NORTH HUNTINGDON, Pa.--(BUSINESS WIRE)--The ExOne Company (Nasdaq: XONE), a global provider of three-dimensional printing machines and 3D printed and other products, materials and services to industrial customers, reported financial results today for the fourth quarter and year ended December 31, 2018.
S. Kent Rockwell, ExOne’s Chairman and Chief Executive Officer, stated, “We are pleased to have attained our 2018 goal for net income in the second half of the year, achieving $0.11 of earnings per share in the second half. The results of our 2018 global cost realignment initiative announced in June demonstrate production efficiency and operating leverage opportunity. With our focus on profitability, cash flow, and long-term growth, we are especially satisfied with these results despite some customer delays causing lower than expected revenue. Revenue predictability is dependent upon timing of customer actions which, at times, can be difficult for us to forecast with accuracy. However, our customer pipeline remains robust and we have the production capacity to satisfy customer requirements.”
Reflecting on results for the full year of 2018, Mr. Rockwell added:
- “We reached record revenue of nearly $65 million. That represents about 12% growth over 2017 and a three-year compound annual growth rate of 17%.
- Machine revenue was up 21%. Non-machine revenue marginally improved, by 2%, impacted by our production service center changes.
- We generated nearly $21 million of gross profit, 32.4% of sales. That represents about 45% growth over 2017 and a three-year compound annual growth rate of 36%.
- Focusing on productivity and profitability, we implemented our 2018 global cost realignment initiative, reaching approximately $7 million of net annualized run rate cost reductions.
- We invested in further advancement of the capabilities of our 3D printing technology, expanding our machine and material offerings. In conjunction with the Formnext additive manufacturing trade fair in Frankfurt, Germany in November, we announced our newest fine powder direct 3D printer system, the X1 25PRO™.
We continue to aggressively develop our machine technology and additional materials to satisfy the growing demands of the industrial marketplace for our binder jetting technology applications, while maintaining efficiency with our investment spend.”
| Fourth Quarter and Full Year Revenue – Driven by Machine Revenue Growth | |||||||||||||||||||||||||||||||||
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| December 31, | December 31, | ||||||||||||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | % Change | |||||||||||||||||||||||||||||
For the year, consolidated revenue grew 12% to $64.6 million, compared with 2017. Machine revenue was up 21% to $36.4 million and non-machine revenue grew 2% to $28.2 million. Machine revenue included sales of 56 machine units in 2018, up 37% from 41 units in 2017.
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.
Fourth Quarter Operations – Realizing Production Efficiency and Operating Leverage | ||||||||||||||
| Q4 2018 | Q4 2017 | Change | ||||||||||||
| 2018 Review – Demonstrates Annual Operating Leverage Opportunity on Revenue Growth | ||||||||||||||
| 2018 | 2017 | Change | % Change | |||||||||||
Gross profit grew to a record $20.9 million, resulting in a 32.4% gross margin in 2018, compared with 24.9% in 2017. The 2018 period benefited from higher revenue and an improved cost base for the second half as well as a decrease in net inventory obsolescence charges, partially offset by a reduction in gains from property and equipment disposals. Additionally, the 2017 period was impacted by the sale of Exerial™ machines at a breakeven contribution margin.
R&D expense was $10.7 million in 2018 compared with $9.9 million in 2017, with the increase primarily due to higher employee-related costs, which were reduced in the second half of 2018 following enactment of the 2018 global cost realignment program.
SG&A in 2018 was $23.2 million compared with $24.2 million in 2017. The decrease was driven by lower equity-based compensation and a reduction in amortization expense associated with intangible assets, partially offset by higher employee-related costs which were reduced in the second half following enactment of the 2018 global cost realignment initiative.
The net loss was $12.7 million, or $0.78 per share, in 2018, compared with $20.0 million, or $1.25 per share, in 2017.
Adjusted EBITDA*, a non-GAAP measure, was a $6.5 million loss in 2018 and a $10.9 million loss in 2017.
* See the attached tables for important disclosures regarding the Company’s use of Adjusted EBITDA, a non-GAAP measure (indicated by * where used in this release), as well as a reconciliation of net income (loss) (the most directly comparable GAAP measure) to Adjusted EBITDA for the quarters ended December 31, 2018 and 2017 and the six months ended December 31, 2018. 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.
Capitalization – Operating Cash Flow Usage Supports Growth
Cash, cash equivalents and restricted cash as of December 31, 2018 were $9.1 million, compared with $22.2 million at December 31, 2017. There were no borrowings outstanding on the Company’s $15 million credit facility.
Cash used for operating activities during 2018 was $11.8 million, compared with $9.7 million in 2017. The $2.1 million increase was driven by higher working capital, primarily due to timing of payments from customers and investments in inventory to support growth, partially offset by improved operating results.
Cash capital expenditures were $1.3 million and $1.0 million in 2018 and 2017, respectively. In 2019, the Company expects cash capital expenditures of $1 million to $2 million.
2019 Goals – Increase Revenue Growth Rate and Generate Positive Adjusted EBITDA
Mr. Rockwell concluded, “Given the strength of our pipeline and customer interest in our technology, we are targeting revenue growth at increasing rates over each of the next several years. We believe that our new cost structure positions us well for operating leverage that will lead to positive adjusted EBITDA for the full year of 2019 and beyond. As is typical for the first quarter of our year, we expect a slow start to 2019 and we currently estimate about a 35/65 revenue split between the first half and second half of the year.”
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”) and Production Service Centers (“PSCs”). 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.
