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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