The ExOne Company Reports 2018 Fourth Quarter Results

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,” “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 SEC filings, 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 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, PSCs 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.

FINANCIAL TABLES FOLLOW.


The ExOne Company
Statement of Consolidated Operations
(in thousands, except per-share amounts)

	Quarter Ended						%		Year Ended						%
	December 31,						Change		December 31,						Change
		2018			2017					2018			2017
Revenue	$	25,305		$	20,189		25	%	$	64,644		$	57,744		12	%
Cost of sales		15,143			13,533		12	%		43,703			43,362		1	%
Gross profit		10,162			6,656		53	%		20,941			14,382		46	%
Gross margin		40.2	%		33.0	%				32.4	%		24.9	%
Research and development		2,270			2,690		(16	%)		10,744			9,909		8	%
Selling, general and administrative		5,439			5,817		(6	%)		23,194			24,155		(4	%)
		7,709			8,507		(9	%)		33,938			34,064		(0	%)
Operating income (loss)		2,453			(1,851	)	NM			(12,997	)		(19,682	)	34	%
Interest expense		75			25		200	%		254			94		170	%
Other expense (income) ̶ net		192			69		178	%		(744	)		203		NM
		267			94		184	%		(490	)		297		NM
Income (loss) before income taxes		2,186			(1,945	)	NM			(12,507	)		(19,979	)	37	%
Provision for income taxes		108			15		620	%		160			38		321	%
Net income (loss)	$	2,078		$	(1,960	)	NM		$	(12,667	)	$	(20,017	)	37	%
Net income (loss) per common share:
Basic	$	0.13		$	(0.12	)	NM		$	(0.78	)	$	(1.25	)	37	%
Diluted	$	0.13		$	(0.12	)	NM		$	(0.78	)	$	(1.25	)	37	%
Weighted average shares outstanding ̶ basic		16,234			16,104					16,176			16,062
Weighted average shares outstanding ̶ diluted		16,264			16,104					16,176			16,062

NM: Not Meaningful


The ExOne Company
Consolidated Balance Sheet
(in thousands, except per-share and share amounts)

	December 31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	7,592		$	21,848
Restricted cash		1,548			330
Accounts receivable – net		6,695			8,647
Inventories – net		15,930			15,430
Prepaid expenses and other current assets		2,438			1,710
Total current assets		34,203			47,965
Property and equipment – net		41,906			46,797
Intangible assets – net		—			62
Other noncurrent assets		1,573			736
Total assets	$	77,682		$	95,560
Liabilities
Current liabilities:
Current portion of long-term debt	$	144		$	137
Accounts payable		4,376			4,291
Accrued expenses and other current liabilities		6,049			6,096
Deferred revenue and customer prepayments		2,343			8,282
Total current liabilities		12,912			18,806
Long-term debt – net of current portion		1,364			1,508
Other noncurrent liabilities		631			37
Total liabilities		14,907			20,351
Contingencies and commitments
Stockholders' equity
Common stock, $0.01 par value, 200,000,000 shares authorized, 16,234,201 (2018) and 16,124,617 (2017) shares issued and outstanding		162			161
Additional paid-in capital		175,214			173,718
Accumulated deficit		(101,853	)		(89,186	)
Accumulated other comprehensive loss		(10,748	)		(9,484	)
Total stockholders' equity		62,775			75,209
Total liabilities and stockholders' equity	$	77,682		$	95,560


The ExOne Company
Statement of Consolidated Cash Flows
(in thousands)

	Year Ended
	December 31,
	2018			2017
Operating activities
Net loss	$	(12,667	)	$	(20,017	)
Adjustments to reconcile net loss to net cash used for operations:
Depreciation and amortization		5,503			6,278
Equity-based compensation		968			2,456
Amortization of debt issuance costs		75			6
Deferred income taxes		—			1
Provision (recoveries) for bad debts – net		58			(64	)
Provision for slow-moving, obsolete and lower of cost or net realizable value inventories – net		1,022			2,056
Gain from disposal of property and equipment – net		(51	)		(325	)
Changes in assets and liabilities, excluding effects of foreign currency translation adjustments:
Decrease (increase) in accounts receivable		1,637			(1,733	)
(Increase) decrease in inventories		(3,441	)		357
Increase in prepaid expenses and other assets		(335	)		(856	)
Increase in accounts payable		195			2,017
Increase in accrued expenses and other liabilities		181			445
Decrease in deferred revenue and customer prepayments		(4,988	)		(294	)
Net cash used for operating activities		(11,843	)		(9,673	)
Investing activities
Capital expenditures		(1,327	)		(987	)
Proceeds from sale of property and equipment		98			3,706
Net cash (used for) provided by investing activities		(1,229	)		2,719
Financing activities
Payments on long-term debt		(142	)		(137	)
Payments on capital leases		(17	)		(78	)
Proceeds from exercise of employee stock options		529			147
Debt issuance costs		(265	)		—
Net cash provided by (used for) financing activities		105			(68	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(71	)		1,045
Net change in cash, cash equivalents, and restricted cash		(13,038	)		(5,977	)
Cash, cash equivalents, and restricted cash at beginning of period		22,178			28,155
Cash, cash equivalents, and restricted cash at end of period	$	9,140		$	22,178

Supplemental disclosure of cash flow information
Cash paid for interest	$	169		$	87
Cash paid for income taxes	$	103		$	5

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	$	2,194		$	2,868
Transfer of internally developed 3D printing machines from property and equipment to inventories for sale	$	1,042		$	3,042
Property and equipment included in assets held for sale	$	822		$	—
Property and equipment included in accounts payable	$	79		$	64
Property and equipment included in accrued expenses and other current liabilities	$	—		$	108
Property and equipment acquired through financing arrangements	$	14		$	48


The ExOne Company
Additional Information
(Unaudited)

	Quarter Ended		Year Ended
	December 31,		December 31,
	2018	2017	2018	2017
3D printing machine units sold:
Direct	14	7	30	18
Indirect	14	9	26	23
	28	16	56	41


The ExOne Company
Adjusted EBITDA Reconciliation
(in millions)
(Unaudited)

	Quarter Ended					Six Months Ended			Year Ended
	December 31,					December 31,			December 31,
	2018		2017			2018			2018			2017
Net income (loss)	$	2.1	$	(1.9	)	$	1.8		$	(12.7	)	$	(20.0	)
Interest expense		0.1		0.0			0.1			0.2			0.1
Provision for income taxes		0.1		0.0			0.1			0.2			0.0
Depreciation and amortization		1.4		1.3			2.7			5.5			6.3
Equity-based compensation		0.3		0.4			0.6			1.0			2.5
Other expense (income) ̶ net		0.2		0.1			(0.6	)		(0.7	)		0.2
Adjusted EBITDA	$	4.2	$	(0.1	)	$	4.7		$	(6.5	)	$	(10.9	)

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