“We are pleased with the progress made in 2016, evidenced by solid growth in machine revenue. While expected recognition of revenue on certain machines slipped from the 2016 fourth quarter into 2017, we are not discouraged by the comparison to a strong 2015 fourth quarter. We have made a considerable effort to understand in what stage of adoption our customers are, with respect to our binder jet printing technology, and believe that 2017 marks an inflection point in our evolution. We have customers who were in the early stages of adoption two years ago and are now reaching more advanced stages, as they discover that our equipment can bring sustainable and differential value to their businesses. This encourages us about our potential for growth,” stated Jim McCarley, ExOne’s Chief Executive Officer.
Fourth Quarter Operations – Lower Machine Revenue Impacts Results
| ($ in millions, except per-share amounts) | Q4 2016 | Q4 2015 | Change | % Change | |||||
| Gross profit | $5.2 | $6.1 | ($0.9) | (14%) | |||||
| Gross margin | 35.7% | 37.5% | |||||||
| Operating Loss | ($2.4) | ($1.1) | ($1.3) | (117%) | |||||
| Net loss | ($2.6) | ($1.2) | ($1.4) | (111%) | |||||
| Diluted EPS | $ | (0.16) | $ | (0.08) | ($0.08) | (90%) | |||
The decrease in 2016 gross profit was driven by lower machine sales, with the 2015 fourth quarter margin demonstrating a more favorable mix.
Higher operating loss in the 2016 fourth quarter was impacted by lower gross profit and higher selling, general and administrative (“SG&A”) expenses. SG&A expenses increased by $0.4 million to $5.5 million primarily due to the inclusion of bad debt recoveries in 2015 that did not recur in 2016. R&D expenses of $2.1 million for the quarter were comparable with the prior year’s quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure, decreased to a $0.7 million loss in the 2016 fourth quarter, compared with $0.8 million in last year’s fourth quarter. ExOne management believes that, when used in conjunction with other measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), Adjusted EBITDA assists in the understanding of its financial results. See the attached tables for important disclosures regarding the Company’s use of Adjusted EBITDA as well as a reconciliation of net loss (most directly comparable GAAP measure) to Adjusted EBITDA for the quarters and years ended December 31, 2016 and 2015.
2016 Review – Improved Operating Leverage
| Full year table | |||||||||||||||
| ($ in millions, except per-share amounts) | 2016 | 2015 | Change | % Change | |||||||||||
| Gross profit | $14.2 | $8.3 | $5.9 | 70% | |||||||||||
| Gross margin | 29.6% | 20.7% | |||||||||||||
| Operating loss | ($14.4 | ) | ($25.9 | ) | $11.6 | 45% | |||||||||
| Net loss | ($14.6 | ) | ($25.9 | ) | $11.3 | 44% | |||||||||
| Diluted EPS | $ | (0.92 | ) | $ | (1.79 | ) | $ | 0.87 | 49% | ||||||
