The ExOne Company Reports Second Quarter 2021 Results

Participants in the Solicitation

Desktop Metal and the Company and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the proposed transaction. Information about the Company’s directors and executive officers and their ownership of the Company’s common stock is set forth in the Company’s proxy statement for its Annual Meeting of Stockholders on Schedule 14A filed with the SEC on April 1, 2021. Information about Desktop Metal’s directors and executive officers is set forth in Desktop Metal’s proxy statement for its Annual Meeting of Stockholders on Schedule 14A filed with the SEC on June 17, 2021. To the extent that holdings of Desktop Metal’s or the Company’s securities have changed since the amounts printed in Desktop Metal’s or the Company’s proxy statement, such changes have been or will be reflected on Statements of Changes in Beneficial Ownership on Form 4 filed with the SEC. Additional information regarding the interests of those persons and other persons who may be deemed participants in the proposed transaction may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available. You may obtain free copies of these documents as described in the preceding paragraph.

No Offer or Solicitation

This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

Safe Harbor Regarding Forward Looking Statements

This news release relates to a proposed business combination transaction between Desktop Metal and the Company and may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to the Company’s future financial or business performance, strategies, or expectations. Forward-looking statements typically are identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” as well as similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could” and “may.”

The Company cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made and the Company assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to risk factors previously disclosed in the Company’s filings with the SEC), including its Annual Report on Form 10-K, the following factors, among others, could cause results to differ materially from forward-looking statements or historical performance: the severity and duration of world health events, including the COVID-19 outbreak and the related economic repercussions and operational challenges; the ability of Desktop Metal and the Company to consummate the proposed transaction in a timely manner or at all, including the ability to secure regulatory approvals; impact to the Company’s business if the transaction is not consummated; successful integration of Desktop Metal’s and the Company’s businesses and realization of synergies and benefits; the ability of Desktop Metal to implement business plans, forecasts and other expectations following the completion of the transaction; risk that actual performance and financial results following completion of the transaction differ from projected performance and results; business disruption following the transaction; the Company’s ability to consistently generate operating profits; fluctuations in the Company’s revenues and operating results; the Company’s competitive environment and its competitive position; ExOne’s ability to enhance its current 3D printing machines and technology and to develop and introduce new 3D printing machines; the Company’s ability to qualify more industrial materials in which it can print; demand for ExOne’s products; the availability of skilled personnel; the impact of loss of key management; the impact of customer specific terms in machine sale agreements in determining the period in which the Company recognizes revenue; risks related to global operations including effects of foreign currency and COVID-19; dependency on certain critical suppliers; nature or impact of alliances and strategic investments; reliance on critical information technology systems; the effect of litigation, contingencies and warranty claims; liabilities under laws and regulations protecting the environment; the impact of governmental laws and regulations; operating hazards, cyberattacks, war, terrorism and cancellation or unavailability of insurance coverage; the impact of disruption of the Company’s manufacturing facilities or ExOne Adoption Centers; the adequacy of ExOne’s protection of its intellectual property; expectations regarding demand for the Company’s industrial products, and other matters with regard to outlook; and other factors beyond our control, including the impact of COVID-19.

These and other important factors, including those discussed under Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, and under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, may cause the Company’s actual results of operations to differ materially from any future results of operations expressed or implied by the forward-looking statements contained therein. Before making a decision to purchase ExOne common stock, you should carefully consider all of the factors identified in its Annual Report on Form 10-K and Quarterly Report on Form 10-Q that could cause actual results to differ from these forward-looking statements.

A more fulsome discussion of the risks related to the proposed transaction will be included in the proxy statement/prospectus. For additional information about other risks and uncertainties that could cause actual results of the transaction to differ materially from those described in the forward-looking statements in this communication of the Company’s business, financial condition, results of operations and prospects generally, please refer to the Company’s reports filed with the SEC, including without limitation the “Risk Factors” and/or other information included in the Form 8-K to be filed by the Company in connection with the transaction, the Form 10-Q filed with the SEC on August 11, 2021 and such other reports as the Company has filed or may file with the SEC from time to time. For additional information about risks and uncertainties that may cause actual results of the transaction to differ materially from those described, please refer to Desktop Metal’s reports filed with the SEC, including without limitation the “Risk Factors” and/or other information included in such reports. While the list of factors presented here is, and the list of factors presented in the proxy statement/prospectus will be considered representative, no such list should be considered to be a complete statement of all risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Except as required by applicable law, neither Desktop Metal nor the Company will update any forward-looking statements to reflect new information, future events, changed circumstances or otherwise.

FINANCIAL TABLES FOLLOW.

 

The ExOne Company

Condensed Statement of Consolidated Operations and Comprehensive Loss (Unaudited)

(in thousands, except per-share amounts)

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Revenue

 

$

18,782

 

 

$

11,099

 

 

$

31,803

 

 

$

24,482

 

Cost of sales

 

 

13,906

 

 

 

8,009

 

 

 

24,927

 

 

 

17,763

 

Gross profit

 

 

4,876

 

 

 

3,090

 

 

 

6,876

 

 

 

6,719

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,008

 

 

 

2,369

 

 

 

5,632

 

 

 

4,845

 

Selling, general and administrative

 

 

7,198

 

 

 

4,488

 

 

 

13,091

 

 

 

10,651

 

Gain from sale-leaseback of property and equipment

 

 

 

 

 

 

 

 

 

 

 

(1,462

)

 

 

 

10,206

 

 

 

6,857

 

 

 

18,723

 

 

 

14,034

 

Loss from operations

 

 

(5,330

)

 

 

(3,767

)

 

 

(11,847

)

 

 

(7,315

)

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

7

 

 

 

53

 

 

 

167

 

 

 

117

 

Other expense net

 

 

236

 

 

 

195

 

 

 

111

 

 

 

5

 

 

 

 

243

 

 

 

248

 

 

 

278

 

 

 

122

 

Loss before income taxes

 

 

(5,573

)

 

 

(4,015

)

 

 

(12,125

)

 

 

(7,437

)

Provision (benefit) for income taxes

 

 

1

 

 

 

8

 

 

 

(411

)

 

 

234

 

Net loss

 

$

(5,574

)

 

$

(4,023

)

 

$

(11,714

)

 

$

(7,671

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.25

)

 

$

(0.24

)

 

$

(0.54

)

 

$

(0.47

)

Diluted

 

$

(0.25

)

 

$

(0.24

)

 

$

(0.54

)

 

$

(0.47

)

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,574

)

 

$

(4,023

)

 

$

(11,714

)

 

$

(7,671

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

223

 

 

 

370

 

 

 

(897

)

 

 

(468

)

Comprehensive loss

 

$

(5,351

)

 

$

(3,653

)

 

$

(12,611

)

 

$

(8,139

)

The ExOne Company

Condensed Consolidated Balance Sheet (Unaudited)

(in thousands, except per-share and share amounts)

 

 

 

June 30,

 

December 31,

 

 

2021

 

2020

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

127,931

 

 

$

49,668

 

Restricted cash

 

 

1,536

 

 

 

508

 

Accounts receivable net

 

 

6,511

 

 

 

5,225

 

Current portion of net investment in sales-type leases net

 

 

237

 

 

 

229

 

Inventories net

 

 

22,986

 

 

 

20,562

 

Prepaid expenses and other current assets

 

 

6,697

 

 

 

4,451

 

Total current assets

 

 

165,898

 

 

 

80,643

 

Property and equipment, net of accumulated depreciation

of $20,809 (2021) and $20,823 (2020)

 

 

23,269

 

 

 

21,300

 

Operating lease right-of-use assets

 

 

3,031

 

 

 

4,043

 

Net investment in sales-type leases net of current portion net

 

 

388

 

 

 

509

 

Other noncurrent assets

 

 

898

 

 

 

794

 

Total assets

 

$

193,484

 

 

$

107,289

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

2,194

 

 

$

1,622

 

Current portion of operating lease liabilities

 

 

1,952

 

 

 

1,958

 

Accounts payable

 

 

6,006

 

 

 

4,501

 

Accrued expenses and other current liabilities

 

 

5,587

 

 

 

4,978

 

Current portion of contract liabilities

 

 

14,983

 

 

 

13,586

 

Total current liabilities

 

 

30,722

 

 

 

26,645

 

Long-term debt net of current portion

 

 

 

 

 

1,783

 

Operating lease liabilities net of current portion

 

 

1,079

 

 

 

2,085

 

Contract liabilities net of current portion

 

 

87

 

 

 

159

 

Other noncurrent liabilities

 

 

338

 

 

 

314

 

Total liabilities

 

 

32,226

 

 

 

30,986

 

Contingencies and commitments

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 200,000,000 shares authorized,

22,032,751 (2021) and 20,009,157 (2020) shares issued and outstanding

 

 

220

 

 

 

200

 

Additional paid-in capital

 

 

315,659

 

 

 

218,113

 

Accumulated deficit

 

 

(143,586

)

 

 

(131,872

)

Accumulated other comprehensive loss

 

 

(11,035

)

 

 

(10,138

)

Total stockholders' equity

 

 

161,258

 

 

 

76,303

 

Total liabilities and stockholders' equity

 

$

193,484

 

 

$

107,289

 

The ExOne Company

Condensed Statement of Consolidated Cash Flows (Unaudited)

(in thousands)

 

 

 

Six Months Ended

 

 

June 30,

 

 

2021

 

2020

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(11,714

)

 

$

(7,671

)

Adjustments to reconcile net loss to net cash used for operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,862

 

 

 

2,107

 

Equity-based compensation

 

 

658

 

 

 

449

 

Amortization of debt issuance costs

 

 

7

 

 

 

29

 

Recoveries for bad debts net

 

 

(53

)

 

 

(19

)

Provision for slow-moving, obsolete and lower of cost or net realizable value inventories net

 

 

218

 

 

 

305

 

Foreign exchange losses (gains) on intercompany transactions net

 

 

104

 

 

 

(51

)

Gain from sale-leaseback of property and equipment

 

 

 

 

 

(1,462

)

Deferred income taxes

 

 

 

 

 

195

 

Loss on extinguishment of debt

 

 

119

 

 

 

 

Changes in assets and liabilities, excluding effects of foreign currency

translation adjustments:

 

 

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(1,365

)

 

 

2,016

 

Decrease in net investment in sales-type leases

 

 

112

 

 

 

20

 

Increase in inventories

 

 

(4,859

)

 

 

(5,369

)

Increase in prepaid expenses and other assets

 

 

(1,228

)

 

 

(1,035

)

Increase (decrease) in accounts payable

 

 

1,573

 

 

 

(821

)

Decrease in accrued expenses and other liabilities

 

 

(187

)

 

 

(458

)

Increase in contract liabilities

 

 

1,552

 

 

 

4,428

 

Net cash used for operating activities

 

 

(13,201

)

 

 

(7,337

)

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,689

)

 

 

(591

)

Proceeds from sale of property and equipment

 

 

 

 

 

16,229

 

Net cash (used for) provided by investing activities

 

 

(2,689

)

 

 

15,638

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from borrowings on long-term debt

 

 

 

 

 

2,194

 

Payments on long-term debt

 

 

(1,226

)

 

 

(78

)

Proceeds from exercise of employee stock options

 

 

1,449

 

 

 

541

 

Proceeds from common stock offerings, net of issuance costs

 

 

95,288

 

 

 

2,894

 

Other

 

 

(15

)

 

 

(29

)

Net cash provided by financing activities

 

 

95,496

 

 

 

5,522

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

 

(315

)

 

 

100

 

Net change in cash, cash equivalents, and restricted cash

 

 

79,291

 

 

 

13,923

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

50,176

 

 

 

6,243

 

Cash, cash equivalents, and restricted cash at end of period

 

$

129,467

 

 

$

20,166

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities

 

 

 

 

 

 

 

 

Transfer of internally developed 3D printing machines from inventories to

property and equipment for internal use or leasing activities

 

$

2,431

 

 

$

1,834

 

Transfer of internally developed 3D printing machines from property

and equipment to inventories for sale

 

$

629

 

 

$

1,107

 

Property and equipment included in accounts payable

 

$

256

 

 

$

41

 

Unsettled proceeds from at-the-market offerings of common stock, net of issuance costs

 

$

 

 

$

204

 

The ExOne Company

Adjusted EBITDA Reconciliation (Unaudited)

(in millions)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Net loss

 

$

(5.6

)

 

$

(4.0

)

 

$

(11.7

)

 

$

(7.7

)

Interest expense

 

 

0.0

 

 

 

0.0

 

 

 

0.1

 

 

 

0.1

 

Provision (benefit) for income taxes

 

 

0.0

 

 

 

0.0

 

 

 

(0.4

)

 

 

0.3

 

Depreciation and amortization

 

 

0.9

 

 

 

1.2

 

 

 

1.9

 

 

 

2.1

 

Equity-based compensation

 

 

0.4

 

 

 

0.2

 

 

 

0.7

 

 

 

0.5

 

Gain from sale-leaseback of property and equipment

 

 

 

 

 

 

 

 

 

 

 

(1.5

)

Other expense net

 

 

0.2

 

 

 

0.2

 

 

 

0.1

 

 

 

0.0

 

Adjusted EBITDA

 

$

(4.1

)

 

$

(2.4

)

 

$

(9.3

)

 

$

(6.2

)


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