R&D expense of $7.4 million for the first nine months of 2019 was down $1.1 million, or 13%, compared with the 2018 period, primarily resulting from efficiencies gained from the 2018 global cost realignment program and improved resource allocation to maintain strong progress in advancing the Company’s technology. These reductions were partially offset by increased material costs associated with development of the X1 25PRO and S-MAX Pro machines.
SG&A expense of $16.9 million was down $800,000, or 5%, compared with the first nine months of 2018, also benefiting from the 2018 global cost realignment program, partially offset by increases in equity-based compensation, bad debts and trade show activities.
ExOne realized a $0.7 million tax benefit in the first nine months of 2019 resulting from the completion of a tax examination.
Net loss for the first nine months of 2019 was $13.1 million, or $0.81 per share, compared with a $14.7 million net loss, or $0.91 loss per share, in the same period of 2018.
Adjusted EBITDA*, a non-GAAP measure, was a $9.1 million loss in the first nine months of 2019, compared with a $10.8 million loss in the first nine months of 2018.
Capitalization – Sufficient Liquidity to Support Near-Term Growth Plans
Cash, cash equivalents and restricted cash as of September 30, 2019 were $6.1 million, compared with $7.3 million at June 30, 2019 and $9.1 million at December 31, 2018. To fund working capital usage in anticipation of a strong revenue level in the fourth quarter, the Company borrowed $2 million against its related party revolving credit facility during the three months ended September 30, 2019, leaving $13 million of remaining availability. The Company continues to believe that it has sufficient liquidity to support its near-term growth plans.
Cash used for operating activities during the first nine months of 2019 was $4.2 million, compared with $8.9 million in the same 2018 period. The $4.7 million decrease was driven by a lower net loss and improved net working capital, reflecting improvements in the Company’s operating model following implementation of the 2018 global cost realignment program.
Cash capital expenditures were $0.6 million and $1.2 million in the first nine months of 2019 and 2018, respectively. In the fourth quarter of 2019, the Company expects cash capital expenditures of less than $0.5 million.
Updating 2019 Goals – Moderating Expectations for Near-term Growth
Mr. Hartner concluded, “As indicated in our third quarter pre-announcement, macroeconomic concerns have heightened customer uncertainty, impacting our ability to achieve prior expectations for revenue growth in 2019. Nevertheless, as is typical for us, we expect the 2019 fourth quarter to be our strongest of the year, with revenue in excess of $20 million and positive Adjusted EBITDA. We remain focused on effectively managing our costs and cash, continuing to advance our binder jetting technology, and driving profitable growth.”
Webcast and Conference Call
ExOne will host a conference call and live webcast on Thursday, November 7, 2019 at 4:45 p.m. Eastern Time. During the conference call and webcast, management will review the financial and operating results for the 2019 third quarter, along with ExOne’s corporate strategies and outlook. A question-and-answer session will follow. The teleconference can be accessed by calling (201) 689-8470. The webcast can be monitored on the Company’s website at www.investor.exone.com.
A telephonic replay of the conference call will be available from 7:45 p.m. Eastern Time on the day of the teleconference through Thursday, November 14, 2019. To listen to a replay of the call, dial (412) 317-6671 and enter the conference ID number 13695259, or access the webcast replay via the Company’s website, where a transcript will also be posted once available.
About ExOne
ExOne is a global provider of 3D printing machines and 3D printed and other products, materials and services to industrial customers. ExOne's business primarily consists of manufacturing and selling 3D printing machines and printing products to specification for its customers using its installed base of 3D printing machines. ExOne’s machines serve direct and indirect applications. Direct printing produces a component; indirect printing makes a tool to produce a component. ExOne offers pre-production collaboration and print products for customers through its network of ExOne Adoption Centers (“EACs”). ExOne also supplies the associated materials, including consumables and replacement parts, and other services, including training and technical support that is necessary for purchasers of its 3D printing machines to print products. The Company believes that its ability to print in a variety of industrial materials, as well as its industry-leading volumetric output (as measured by build box size and printing speed) uniquely position ExOne to serve the needs of industrial customers.
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,” “goal,” “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, the following factors, among others, could cause results to differ materially from forward-looking statements or historical performance: 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 3D printing machines and technology and develop new 3D printing machines; delays in customer capital equipment spending due to macroeconomic factors; 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 on the period in which the Company recognizes revenue; risks related to global operations including effects of foreign currency; 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 EACs; the adequacy of ExOne’s protection of its intellectual property; and 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.
These and other important factors, including those discussed in the Company’s Annual Report on Form 10-K, 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 other SEC filings that could cause actual results to differ from these forward-looking statements.
| The ExOne Company
Statement of Consolidated Operations (in thousands, except per-share amounts) (Unaudited) |
||||||||||||||||||||
| Three Months Ended | % |
Nine Months Ended | % |
|||||||||||||||||
| September 30, | Change |
September 30, | Change |
|||||||||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
||||||||
| Revenue | $ |
10,884 |
|
$ |
16,589 |
|
(34%) |
$ |
35,742 |
|
$ |
39,339 |
|
(9%) |
||||||
| Cost of sales |
|
8,006 |
|
|
10,016 |
|
(20%) |
|
25,080 |
|
|
28,560 |
|
(12%) |
||||||
| Gross profit |
|
2,878 |
|
|
6,573 |
|
(56%) |
|
10,662 |
|
|
10,779 |
|
(1%) |
||||||
| Gross margin |
|
26.4% |
|
39.6% |
|
29.8% |
|
27.4% |
||||||||||||
| Research and development |
|
2,430 |
|
|
2,444 |
|
(1%) |
|
7,399 |
|
|
8,474 |
|
(13%) |
||||||
| Selling, general and administrative |
|
5,326 |
|
|
5,200 |
|
2% |
|
16,916 |
|
|
17,755 |
|
(5%) |
||||||
|
|
7,756 |
|
|
7,644 |
|
1% |
|
24,315 |
|
|
26,229 |
|
(7%) |
|||||||
| Operating loss |
|
(4,878 |
) |
|
(1,071 |
) |
(355%) |
|
(13,653 |
) |
|
(15,450 |
) |
12% |
||||||
| Interest expense |
|
85 |
|
|
73 |
|
16% |
|
227 |
|
|
179 |
|
27% |
||||||
| Other income - net |
|
(134 |
) |
|
(838 |
) |
(84%) |
|
(65 |
) |
|
(936 |
) |
(93%) |
||||||
|
|
(49 |
) |
|
(765 |
) |
(94%) |
|
162 |
|
|
(757 |
) |
NM |
|||||||
| Loss before income taxes |
|
(4,829 |
) |
|
(306 |
) |
(1478%) |
|
(13,815 |
) |
|
(14,693 |
) |
6% |
||||||
| Provision (benefit) for income taxes |
|
15 |
|
|
17 |
|
(12%) |
|
(686 |
) |
|
52 |
|
NM |
||||||
| Net loss | $ |
(4,844 |
) |
$ |
(323 |
) |
(1400%) |
$ |
(13,129 |
) |
$ |
(14,745 |
) |
11% |
||||||
| Net loss per common share: | ||||||||||||||||||||
| Basic | $ |
(0.30 |
) |
$ |
(0.02 |
) |
(1400%) |
$ |
(0.81 |
) |
$ |
(0.91 |
) |
11% |
||||||
| Diluted | $ |
(0.30 |
) |
$ |
(0.02 |
) |
(1400%) |
$ |
(0.81 |
) |
$ |
(0.91 |
) |
11% |
||||||
| Weighted average shared outstanding
(basic and diluted) |
|
16,333 |
|
|
16,183 |
|
|
16,297 |
|
|
16,157 |
|
||||||||
| NM: Not Meaningful |
||||||||||||||||||||
|
The ExOne Company
|
||||||||
| September 30, | December 31, | |||||||
|
|
2019 |
|
|
2018 |
|
|||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
4,756 |
|
$ |
7,592 |
|
||
| Restricted cash |
|
1,364 |
|
|
1,548 |
|
||
| Accounts receivable - net |
|
3,711 |
|
|
6,393 |
|
||
| Current portion of net investment in sales-type leases |
|
210 |
|
|
302 |
|
||
| Inventories - net |
|
18,610 |
|
|
15,930 |
|
||
| Prepaid expenses and other current assets |
|
3,219 |
|
|
2,438 |
|
||
| Total current assets |
|
31,870 |
|
|
34,203 |
|
||
| Property and equipment - net |
|
39,146 |
|
|
41,906 |
|
||
| Net investment in sales-type leases - net of current portion |
|
792 |
|
|
1,351 |
|
||
| Other noncurrent assets |
|
408 |
|
|
222 |
|
||
| Total assets | $ |
72,216 |
|
$ |
77,682 |
|
||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ |
151 |
|
$ |
144 |
|
||
| Accounts payable |
|
6,035 |
|
|
4,376 |
|
||
| Accrued expenses and other current liabilities |
|
4,116 |
|
|
6,049 |
|
||
| Current portion of contract liabilities |
|
8,824 |
|
|
2,343 |
|
||
| Total current liabilities |
|
19,126 |
|
|
12,912 |
|
||
| Related party revolving credit facility |
|
2,000 |
|
— | ||||
| Long-term debt - net of current portion |
|
1,250 |
|
|
1,364 |
|
||
| Contract liabilities - net of current portion |
|
227 |
|
|
527 |
|
||
| Other noncurrent liabilities |
|
250 |
|
|
104 |
|
||
| Total liabilities |
|
22,853 |
|
|
14,907 |
|
||
| Contingencies and commitments | ||||||||
| Stockholders' equity | ||||||||
| Common stock, $0.01 par value, 200,000,000 shares authorized,
16,346,960 (2019) and 16,234,201 (2018) shares issued and outstanding |
|
163 |
|
|
162 |
|
||
| Additional paid-in capital |
|
176,510 |
|
|
175,214 |
|
||
| Accumulated deficit |
|
(114,982 |
) |
|
(101,853 |
) |
||
| Accumulated other comprehensive loss |
|
(12,328 |
) |
|
(10,748 |
) |
||
| Total stockholders' equity |
|
49,363 |
|
|
62,775 |
|
||
| Total liabilities and stockholders' equity | $ |
72,216 |
|
$ |
77,682 |
|
||
|
The ExOne Company
|
||||||||
|
|
Nine Months Ended | |||||||
| September 30, | ||||||||
|
|
2019 |
|
|
2018 |
|
|||
| Operating activities | ||||||||
| Net loss | $ |
(13,129 |
) |
$ |
(14,745 |
) |
||
| Adjustments to reconcile net loss to net cash used for operations: | ||||||||
| Depreciation and amortization |
|
3,491 |
|
|
4,039 |
|
||
| Equity-based compensation |
|
1,076 |
|
|
656 |
|
||
| Amortization of debt issuance costs |
|
70 |
|
|
52 |
|
||
| Provision (recoveries) for bad debts - net |
|
264 |
|
|
(40 |
) |
||
| Provision for slow-moving, obsolete and lower of cost or
net realizable value inventories - net |
|
37 |
|
|
910 |
|
||
| Gain from disposal of property and equipment - net |
|
(2 |
) |
|
(33 |
) |
||
| Changes in assets and liabilities, excluding effects of foreign currency
translation adjustments: |
||||||||
| Decrease in accounts receivable |
|
2,790 |
|
|
3,014 |
|
||
| Decrease in net investment in sales-type leases |
|
218 |
|
|
152 |
|
||
| Increase in inventories |
|
(4,373 |
) |
|
(7,458 |
) |
||
| Increase in prepaid expenses and other assets |
|
(827 |
) |
|
(761 |
) |
||
| Increase (decrease) in accounts payable |
|
1,822 |
|
|
(637 |
) |
||
| Decrease in accrued expenses and other liabilities |
|
(1,934 |
) |
|
(206 |
) |
||
| Increase in contract liabilities |
|
6,301 |
|
|
6,168 |
|
||
| Net cash used for operating activities |
|
(4,196 |
) |
|
(8,889 |
) |
||
| Investing activities | ||||||||
| Capital expenditures |
|
(613 |
) |
|
(1,192 |
) |
||
| Proceeds from sale of property and equipment |
|
3 |
|
|
77 |
|
||
| Net cash used for investing activities |
|
(610 |
) |
|
(1,115 |
) |
||
| Financing activities | ||||||||
| Proceeds from related party revolving credit facility |
|
2,000 |
|
— | ||||
| Proceeds from exercise of employee stock options |
|
289 |
|
|
521 |
|
||
| Payments on long-term debt |
|
(111 |
) |
|
(106 |
) |
||
| Taxes related to the net share settlement of equity-based awards |
|
(68 |
) |
— | ||||
| Debt issuance costs | — |
|
(265 |
) |
||||
| Other |
|
(10 |
) |
|
(13 |
) |
||
| Net cash provided by financing activities |
|
2,100 |
|
|
137 |
|
||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(314 |
) |
|
(294 |
) |
||
| Net change in cash, cash equivalents, and restricted cash |
|
(3,020 |
) |
|
(10,161 |
) |
||
| Cash, cash equivalents, and restricted cash at beginning of period |
|
9,140 |
|
|
22,178 |
|
||
| Cash, cash equivalents, and restricted cash at end of period | $ |
6,120 |
|
$ |
12,017 |
|
||
| Supplemental disclosure of noncash investing and financing activities | ||||||||
| Transfer of internally developed 3D printing machines from inventories to
property and equipment for internal use or leasing activities |
$ |
1,635 |
|
$ |
1,521 |
|
||
| Transfer of internally developed 3D printing machines from property
and equipment to inventories for sale |
$ |
485 |
|
$ |
847 |
|
||
| Property and equipment reclassified as assets held for sale | $ |
— | $ |
822 |
|
|||
| Property and equipment included in accounts payable | $ |
48 |
|
$ |
48 |
|
||
| Property and equipment included in accrued expenses and other current liabilities | $ |
— | $ |
4 |
|
|||
| Property and equipment acquired through financing arrangements | $ |
— | $ |
14 |
|
|||
|
The ExOne Company
|
||||||||
| Three Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2019 |
2018 |
2019 |
2018 |
|||||
| 3D printing machine units sold: | ||||||||
| Direct | 6 |
8 |
18 |
16 |
||||
| Indirect | 3 |
7 |
12 |
12 |
||||
| 9 |
15 |
30 |
28 |
|||||
|
The ExOne Company
|
||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|||||
| Net loss | $ |
(4.8 |
) |
$ |
(0.3 |
) |
$ |
(13.1 |
) |
$ |
(14.7 |
) |
||||
| Interest expense |
|
0.1 |
|
|
0.0 |
|
|
0.2 |
|
|
0.2 |
|
||||
| Provision (benefit) for income taxes |
|
0.0 |
|
|
0.0 |
|
|
(0.7 |
) |
|
0.0 |
|
||||
| Depreciation and amortization |
|
1.1 |
|
|
1.2 |
|
|
3.5 |
|
|
4.0 |
|
||||
| Equity-based compensation |
|
(0.0 |
) |
|
0.3 |
|
|
1.1 |
|
|
0.6 |
|
||||
| Other income - net |
|
(0.1 |
) |
|
(0.8 |
) |
|
(0.1 |
) |
|
(0.9 |
) |
||||
| Adjusted EBITDA | $ |
(3.7 |
) |
$ |
0.4 |
|
$ |
(9.1 |
) |
$ |
(10.8 |
) |
||||
