writes copy 16 Aug 2021

3D Printing Financials: ExOne Shares Soar with Record Revenues and Acquisition News

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ExOne (Nasdaq: XONE) posted record revenue of $18.8 million for its second quarter in 2021 amid news that it was being acquired by Desktop Metal (NYSE: DM). While navigating a whirlwind of positive news, ExOne shares were trading higher after hours following the announcement on August 11, 2021, and the stock price surged 41% the next day.

An early leader in binder jetting technology, ExOne tops revenue estimates this quarter after reporting a 69% revenue increase year-on-year and 44% sequentially. In addition, revenue from 3D printing machines increased 114% compared to the same quarter in 2020, resulting from an increase in volume sales but slightly offset by an unfavorable mix of machines sold.

The X1 160Pro metal 3D printer by ExOne. Image courtesy of ExOne.

Despite the increase, the company said revenue continued to be impacted by COVID-19, including disruptions to domestic and international shipping and travel, in addition to negative macroeconomic effects, particularly in Europe and Asia. Despite this, and from a geographic perspective, ExOne CEO John Hartner said the company grew in all regions but was driven by growth in the Americas and Asia, with a combined 92% increase year-over-year.

'œWe're also benefiting from secular trends that we believe will continue to lift ExOne long into the future, such as a desire to lightweight cars and aircraft for sustainability benefits. While Covid-19 continues to cast uncertainty over the markets we serve, we also see early signs of an economic restart, led by the U.S. market, and a shift in manufacturing approach as a direct result of the pandemic that also benefits ExOne. We're talking to an increasing number of manufacturers who are looking to de-risk and shorten supply chains in a way that supports increased interest in additive manufacturing technologies such as binder jetting for more localized production,' described Hartner.

Revenue for the period ending June 2021 includes an all-time quarterly record for recurring revenue of $8.3 million, up 34% year-on-year, driven by material sales due to the developing global economic restart and an expansion of ExOne's global installed base of printers. Along with a record backlog of $48.7 million, a 27% increase compared to the same period in 2020.

New orders remain strong while execution on installations continued to improve. During the second quarter, ExOne progressed on both remote installations and getting people on the ground around the world, as well as getting new orders to support future growth. As a result, however, the company posted a net loss of $5.6 million, or 25 cents per share, compared to a loss of $4 million or 24 cents per share a year ago.

Second-quarter of 2021 earnings, detail of revenues segmented by machines, and others. Image courtesy of ExOne.

Participating in the quarterly earnings call with Desktop Metal CEO Ric Fulop, Hartner said there are several key points that underpin this transaction. Primarily, the synergy between the companies will increase the combined AM portfolio, increase new material development, and leverage ExOne's sand 3D printing technologies in combination with Desktop Metal's low-cost hardware to make digital casting more accessible and lower cost for customers.

The combined portfolio in metals can take customers all the way from turnkey to mass production, providing anywhere from four to 250 liters of throughput per day. Hartner said that one of the biggest benefits of this deal is that both product portfolios and go-to-market strategies are highly complementary.

'œEven where throughputs are similar, there are differences in build volumes and vice versa. This acquisition creates a product lineup that combines throughput and flexibility and allows us to address the full spectrum of applications across speed, cost, and resolution and part size. I’m also particularly excited about the opportunity to evolve ExOne’s products into more turnkey solutions. At the end, we believe fragmentation between software, hardware and materials has held back the adoption of additive manufacturing. This fragmentation has often resulted in the inability to achieve part success or high yields quickly without significant development cycles,' explained Hartner.

Desktop Metal said it agreed to acquire ExOne in a stock and cash deal with a transaction value of $575 million. Under the terms of the deal, ExOne shareholders will get $8.50 in cash and $17 in Desktop Metal common stock shares for each share of ExOne common stock. So far, the transaction was unanimously approved by ExOne’s board and is expected to close in the fourth quarter of this year.

Now that ExOne will be part of the Desktop Metal group, it will be interesting to see how the next quarters and full-year earnings change for the two companies and whether they report combined earnings instead of losses. As for the impact of this unexpected deal, which brings together two of the industry’s leaders in the 3D printing community, could dramatically accelerate the adoption of metal additive manufacturing and cement Desktop Metal’s leadership in AM for mass production.

ExOne CEO John Hartner will be joining us at the upcoming SmarTech '“ Stifel AM Investment Strategies 2021  summit on September 9, 2021. The half-day online event focused on 3D printing market activity is free to attend.  Register at the summit website here.

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