For the first half of 2016, revenue was up 32% over the 2015 first half, driven by the same factors that impacted the quarter. Machine revenue nearly doubled and non-machine revenue grew 12%.
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.
Second Quarter Operations – Operating Leverage on Higher Revenue
| Q2 table | ||||||||||||||||
| ($ in millions,
except per-share amounts) | Q2 2016 | Q2 2015 | Change | % Change | ||||||||||||
| Gross profit | $ | 3.5 | $ | 1.1 | $ | 2.4 | 217 | % | ||||||||
| Gross margin | 29.8 | % | 13.0 | % | ||||||||||||
| Operating loss | $ | (3.1 | ) | $ | (6.9 | ) | $ | 3.8 | 55 | % | ||||||
| Net loss | $ | (2.9 | ) | $ | (6.9 | ) | $ | 4.0 | 57 | % | ||||||
| Diluted EPS | $ | (0.18 | ) | $ | (0.48 | ) | $ | 0.30 | 63 | % | ||||||
The increase in second quarter gross profit was driven by higher revenue, including significantly higher machine sales and a favorable mix of indirect machines, as well as the reversal of a $0.5 million reserve for obsolete and slow-moving inventory, and enhanced production efficiency. The 2015 quarter was impacted by inefficiencies resulting from the Company’s transition into its new and expanded facilities as well as deployment of its ERP system.
Operating loss for the quarter significantly improved compared with the prior-year second quarter due to higher gross profit as well as lower selling, general and administrative (“SG&A”) expenses. SG&A decreased by 26% to $4.7 million compared with $6.3 million in the prior-year quarter, primarily due to lower bad debt, professional, consulting and trade show expenses. R&D expenses of $1.9 million for the quarter were up from $1.7 million in the 2015 second quarter, with the increase reflecting project-related material costs.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was a $1.4 million loss in the 2016 second quarter, compared with a $5.2 million loss in last year’s second quarter. ExOne management believes that when used in conjunction with other measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), that Adjusted EBITDA, a non-GAAP measure, assists in the understanding of its financial results. See the attached tables for important disclosures regarding the Company’s use of Adjusted EBITDA as well as a reconciliation of net loss to Adjusted EBITDA for the quarters and six months ended June 30, 2016 and 2015.
First Half 2016 Review – Gaining Momentum in Operational Performance
| YTD table | ||||||||||||||||
| ($ in millions,
except per-share amounts) | YTD 2016 | YTD 2015 | Change | % Change | ||||||||||||
| Gross profit | $ | 5.4 | $ | 1.1 | $ | 4.3 | 387 | % | ||||||||
| Gross margin | 26.7 | % | 7.2 | % | ||||||||||||
| Operating loss | $ | (8.4 | ) | $ | (14.7 | ) | $ | 6.3 | 43 | % | ||||||
| Net loss | $ | (8.4 | ) | $ | (14.6 | ) | $ | 6.2 | 42 | % | ||||||
| Diluted EPS | $ | (0.53 | ) | $ | (1.01 | ) | $ | 0.48 | 48 | % | ||||||
