overhead costs, which were driven by cost actions taken and other reductions realized as a result of COVID-19. * Research and development expenses were $2.4 million, compared to $2.5 million in the second quarter of 2019. The decrease was primarily due to lower employee-related costs resulting from actions taken in response to COVID-19. Investments remain focused on the further development of binder jetting technology, including the X1 160Pro production metal 3D printing system. * Selling, general and administrative expenses were $4.5 million, compared to $6.2 million for the second quarter of 2019. This decrease was driven by a combination of factors including lower trade show expenses and cost reductions associated with COVID-19, as well as lower equity-based compensation. * Net loss was $4.0 million, or $0.24 per fully diluted share, compared with a net loss of $3.8 million, or $0.23 per fully diluted share, in the second quarter of 2019. * Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-GAAP measure, was a loss of $2.4 million, compared with a loss of $1.7 million in the second quarter of 2019. Refer to the attached table captioned "Adjusted EBITDA Reconciliation" for important disclosures regarding the Company's definition and use of Adjusted EBITDA as well as a reconciliation of net loss (the most directly comparable measure under accounting principles generally accepted in the United States ("GAAP")) to Adjusted EBITDA. ExOne management believes that, when used in conjunction with other measures prepared in accordance with GAAP, Adjusted EBITDA assists in the understanding of its financial results. * Cash, cash equivalents and restricted cash as of June 30, 2020 increased to $20.2 million, from $17.3 million at March 31, 2020. The increase was driven by cash inflows from financing activities of $5.6 million, including $2.9 million in sales of common stock in at-the-market offerings and $2.2 million in proceeds from a federal COVID-19 loan program. Offsetting this were cash outflows from operations of $2.6 million mostly due to the widening of net loss, net of noncash items for the period. Working capital remained generally balanced as inflows from customers approximated the Company's investment in inventories for future deliveries against its backlog. * Total liquidity, which includes unrestricted cash and cash equivalents and availability under the Company's related party revolving credit facility, increased to $29.7 million at June 30, 2020 compared to $26.8 million at March 31, 2020. There were no borrowings outstanding under the Company's $10.0 million related party revolving credit facility at June 30, 2020.

Outlook

ExOne CEO John Hartner commented, "Our operating results continue to be impacted by a prolonged downturn in the global manufacturing sector, which has influenced the capital expenditures of our customers. Despite these headwinds, we ended the second quarter with a record backlog of $38.2 million. We expect the combination of our backlog, our recurring revenue stream and an acceleration in market adoption of our technology to provide the basis for operating stability for the remainder of 2020 and into 2021, despite continuing negative macroeconomic trends."

Webcast and Conference Call

ExOne will host a conference call and live webcast on Friday, August 7, 2020 at 8:30 a.m. Eastern Time. During the conference call and webcast, management will review the financial and operating results for the second quarter of 2020, along with ExOne's corporate strategies and outlook. A question-and-answer session will follow. The teleconference can be accessed by calling (877) 407-9039 or, for international callers, (201) 689-8470. The webcast can be accessed 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. Eastern Time on the day of the teleconference through 11:59 p.m. Eastern Time on Friday, August 14, 2020. To listen to a replay of the call, dial (844) 512-2921 or, for international callers, (412) 317-6671, and enter the conference ID number 13707347, or access the webcast replay via the Company's website, where a transcript will also be posted once available.

About ExOne

ExOne is the pioneer and global leader in binder jet 3D printing technology. Since 1995, we've been on a mission to deliver powerful 3D printers that solve our customers' toughest problems and enable world-changing innovations. Our 3D printing systems quickly transform powder materials - including metals, ceramics, composites and sand - into precision parts, metalcasting molds and cores, and innovative tooling solutions. Industrial customers use our technology to save time and money, reduce waste, increase their manufacturing flexibility, and deliver designs and products that were once impossible. As home to the world's leading team of binder jetting experts, ExOne also provides specialized 3D printing services, including on-demand production of mission-critical parts, as well as engineering and design consulting. Learn more about ExOne at www.exone.com or on Twitter at @ExOneCo.

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 filings with the U.S. Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, the following factors, among others, could cause results to differ materially from forward-looking statements or historical performance: the severity and duration of world health events, including the recent COVID-19 outbreak and the related economic repercussions and operational challenges; the Company's ability to consistently generate operating profits; fluctuations in the Company's revenues and operating results; the Company's competitive environment and its competitive position; ExOne's ability to enhance its current three-dimensional ("3D") printing machines and technology and to develop and introduce new 3D printing machines; the Company's ability to qualify more industrial materials in which it can print; demand for ExOne's products; the availability of skilled personnel; the impact of loss of key management; the impact of market conditions and other factors on the carrying value of long-lived assets; the Company's ability to continue as a going concern; the impact of customer specific terms in machine sale agreements in determining the period in which the Company recognizes revenue; risks related to global operations including effects of foreign currency and COVID-19; the adequacy of sources of liquidity; the amount and sufficiency of funds for required capital expenditures, working capital, and debt service; dependency on certain critical suppliers; nature or impact of alliances and strategic investments; reliance on critical information technology systems; 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 the Company's manufacturing facilities or ExOne Adoption Centers; the adequacy of ExOne'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 other factors beyond our control, including the impact of COVID-19.

These and other important factors, including those discussed under Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K, and under Part II, Item 1A, "Risk Factors" and Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, may cause the Company's actual results of operations to differ materially from any future results of operations expressed or implied by the forward-looking statements contained therein. 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 and Quarterly Reports on Form 10-Q that could cause actual results to differ from these forward-looking statements.

FINANCIAL TABLES FOLLOW.

The ExOne CompanyCondensed Statement of Consolidated Operations and Comprehensive Loss(Unaudited)(in thousands, except per-share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenue $ 11,099 $ 15,279 $ 24,482 $ 24,858

Cost of sales 8,009 10,137 17,763 17,074

Gross profit 3,090 5,142 6,719 7,784

Operating expensesResearch and development 2,369 2,537 4,845 4,969

Selling, general and 4,488 6,167 10,651 11,590 administrativeGain from sale-leaseback of - - (1,462 ) - property and equipment 6,857 8,704 14,034 16,559

Loss from operations (3,767 ) (3,562 ) (7,315 ) (8,775 )

Other expenseInterest expense 53 71 117 142

Other expense - net 195 57 5 69

248 128 122 211

Loss before income taxes (4,015 ) (3,690 ) (7,437 ) (8,986 )

Provision (benefit) for income 8 99 234 (701 )taxesNet loss $ (4,023 ) $ (3,789 ) $ (7,671 ) $ (8,285 )

Net loss per common share:Basic $ (0.24 ) $ (0.23 ) $ (0.47 ) $ (0.51 )

Diluted $ (0.24 ) $ (0.23 ) $ (0.47 ) $ (0.51 )

Comprehensive loss:Net loss $ (4,023 ) $ (3,789 ) $ (7,671 ) $ (8,285 )

Other comprehensive income(loss):Foreign currency translation 370 583 (468 ) (193 )adjustmentsComprehensive loss $ (3,653 ) $ (3,206 ) $ (8,139 ) $ (8,478 )

The ExOne CompanyCondensed Consolidated Balance Sheet (Unaudited)(in thousands, except per-share and share amounts)

June 30, December 31,

2020 2019

AssetsCurrent assets:Cash and cash equivalents $ 19,658 $ 5,265

Restricted cash 508 978

Accounts receivable - net 4,531 6,522

Current portion of net investment in sales-type 292 213 leasesInventories - net 24,208 19,770

Prepaid expenses and other current assets 3,510 2,182

Total current assets 52,707 34,930

Property and equipment - net 20,609 38,895

Operating lease right-of-use assets 4,533 432

Net investment in sales-type leases - net of 639 738 current portionOther noncurrent assets 242 371

Total assets $ 78,730 $ 75,366

LiabilitiesCurrent liabilities:Current portion of long-term debt $ 1,128 $ 153

Current portion of operating lease liabilities 1,754 158

Accounts payable 5,127 5,818

Accrued expenses and other current liabilities 4,183 6,942

Current portion of contract liabilities 16,438 11,846

Total current liabilities 28,630 24,917

Long-term debt - net of current portion 2,354 1,211

Operating lease liabilities - net of current 2,779 274 portionContract liabilities - net of current portion 213 286

Other noncurrent liabilities 223 96

Total liabilities 34,199 26,784

Contingencies and commitmentsStockholders' equityCommon stock, $0.01 par value, 200,000,000 shares 169 163 authorized, 16,863,602 (2020) and 16,346,960 (2019)shares issued and outstandingAdditional paid-in capital 180,932 176,850

Accumulated deficit (124,619 ) (116,948 )

Accumulated other comprehensive loss (11,951 ) (11,483 )

Total stockholders' equity 44,531 48,582

Total liabilities and stockholders' equity $ 78,730 $ 75,366

The ExOne CompanyCondensed Statement of Consolidated Cash Flows (Unaudited)(in thousands)

Six Months Ended

June 30,

2020 2019

Operating activitiesNet loss $ (7,671 ) $ (8,285 )

Adjustments to reconcile net loss to net cash used foroperations:Depreciation 2,107 2,349

Equity-based compensation 449 1,081

Amortization of debt issuance costs 29 47

Recoveries for bad debts - net (19 ) (150 )

Provision for slow-moving, obsolete and lower of cost 305 131 or net realizable value inventories - netForeign exchange (gains) losses on intercompany (51 ) 19 transactions - netGain from sale-leaseback of property and equipment (1,462 ) -

Gain from disposal of property and equipment - net (1 ) (2 )

Deferred income taxes 195 -

Changes in assets and liabilities, excluding effects offoreign currency translation adjustments:Decrease in accounts receivable 2,016 1,879

Decrease in net investment in sales-type leases 20 153

Increase in inventories (5,369 ) (1,325 )

Increase in prepaid expenses and other assets (1,034 ) (221 )

(Decrease) increase in accounts payable (821 ) 927

Decrease in accrued expenses and other liabilities (458 ) (1,689 )

Increase in contract liabilities 4,428 3,608

Net cash used for operating activities (7,337 ) (1,478 )

Investing activitiesCapital expenditures (591 ) (423 )

Proceeds from sale of property and equipment 16,229 3

Net cash provided by (used for) investing activities 15,638 (420 )

Financing activitiesProceeds from borrowings on long-term debt 2,194 -

Payments on long-term debt (78 ) (74 )

Proceeds from at-the-market offerings of common stock, 2,894 - net of issuance costsProceeds from exercise of employee stock options 541 171

Other (29 ) (75 )

Net cash provided by financing activities 5,522 22

Effect of exchange rate changes on cash, cash 100 (12 )equivalents, and restricted cashNet change in cash, cash equivalents, and restricted 13,923 (1,888 )cashCash, cash equivalents, and restricted cash at 6,243 9,140 beginning of periodCash, cash equivalents, and restricted cash at end of $ 20,166 $ 7,252 periodSupplemental disclosure of noncash investing andfinancing activitiesTransfer of internally developed 3D printing machines $ 1,834 $ 1,066 from inventories to property and equipment for internaluse or leasing activitiesTransfer of internally developed 3D printing machines $ 1,107 $ 182 from property and equipment to inventories for saleProperty and equipment included in accounts payable $ 41 $ 110

Property and equipment included in accrued expenses and $ - $ 48 other current liabilitiesUnsettled proceeds from at-the-market offerings of $ 204 $ - common stock, net of issuance costsUnsettled proceeds from exercise of employee stock $ - $ 91 options

The ExOne CompanyAdjusted EBITDA Reconciliation (Unaudited)(in millions)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Net loss $ (4.0 ) $ (3.8 ) $ (7.7 ) $ (8.3 )

Interest expense 0.0 0.1 0.1 0.1

Provision (benefit) for income taxes 0.0 0.1 0.3 (0.7 )

Depreciation 1.2 1.2 2.1 2.4

Equity-based compensation 0.2 0.6 0.5 1.1

Gain from sale-leaseback of property and 0.0 0.0 (1.5 ) 0.0 equipmentOther expense - net 0.2 0.1 0.0 0.1

Adjusted EBITDA $ (2.4 ) $ (1.7 ) $ (6.2 ) $ (5.3 )

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, equity-based compensation, gain from sale-leaseback of property and equipment and other expense - net. Use of Adjusted EBITDA, which is a non-GAAP financial measure, as defined under SEC rules, is intended as a supplemental measure of ExOne's performance that is not required by, or presented in accordance with, GAAP. The presentation of Adjusted EBITDA is not intended to be a substitute for, and should not be considered in isolation from, net loss reported 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 that 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.

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CONTACT: Doug Zemba Chief Financial Officer and Treasurer (724) 765-1331 douglas.zemba@exone.com Monica Gould Investor Relations/The Blueshirt Group (212) 871-3927 investor.relations@exone.com