Industrial binder jetting 3D printer manufacturer ExOne closed FY 2016 last December 31st with gross profit and gross margin for significantly improved compared to the prior year. Sales for the year totaled $14.2 million, up significantly from last year’s $8.3 million. FY 2016 was driven by higher volume, especially large, indirect machine sales, and improved efficiencies. As previously noted, 2015 included costs associated with the Company’s expanded global facilities integration as well as its European ERP system implementation.
Operating loss for 2016 also improved compared with 2015 due to higher gross profit and lower SG&A expenses, as well as the impact of a $4.4 million goodwill impairment charge recorded in 2015. SG&A for 2016 was $20.7 million, down $1.8 million, or 8%, compared with 2015 primarily due to reduced professional, consulting and trade show expenses resulting from cost containment initiatives.
“We are pleased with the progress made in 2016, evidenced by solid growth in machine revenue. While expected recognition of revenue on certain machines slipped from the 2016 fourth quarter into 2017, we are not discouraged by the comparison to a strong 2015 fourth quarter. We have made a considerable effort to understand in what stage of adoption our customers are, with respect to our binder jet printing technology, and believe that 2017 marks an inflection point in our evolution. We have customers who were in the early stages of adoption two years ago and are now reaching more advanced stages, as they discover that our equipment can bring sustainable and differential value to their businesses. This encourages us about our potential for growth.” Jim McCarley, ExOne’s Chief Executive Officer.
R&D expense was $7.8 million in 2016 compared with $7.3 million in 2015, with the increase reflecting project-related material costs supporting continued product enhancements. While net losses were reduced by 44%, they still remain significant, at $14.6 million. However it is to be expected in an industrial 3D printing market that is still very much seeding and building towards the future.
Adjusted EBITDA improved to a $7.3 million loss in 2016, compared with a $14.6 million loss last year. ExOne management believes that, when used in conjunction with other measures prepared in accordance with GAAP, Adjusted EBITDA, a non-GAAP measure, assists in the understanding of its financial results. See the attached tables for important disclosures regarding the Company’s use of Adjusted EBITDA as well as a reconciliation of net loss to Adjusted EBITDA for the quarters and years ended December 31, 2016 and 2015.
Capitalization — Cash Usage Continues to be Stable
Unrestricted cash and cash equivalents as of December 31, 2016 were $27.8 million, down from $29.8 million at September 30, 2016 and up from $19.3 million at December 31, 2015. Cash used for operations was $2.7 million for 2016 compared with $10.7 million for 2015, with the improvement driven by better operating performance and working capital utilization. Cash capital expenditures were $1.3 million for 2016 compared with $4.9 million for 2015.
Outlook and Vision
“We believe our addressable market is expanding based on ExOne’s increased equipment and material capabilities that support a higher level of adoption across our customer base and their markets,” Mr. McCarley noted and concluded that “Our outlook is positive for 2017. Although we will continue to have fluctuations in quarter-to-quarter revenue and profitability comparisons, our expected annual sales growth is at least 25%, which will result in operating leverage, stable cash flow and working capital utilization, and positive Adjusted EBITDA experienced by year end. Looking beyond 2017, we believe that continuing our investment in equipment capability and material qualification, coupled with applying our enhanced commercial management and tools, ExOne can achieve long-term sustained year-over-year revenue growth rates that exceed 25% for the foreseeable future.”
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.
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.