The ExOne Company’s 2020 third-quarter earnings report showed signs of recovery after a devastating first half of the year. Company revenues grew to a record $17.4 million in the third quarter, up 60% from the same period last year, with sales of 3D printers more than doubling, as easing travel restrictions enabled ExOne teams to complete machine installations. It also had its best backlog of $42.6 million, up 12% from last quarter and 65% year-on-year, a new record level that will continue to support revenue predictability for some time.
Challenging market conditions as a result of the COVID-19 pandemic outbreak forced the business to take several cost-saving actions during the second quarter of 2020, including a mix of employee terminations, furloughs, and pay rate reductions in an effort to save close to $2 million for the April through June quarter. For the third quarter, the global manufacturer of sand and metal 3D printers for binder jetting technology continued to be impacted by the pandemic as disruptions to domestic and international shipping pursue, in addition to adverse macroeconomic effects.
Nonetheless, it managed to deliver record revenues driven by a 164% increase in earnings from 3D printing machine sales, including contributions from fourth-quarter 2019 product introductions, like the S-Max Pro and X1 25Pro platforms. It isn’t all good news, even though this quarterly report performed favorably, the company still announced a quarterly loss of 19 cents per share, or $3.3 million, albeit an improvement over last year’s Q3 loss of 30 cents per share, or $4.8 million.
“Throughout the quarter, we remained focused on machine order execution and recurring revenue growth, supported by our diverse portfolio, global footprint, and unmatched experience in a technology area benefiting from increased momentum,” said ExOne’s CEO John Hartner. “We also continued to drive progress against our strategic pillars – getting closer to customers, evidenced by our record backlog; extending our binder jetting technology, with the announcement of our InnoventPro® entry-level metal 3D printer; and driving recurring revenue growth, demonstrated by our recent government contract wins and sequential quarterly gains.”
For the third quarter, total operating expenses decreased to $6.8 million from $7.7 million in the prior-year periods. Research and development expenses were $2 million compared to $2.4 million in the third quarter of 2019, primarily due to cost savings measures and other cost reductions associated with COVID-19 and lower material and consulting spend associated with machine development projects. Investments, however, remain focused on the further development of binder jetting technology, including its largest metal binded jet system, the X1 160Pro system, and the recently announced InnoventPro, which is a major upgrade to the Innovent Plus, one of the world’s best-selling metal binder jetting system today.
On November 6, 2020, the day after the quarterly report was announced, ExOne shares peaked at $11.39 on market opening, before slumping back down to $10.16. Since March, company stock had been on an upward trend, with accentuated highs during September and October. Since the beginning of the year, ExOne shares have added about 31.6% versus the S&P 500’s gain of 6.6%, according to Yahoo!Finance.
While ExOne has outperformed the market so far this year, global uncertainties still persist and company earnings expectations for the coming months could change. Moreover, one of the key questions investors probably ask themselves is whether this revenue growth will endure. If this third quarter is representative of the company’s upcoming quarterly reports, then it might well be on track to return to revenue levels seen in previous years, mainly 2017 and 2018.
“With a record backlog, strong interest in our core binder jetting technology, and exciting new products still launching, we remain optimistic about our future. However, our enthusiasm must be tempered by the headwinds in the global manufacturing sector as a result of COVID-19, which continues to influence the timing of our customers’ capital spending and is causing intermittent disruption to our global operations,” commented Hartner. “Despite these headwinds, our backlog growth, refreshed product portfolio, and enhanced liquidity sets the stage for strong operational performance in the fourth quarter and heading into 2021.”
Even with a rough start to the year, the Pennsylvania-based company firmly believed that it is on track to deliver year-over-year revenue growth in 2020. Given a stronger performance during the second half of the year and assuming no significant increase in travel restrictions pursue, the company considered that this positive momentum will continue into 2021. The CEO also remarked during the earnings call conference on November 6, 2020, that the new ExOne’s X1 160Pro will be shipping soon with initial revenues anticipated to be recognized in the first half of next year.
With 20 years of experience in metal binder jetting, ExOne considers its systems more than simply machines, but a complete floor solution, one they expect could play a critical role in the transformation of traditional manufacturing to a more innovative, sustainable, and decentralized manufacturing model. Certainly, hitting record levels amid an ongoing pandemic is favorable for ExOne, not only is it thriving when compared to competing businesses, but it is hopeful that this newly acquired upward trend could be maintained.
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