The ExOne Company Reports 2018 Second Quarter Results

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 reports and those identified elsewhere in 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 generate operating profits; fluctuations in the Company’s revenues and operating results; the results of its global cost realignment initiative; the Company’s competitive environment and its competitive position; ExOne’s ability to enhance its current three-dimensional (“3D”) printing machines and technology and develop new 3D printing machines; 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, production service centers (“PSCs”) or ExOne Adoption Centers (“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 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)

 
Quarter Ended

June 30,

% Change Six Months Ended

June 30,

% Change
2018 2017 2018 2017
 
Revenue $ 10,857 $ 10,799 1 % $ 22,750 $ 21,668 5 %
Cost of sales   9,267     8,773   6 %   18,544     18,039   3 %
Gross profit   1,590     2,026   (22 %)   4,206     3,629   16 %
Gross margin 14.6 % 18.8 % 18.5 % 16.7 %
 
Research and development 3,235 2,349 38 % 6,030 4,348 39 %
Selling, general and administrative   6,353     6,013   6 %   12,555     12,276   2 %
  9,588     8,362   15 %   18,585     16,624   12

%

Operating loss (7,998 ) (6,336 ) (26 %) (14,379 ) (12,995 ) (11 %)
 
Interest expense 73 23 217 % 106 45 136 %
Other (income) expense – net   (52 )   35   NM   (98 )   145   NM
  21     58   (64 %)   8     190   (96 %)
Loss before income taxes (8,019 ) (6,394 ) (25 %) (14,387 ) (13,185 ) (9 %)
 
Provision for income taxes   18     9   100 %   35     9   289 %
 
Net loss $ (8,037 ) $ (6,403 ) (26 %) $ (14,422 ) $ (13,194 ) (9 %)
 
 
Net loss per common share:
Basic $ (0.50 ) $ (0.40 ) (25 %) $ (0.89 ) $ (0.82 ) (9 %)
Diluted $ (0.50 ) $ (0.40 ) (25 %) $ (0.89 ) $ (0.82 ) (9 %)
 
Weighted average shares outstanding (basic and diluted) 16,150 16,046 16,144 16,037

NM: Not Meaningful

 
       
The ExOne Company
Consolidated Balance Sheet

(in thousands, except per-share and share amounts)

(Unaudited)

 
June 30,

2018

December 31,

2017

 
Assets
Current assets:
Cash and cash equivalents $ 11,584 $ 21,848
Restricted cash 1,463 330
Accounts receivable - net of allowance of $1,122 (2018) and $1,193 (2017) 5,003 8,647
Inventories - net 20,551 15,430
Prepaid expenses and other current assets   2,677     1,710  
Total current assets 41,278 47,965
Property and equipment - net 44,791 46,797
Intangible assets - net - 62
Other noncurrent assets   770     736  
Total assets $ 86,839   $ 95,560  
 
Liabilities
Current liabilities:
Current portion of long-term debt $ 140 $ 137
Current portion of capital leases 16 15
Accounts payable 4,756 4,291
Accrued expenses and other current liabilities 6,665 6,081
Deferred revenue and customer prepayments   13,460     8,282  
Total current liabilities 25,037 18,806
Long-term debt - net of current portion 1,437 1,508
Capital leases - net of current portion 41 36
Other noncurrent liabilities   1     1  
Total liabilities 26,516 20,351
Contingencies and commitments
Stockholders' equity
Common stock, $0.01 par value, 200,000,000 shares authorized, 16,149,617 (2018)
and 16,124,617 (2017) shares issued and outstanding 161 161
Additional paid-in capital 174,092 173,718
Accumulated deficit (103,608 ) (89,186 )
Accumulated other comprehensive loss   (10,322 )   (9,484 )
Total stockholders' equity   60,323     75,209  
Total liabilities and stockholders' equity $ 86,839   $ 95,560  
 
       
The ExOne Company
Statement of Consolidated Cash Flows

(in thousands)

(Unaudited)

 
Six Months Ended
June 30,
2018 2017
 
Operating activities
Net loss $ (14,422 ) $ (13,194 )
Adjustments to reconcile net loss to net cash used for operations:
Depreciation and amortization 2,829 3,589
Equity-based compensation 374 835
Amortization of debt issuance costs 27 3
(Recoveries) provision for bad debts - net (37 ) 132
Provision for slow-moving, obsolete and lower of cost or net realizable value
inventories - net 771 1,835
Gain from disposal of property and equipment - net (41 ) (314 )
Changes in assets and liabilities, excluding effects of foreign currency translation adjustments:
Decrease in accounts receivable 3,763 69
Increase in inventories (7,060 ) (3,358 )
Increase in prepaid expenses and other assets (658 ) (770 )
Increase in accounts payable 445 2,111
Increase (decrease) in accrued expenses and other liabilities 730 (252 )
Increase in deferred revenue and customer prepayments   5,406     2,390  
Net cash used for operating activities (7,873 ) (6,924 )
 
Investing activities
Capital expenditures (819 ) (392 )
Proceeds from sale of property and equipment   25     3,677  
Net cash (used for) provided by investing activities (794 ) 3,285
 
Financing activities
Payments on long-term debt (70 ) (68 )
Payments on capital leases (9 ) (45 )
Debt issuance costs   (188 )   -  
Net cash used for financing activities (267 ) (113 )
 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (197 )   760  
Net change in cash, cash equivalents, and restricted cash (9,131 ) (2,992 )
Cash, cash equivalents, and restricted cash at beginning of period   22,178     28,155  
Cash, cash equivalents, and restricted cash at end of period $ 13,047   $ 25,163  
 
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 $ 895   $ 1,917  
Transfer of internally developed 3D printing machines from property and equipment to
inventories for sale $ 424   $ 395  
Property and equipment acquired through financing arrangements $ 14   $ 48  
Unsettled proceeds from sale of property and equipment $ 51   $ -  
Property and equipment included in accounts payable $ 95   $ 100  
Property and equipment included in accrued expenses and other current liabilities $ 23   $ -  
Debt issuance costs included in accounts payable $ 76   $ -  
 
           
The ExOne Company
Additional Information

(Unaudited)

 
Machine Sales by Type
 
Quarter Ended

June 30,

Six Months Ended

June 30,

2018 2017 2018 2017
S-Max ® 1 2 4 6
S-Print™ 1 - 1 -
M-Flex ® 1 3 1 4
Innovent ® + 1 - 1 -
Innovent ® 3 3 6 3
 
7 8 13 13
 
           
The ExOne Company
Adjusted EBITDA Reconciliation

(in millions)

(Unaudited)

 
Quarter Ended

June 30,

Six Months Ended

June 30,

2018 2017 2018 2017
 
Net loss $ (8.0 ) $ (6.4 ) $ (14.4 ) $ (13.2 )
 
Interest expense 0.1 0.0 0.1 0.1
Provision for income taxes 0.0 0.0 0.0 0.0
Depreciation and amortization 1.3 1.3 2.8 3.6
Equity-based compensation (0.0 ) 0.3 0.4 0.8
Other (income) expense - net   (0.1 )   0.0     (0.1 )   0.1  
Adjusted EBITDA $ (6.7 ) $ (4.8 ) $ (11.2 ) $ (8.6 )
 

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