ExOne Issues Financial Results

The ExOne Company (North Huntingdon, PA), a global provider of industrial 3D printing machines and printed products, reported financial results for the fourth quarter and year ended December 31, 2014. The following is an excerpt from the results that were issued. To further examine the full results that were issued, please click here.

Fourth Quarter Revenue: Record Non-Machine and Machine Revenue
S. Kent Rockwell, the chairman and the chief executive officer, commented, “With solid fourth quarter sales, we experienced a good finish to an otherwise challenging transition year. Customer feedback indicates that we are accelerating implementation with many global customers as they move into their adoption phase. They are planning purchases of additional machines and larger orders of PSC produced parts.”

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. Traditionally, sales escalate after the first quarter. Additionally, we expect the revenue to be weighted approximately 30 percent in the first half of 2015 versus 70 percent in the second half due to an accelerating volume of machine sales throughout the year.

Rockwell continued, “While disappointed with our near-term financial results, we are proud of the progress we made in our strategic efforts to create a high growth global enterprise based on our binder jetting technology. We made significant investments in our people and processes, our facilities, our machine platforms and our materials. We believe these investments will lead to an escalation in market acceptance of binder jetting applications in global industrial development.”

Fourth Quarter Operations: Capacity Consolidation and Expansions Cloud Operational Performance
Gross profit was $3.9 million, resulting in a 24.5 percent gross margin, in the 2014 fourth quarter compared with $3.3 million, resulting in a 30.9 percent gross margin, in the 2013 fourth quarter. The 2014 fourth quarter was impacted by several charges associated with capacity consolidation and expansions including the following:

• $0.2 million of out-of-pocket costs to move machinery, equipment and files into the company’s new German facility and expanded North Huntingdon facility; significant inefficiencies resulting from costs to disassemble, move and set up operations in these two new facilities; and
• $0.4 million for write-off of inventories associated with the Company’s micromachinery product line.

Operating loss was $7.3 million compared with $3.3 million operating loss in the fourth quarter of 2013. SG&A expenses were $9.0 million, compared with $4.9 million in the prior-year quarter. The 2014 fourth quarter SG&A includes $3.5 million of atypical expenses, including the following:

• $0.5 million of expenses relating to our enterprise resource planning system; $2.2 million for bad debt charges resulting from customer specific or macroeconomic factors; and $0.4 million of severance costs.

Consistent with the Company’s stated intent to accelerate machine technology and materials development, R&D expenses for the quarter were $2.2 million, compared with $1.7 million in the 2013 fourth quarter. Net loss attributable to ExOne for the reported quarter was $7.2 million, or $0.50 loss per diluted share, compared with $3.2 million, or $0.22 loss per diluted share, for the prior-year fourth quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) was a $5.1 million loss in the 2014 quarter, compared with a $2.1 million loss during 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”), that Adjusted EBITDA, a non-GAAP measure, assists in the understanding of operating performance.

For further information on 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 years ended December 31, 2014 and 2013, please click here.

2014 Review: A Year of Transition
Revenue for the year ended December 31, 2014 was $43.9 million, up 11 percent compared with $39.5 million in the prior-year period, driven by 45 percent growth in global non-machine revenue, offset by lower machine revenue. The 2014 gross profit was $10.5 million, compared with last year’s $15.6 million.

Similar to the fourth quarter, the 2014 gross profit was impacted by charges associated with capacity consolidation and expansion as previously described. Gross profit as a percentage of sales was 23.8 percent in 2014 compared with 39.4 percent last year. SG&A expense for 2014 was $24.0 million, up $7.9 million over the prior year including $3.5 million of atypical charges in the fourth quarter as described above. R&D expense was $8.2 million in 2014, compared with $5.1 million in 2013, reflecting the Company’s accelerated investments in growth.

Operating loss for 2014 was $21.8 million compared with an operating loss of $5.7 million during 2013. Net loss attributable to ExOne was $21.8 million, or $1.52 loss per diluted share, for 2014 compared with $6.5 million, or $0.51 loss per diluted share, for 2013.

2015 Outlook: Growing Customer Adoption

• Revenue expected to grow approximately 32 percent to 50 percent, to about $58 million to $66 million
• Gross margin expected to be between 36 percent and 40 percent, excluding anticipated non-recurring costs estimated at $0.5 million to $1.0 million to complete facility integrations
• SG&A expenses expected to be in a range of $21 million to $23 million, excluding approximately $0.5 million to $1.0 million of costs associated with ongoing implementation of the Company’s enterprise resource planning system
• R&D expenses expected to be in a range of $6.5 million to $7.5 million
• Capital expenditures expected to be between $5 million and $7 million

Rockwell concluded, “With the announcement of our newest machines, Exerial™ and Innovent™, and our growing list of printable materials, we look forward to 2015 as the next step in our evolution as an emerging growth company. Our customers are migrating our binder jetting technology into expanded utilization of new applications on their manufacturing floors.  We are confident that the adoption of 3D printing in industrial manufacturing applications is gaining momentum in our global marketplace as a technology that will transform business.”

www.exone.com