ExOne (NASDAQ: XONE) Reports Dismal Earnings, But The News May Not Be As Bad as it Appears

If you are an investor within the 3D printing space, then these last 12-18 months have likely been a roller coast from hell for you. And although things seem to now be finding flatter ground, with stocks of some of the larger additive manufacturing companies leveling off following cliff dives earlier in the year, The ExOne Company (NASDAQ: XONE) took us all for another loop when they released their first quarter earnings after the market closed yesterday afternoon.

While analysts had been expecting the company to report a loss of 29 cents per share, ExOne surprised investors to the downside with a loss for the quarter of almost twice that, coming in at 53 cents per share. Revenue also came in quite a ways south of the expected $8.12 million that analysts were expecting for the quarter, as the company reported just $6.8 million.

Now here is where things get a little bit silly. Despite these dismal numbers, ExOne has provided revenue guidance of between $58 to $66 million for the entire year, as opposed to the $59.9 million that analysts were expecting. So what’s happening here?

An issue often seen with smaller companies who rely on big ticket sales, is the difficulty in predicting sales on a shorter time frame. The cause for these discrepancies are several machine deliveries which the company has yet to bill out for. While 6 new machines have been delivered to customers this quarter, only two of those machines have actually been paid for. Of the four which have yet to be paid for, two are leases, of which one, the company expects to turn into a sale, while the other two are sales which have yet to be billed. This means that the following quarters should be skewed in the opposite direction, as these other machines are finally able to bring revenue to the company’s balance sheet. ExOne expects total sales to be weighted at approximately 30% for the first half, and 70% for the second half, escalating considerably from this point forward. For investor’s sake, let’s hope they are right.

Other important highlights of this quarter’s report are as follows:

• Gross margin is expected to be between 36-40% for the year (This excludes anticipated non-recurring costs of around $500,000 to $1 million for the completion of a new facility)
• Net loss increased $2.2 million over last year’s first quarter to $7.7 million.
• Revenue declined 7% on a 50% drop in machine sales when compared to Q1 2014.
• Revenue for parts, services and supplies increased 18% (26% when adjusted for currency exchange) when compared to Q1 2014.
• The company has $36 million in cash and equivalents on their balance sheet, having burned through $62 million since going public in 2014.

Overall the report looks pretty terrible, but if they can follow through with their guidance, all should be well for investors. The next two quarterly reports for the company will be very important in either raising or lowering investors’ confidence. Are you an ExOne shareholder? What are your thoughts on their recent numbers? Discuss in the ExOne Earnings forum thread on 3DPB.com.