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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