Industrial sand and metal 3D printer manufacturer ExOne, has reported a decline in revenue for Q2 2020, despite showing growth in its installed base.
For the three months ending June 30, 2020, ExOne generated total revenue of $11.1 million. This figure is down 27.4 percent compared to the same period last year, where the company’s revenue was reported at $15.3 million.
Although ExOne’s overall revenue dropped in Q2 2020, it delivered increased revenue from repeat customers, generating a backlog of orders worth $38.2 million. The company reported recurring revenue of $6.2 million in Q2 2020, an increase of three percent over Q2 2019, and six percent over the last 12 months. The firm’s secure financial footing was well received by the markets, and its shares increased by 11.2 percent from $9.24 to a high of $10.28 after the results.
In a call with investors and analysts, ExOne CEO John Hartner acknowledged the impact of the ongoing pandemic but emphasized the company’s opportunities in Q3 2020. “Our operating results continue to be impacted by a prolonged downturn in the global manufacturing sector, which has influenced the capital expenditures of our customers,” said Hartner. “We expect the combination of our backlog, our recurring revenue stream, and an acceleration in market adoption of our technology to provide the basis for operating stability for the remainder of 2020 and into 2021.”
“Overall, our performance highlights our operating model’s resiliency and our team’s ability to continue to execute on our strategy in the face of very difficult times,” added Hartner.
ExOne’s Q2 2020 results
ExOne’s revenue is divided into two product lines comprising 3D Printing Machines, and 3D Printed and Other Products, Materials and Services. During Q2 2020, machine revenue fell by 47.3 percent to $4.9 million, down from $9.3 million in Q2 2019. The company’s decreased revenue is due to lower sales volumes, with eight systems sold in Q2 2020, versus 13 in Q2 2019.
The firm’s 3D Printed and Other Products, Materials, and Services was 56 percent of the company’s overall revenue, overtaking 3D Printing Machines for the first time. Over Q2 2020, 3D Printing Machines generated $6.2 million in revenue, a slight increase on the $6 million reported in Q2 2019.
ExOne attributed its healthy Products, Materials, and Services performance to a growth in the number of contracts it had signed with repeat customers. The U.S. Department of Defense recently awarded the company a $1.6 million contract to develop a field-deployable binder jet printer. Automotive, medical, and consumer goods firms have also engaged with ExOne about future production deals to decentralize their supply chains.
|Revenue by Product Line||Q2 2019||Total Sales (%)|
|3D Printing Machines||$9.3m||60|
|Other Products, Materials and Services||$15.3m||40|
The company’s $38.2 million backlog of orders is a new record for the firm, an increase of 13 percent over Q2 2019, and a 65 percent increase over the last 12 months. ExOne attributed its growth in orders to the strength of its binder jetting technology. The company’s increased order quantity has also improved its cash flow, with $29.7 million of liquid capital available to the firm, enabling it to make future investments.
Research and development spending remained flat, with $2.4 million spent in Q2 2020 compared to $2.5 million in Q2 2019. The company stated that its decreased spending was primarily due to lower employee-related costs, and it remains committed to developing its X1 160 Pro metal 3D printer. ExOne also launched a $2.8 million research project with 43 Pennsylvania universities during Q2 2020 to further develop its binder jet printing technology.
|Revenue by Product Line||Q2 2020||Total Sales (%)||Net Change (%)|
|3D Printing Machines||$4.9m||44||-47|
|Other Products, Materials and Services||$11.1m||56||-27|
The firm’s X1 160 Pro system is still on track and will be added to its existing portfolio of metal 3D printers, the X1 25 Pro, Innovent+ and M-Flex, in H2 2020. During Q2 2020, ExOne launched its #MakeMetalGreen campaign, highlighting the low material waste created by its metal 3D systems. ExOne remains committed to its green initiative and will continue developing its portfolio of more than 20 materials to produce the minimal possible amount of waste.
ExOne released its Sand 3D Printing Network in the second quarter, allowing customers to access the rapid digital production of complex castings and tooling parts. Powered by 40 ExOne industrial binder jetting systems, customers in a range of sectors can reportedly access parts in just 3-5 days.
Impact of the COVID-19 pandemic
During the company’s earnings call, CFO Douglas Zemba explained that the ongoing COVID-related restrictions impacted the company’s revenue performance. “Both of our product groups were disrupted by COVID-19, primarily due to domestic and international shipping and travel restrictions, which delayed or prohibited the delivery and/or installation of our products,” said Zemba.
Due to a decrease in customer demand, the company was forced to cut costs by reducing headcount, furloughing, pay reductions, and decreased overall spending. Through reduced expenditure, ExOne saved around $2 million in Q2, and it anticipates further savings of $3 million by 2021. The firm’s total operating expenses decreased by 21 percent from $8.7 million in Q2 2019 to $6.9 million in Q2 2020.
ExOne’s fall in revenue has been reflected across the 3D printing industry as the COVID-19 pandemic continues to impact customer demand. 3D Systems has announced a strategic refocus after it recorded a 28 percent fall in revenue. At the same time, Stratasys will cut 10 percent of its workforce, reporting similar declines.
Zemba added that consumption of the company’s materials was mainly accountable for the company’s decline in revenues. Between Q1 and Q2 2020, ExOne’s reduction in materials revenue was responsible for $800,000 of the $900,000 drop that the company suffered. “There was a lot of hoarding of materials, a sort of a toilet paper mentality that took place in the month of March for the most part,” said Zemba.
“A lot of our customers because of whatever restrictions were in place, or even just macroeconomic factors, weren’t running printers as hard as they typically would. Therefore consumption was lower, and it wasn’t necessarily a need to pull supply for materials,” he added.
On an outlook for 2020, Zemba expressed confidence that the company’s large backlog of orders would be fulfilled without cancellations. The significant deposits paid by its customers for the machines and the fact that many of the systems have been pre-installed will protect ExOne from any potential withdrawals. “I would, in general, say that the risk of cancellations with respect to our systems contracts is quite low,” said Zemba.
“The contracts generally don’t have termination clauses that are one-sided in them where you can simply back out before we deliver the product. We’re pretty well protected in that regard,” the CEO added.
In conclusion, Zemba summarized that the flexibility of the company’s upcoming X1 160 Pro system would drive future growth in a range of sectors. “We have had interest across three or four different spaces. So the nice thing is that our platform is very versatile. Still, for anyone who is looking for high volume metal parts via decentralized production, the 160 is a great opportunity for them,” said Zemba.
“It is going across all of our end markets, so we’re very excited about this platform. Again, we’re on schedule with it. We are planning to ship towards the end of this year. But we will not recognize revenue on this until sometime in 2021,” the ExOne CFO concluded.
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Featured image shows a printed model of the ExOne logo at one of the company’s 3D printing facilities. Photo via ExOne.