The ExOne Company Reports Second Quarter 2014 Results

The ExOne Company has  reported financial results for the second quarter and six-month period ended June 30, 2014.

Second Quarter Revenue - Solid Non-machine Growth

• Revenue for the quarter was $11.2 million 
• Non-machine revenue was up 53% compared with the prior-year quarter 
• The Company sold six 3D printing machines during the 2014 second quarter:  three S-Max™ machines, one S-Print™ machine, one M-Flex™ machine, and one X1-Lab™ machine

Given the long sales cycle and significance of a machine's average selling price relative to total revenue, fluctuations in machine revenue may vary from quarter to quarter. ExOne does not believe that such quarter-to-quarter fluctuations are necessarily indicative of larger trends.      

Second Quarter Operations - Continued Investments

Gross profit was $2.5 million, resulting in a 22.3% gross margin in the 2014 second quarter, compared with $4.2 million, resulting in a 45.3% gross margin, in the 2013 second quarter. The 2014 quarter was impacted by near-term investments in the Company's development of its ExCast strategy as well as under absorption of costs associated with its expanded PSC network. The 2014 quarter was also impacted by an unfavorable mix of machine sales versus non-machine revenue.

David Burns, President and Chief Operating Officer, commented, "We continue to stay focused on investing to drive utilization of 3D printing in the manufacturing setting. Investments in our ExCast strategy as well as our ongoing machine and materials development should serve as a springboard for our future revenue growth."

Mr. Burns added, "In the second quarter, strong global non-machine sales were extremely encouraging. As is typical in the first half of the year, we did not fully absorb our infrastructure costs as machine sales are weighted to the second half. As a small but growing company, the mix between machine and non-machine revenue may significantly impact our quarterly performance."

Operating loss was $4.7 million compared with operating loss of $1.0 million in the second quarter of 2013. SG&A expenses were $5.3 million, compared with $3.9 million in the prior-year quarter, reflecting the Company's investments in people and processes to support growth.  R&D expenses for the quarter increased by $0.6 million to $1.9 million, resulting from ongoing materials qualification activities and machine technology enhancements. Net loss attributable to ExOne for the reported quarter was $4.7 million, or $0.32 loss per diluted share, compared with net loss attributable to ExOne of $1.1 million, or $0.08 loss per diluted share, for the prior-year period. 

Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") was a $3.6 million loss in the 2014 quarter, compared with a $0.3 million loss during last year's second 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"), that Adjusted EBITDA, a non-GAAP measure, assists in the understanding of operating performance. See the attached tables for important disclosures regarding the Company's use of Adjusted EBITDA as well as a reconciliation of net loss attributable to ExOne to Adjusted EBITDA for the quarters and six months ended June 30, 2014 and 2013.

First Half 2014 Review - Advancing Developments

Revenue for the six-month period ended June 30, 2014 was $18.5 million, up $1.3 million, or 8%, compared with $17.2 million in the prior-year period, driven by 42% growth in global non-machine revenue.  

First half gross profit was $4.1 million, down $2.9 million compared with last year's first half of $7.0 million. Gross profit as a percentage of sales was 22.3% in the first half of 2014 compared with 40.9% in last year's first half. SG&A expense for the first six months of 2014 was $10.5 million, up 
$3.0 million from the prior-year period. R&D expense was $3.8 million in the first half of 2014, compared with $2.1 million in the first half of 2013, reflecting the Company's investments in growth. 

Operating loss for the first half of 2014 was $10.1 million compared with a loss of $2.6 million during the comparable prior-year period. Net loss attributable to ExOne was $10.2 million, or $0.71 loss per diluted share, for the first half of 2014 compared with $3.0 million, or $0.27 loss per diluted share, for the first half of 2013.

Outlook and Strategy - Updating 2014 Gross Margin and R&D Expectations

• Revenue expected to grow 40% to 50% in 2014, resulting in approximately $55 million to $60 million
• Gross margin now expected to be between 32% and 36% to adjust for first half actual results and second half forecast, excluding anticipated non-recurring costs estimated at $1.5 million to $2.5 million associated with facility expansions
• SG&A expenses expected to be in a range of $19 million to $21 million
• R&D expenses now expected to be in a range of $7 million to $8 million, reflecting acceleration of machine enhancements and machine development
• Capital expenditures expected to be between $31 million and $34 million, including investments for capacity expansion and a global ERP implementation

S. Kent Rockwell, Chairman and CEO, noted, "Given demand from our growing base of industrial customers, we expect that 2014 sales will meet our expectations, although timing of order flow continues to be unpredictable. We expect our development to result in more productive machines that our customers can apply in a variety of industrial applications. More significantly, there is improving clarity for the role and acceptance of our binder jetting technology within 3D printing. The market opportunities that we develop now should be the foundation for our success in 2015 and beyond."

Source: ExOne