Consolidated revenue for the 2016 third quarter was up 47% compared with the prior-year period.  Machine revenue grew by more than two and one-half times, driven by recognition of large, indirect machine sales.  Non-machine revenue, which was consistent with the prior year, was impacted by lower pricing on consumables, partially offsetting increased consumables volume due to the larger installed base.

For the first nine months of 2016, revenue was up 37% over the 2015 period, also driven by the sale of large, indirect machines.  Machine revenue more than doubled and non-machine revenue grew 8%.

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 – Favorable Mix Drives Results

The increase in third quarter gross profit was driven by significantly higher machine sales including a favorable mix of indirect machines, and enhanced production efficiency.  The prior-year 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 third quarter primarily due to higher gross profit and last year’s recording of a $4.4 million non-cash goodwill impairment charge.  Selling, general and administrative (“SG&A”) expenses increased by $0.2 million to $5.2 million.  The 2016 third quarter included approximately $0.5 million for management succession, of which $0.3 million comprised non-cash stock compensation.  R&D expenses of $1.9 million for the quarter were up from $1.8 million in the 2015 third quarter, with the increase reflecting project-related material costs.

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure, improved to a $1.6 million loss in the 2016 third quarter, compared with a $4.0 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”), that 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 and nine months ended September 30, 2016 and 2015.

Year-to-date 2016 Review – Continued Progress