Additive manufacturing system OEM ExOne (NASDAQ: XONE) has announced financial results for the first quarter of fiscal 2020.
Total revenue for Q1 2020 was posted at $13.4 million, representing a 40 percent increase over the first quarter in 2019, which was $9.6 million. Additionally, the company closed the quarter with a record backlog of $33.8 million.
ExOne’s strong performance for the quarter has been attributed by CEO John Hartner, to new product introductions and the company’s backlog coming into 2020. He explains that ExOne was not affected by the initial impact of the COVID-19 pandemic: “Despite initial effects of COVID-19 on our business, our execution performance was solid. Globally, our facilities continued to operate in support of our customers in critical industries and essential businesses, subject to social distancing and other procedures to keep our employees safe.”
It was only towards the end of the quarter, in March, where the impact of the health crisis was felt, adds Hartner: “However, conditions clearly changed in March. We previously anticipated that growth would continue during 2020, but the COVID-19 pandemic has impacted shipping, travel, and installation schedules, as well as the timing of customer capital investments.”
“The uncertainty of our outlook caused by this situation prompted us to reduce our cost structure as we manage through these historic times.”
ExOne financial results
ExOne’s revenue is divided into two product lines, comprising 3D Printing Machines, and 3D Printed and Other Products, Materials and Services.
For Q1 2020, Machine revenue nearly doubled to $6.3 million, compared to $3.3 million in the prior-year period. This represents a year-on-year growth of 90 percent and accounts for 47 percent of the total revenue.
Recurring revenue from 3D printed and other products, materials, and services was $7.1 million in the first quarter of 2020, up 13 by percent compared to Q1 2019’s figure, which was $6.3 million.
|Revenues $ millions||Q1 2020||Q1 2019||Variance $ millions||%|
|3D Printing Machines||6.3||3.3||3.0||90%|
|3D Printed and Other Products, Materials and Services||7.1||6.3||0.8||13%|
The strong performance of ExOne’s Machine Sales for Q1 2020 was attributed by the company to increased volumes and a favorable mix of machines sold. In the quarter, a total of 14 machines were sold, compared to eight machines sold in the 2019 first quarter.
ExOne develops two types of binder jetting 3D printers: metal and sand. Its metal 3D printers comprise the X1 25 Pro, Innovent+, M-Flex, and recently introduced X1 160 Pro system, for which development is expected to be completed in the second half of 2020. ExOne’s sand 3D printers include the S-Max Pro, S-Max, and S-Print systems. Of the 14 machines sold in Q1 2020, five were sand and nine were metal 3D printing systems, including ExOne’s first customer acceptance of an X1 25 Pro, launched in 2019.
During the company’s earnings call, CFO Douglas Zemba explained that ExOne’s growth in its recurring revenue, which includes its 3D printed and other products, materials, and services, was driven primarily by an increase in sales of consumables to its growing global installed base of machines. It was also supported by an increase in revenue associated with commercial, research, and development contracts.
In the call, Hartner also elaborated on ExOne’s diverse range of machines, enabling applications of the company’s technology in a broad range of industries: “This diversity of machine sizes, positions us well to respond to a wide variety of customer applications. Our service offerings generate recurring revenue, ranging from collaborative R&D contracts to customized part production to printing high volumes of custom parts for customers at one of our adoption centers.”
Impact of the COVID-19 pandemic
Explaining the impact of the COVID-19 pandemic on ExOne’s revenue thus far, Hartner states that the company has been restricted from shipping, or travelling to complete customer installations as planned. This led to a few machine installations being deferred in Asia which were planned for Q1 2020.
Outlining the company’s actions to reduce cost in the wake of the pandemic, Hartner adds: “From a cost perspective, we’ve been proactive in implementing cost reductions, some of which are temporary, and others are permanent. In March and April, we made the difficult but necessary decisions on some permanent staff reductions and organizational changes.” Additionally, the company’s global leadership team and a number of employees have taken salary reductions.
Hartner also touched on ExOne’s recent partnership with the University of Pittsburgh to produce a 3D printed reusable respirator filter. “Currently undergoing initial testing, the filter cartridge contains a 3D printed porous metal filter intended for sustainable, long-term protection against contaminants such as COVID-19.” The company has been working on expediting the filter for medical personnel on the frontlines, in order to help address the current PPE shortage, while also being a long-term solution for a variety of other applications.
On an outlook for 2020, the company’s ability to predict its performance over the next year has been severely hampered by the effects of the pandemic, explains Zemba: “Significant uncertainties associated with the duration and severity of the outbreak make it difficult for us to predict the full year and longer term effect on our business at this time, including the impact on future capital, equipment spending decisions of our customers.”
However, Hartner adds that ExOne remains positive about future growth once the pandemic is over, particularly in relation to its new X1 160 Pro 3D printer: “We remain excited about the future growth once we get past the COVID-19 induced economic downturn. In addition, to the new machines we started to ship last year, we are on-track for the development of our newest machine, the extra-large metal production printer X1 160 Pro. We plan to have development completed by year-end and revenues in the first half of 2021.”
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Featured image shows 3D printed parts using ExOne qualified materials. Photo via ExOne.