3D Systems’ 2015 Fourth Quarter and Full-Year Financials Surprisingly Optimistic

It was just a few months ago that 3D Systems saw its stock prices bottoming out amid lawsuits, multimillion dollar judgments, allegations of misleading stockholders and significant layoffs. It was seemingly a nonstop string of bad news, as hits, one after the other kept coming,  all pointing to what many insiders called poor company management and dysfunctional company culture. Ultimately, the string of financial hits would bring with it the resignation of longtime CEO Avi Reichental and eventually end the Cube, 3D Systems’ unsuccessful attempt to penetrate the fragile desktop 3D printer market. While very few mourned the demise of the Cube, it looks like exiting the desktop market may bring with it some new hope for beleaguered stockholders.

After filing late, this week 3D Systems Corporation released their financial results for the fourth quarter and full year ending December 31, 2015 and it held some surprisingly good news for the company. Predictions had been grim, however final yearly results showed an unexpected 2% increase in total revenues, which caused a jump in trading that surged to an almost 25% jump in value. Interest in the company’s stock had been dropping for almost the entire 2015 fiscal year as share prices dipped down to a dismal $9.29 a share from a high of $97 back in December 2013. The jump in revenue even seemed to take 3D Systems by surprise, as industry analysts predicted losses and they had been keeping silent on their financials.

The fourth quarter of 2015 actually saw a decrease in revenue of a little over 2% from the fourth quarter in 2014, however revenue estimates had predicted a much greater loss. The company reached $184.3 million in revenue, more than $17 million higher than original predictions. They also reported that the company took a GAAP loss of $5.32 per share, $595.4 million, and showed non-GAAP earnings of $0.19 per share within the fourth quarter. Additionally, the full year 2015 financial results showed that 3D Systems actually grew its overall revenue by 2% to $666.2 million. That offered $0.27 earnings per share (EPS) when analyst predictions expected EPS of only $0.11 and final revenues of just $646.55 million.

“While market conditions remain challenging and uncertain, timing of healthcare and industrial customer orders as well as contributions from acquisitions supported revenue during the quarter. We believe that by leveraging our domain expertise, partner and customer relationships and advanced technology we are well positioned to capitalize on meaningful opportunities in key verticals. We are continuing an extensive and comprehensive review of our business and strategy and taking steps to better prioritize our resources and focus our investments,” explained 3D Systems Interim President Andrew Johnson, who also serves as Chief Executive Officer and Chief Legal Officer.

3D Systems Cube 3D Printer

Actual fourth quarter 2015 showed a gross profit margin of 32.8% related to inventory and purchase commitments related to the end-of-life of the Cube 3D printer. The resulting $27.4 million charge was a hefty price to pay for shifting the company away from consumer products, but it may leave a much healthier company behind it. If you exclude the negative impact of the charge, the gross profit margin jumps to 47.7%. That is still a decrease of 20 basis points from fourth quarter 2014, but if the company can maintain its current sales level in industrial and medical applications it will look much healthier next year.

The company is heading into 2016 in surprisingly good shape, showing a flat $66.7 million in cash operating expenses, total operating expenses for the quarter at $626.1 million including a goodwill and intangibles impairment charge of $537.2 million. Excluding the impairment charge makes total operating expenses $88.9 million with $22.4 million for R&D expenses and the remaining $66.5 million designated as SG&A expenses. Fourth quarter generated $7.5 million in cash for operations and used $3.1 million in cash during the full year, currently the company has a solid $155.6 million of cash on hand as of the end of December.

While the 2015 end of year showed a glimmer of hope for the embattled 3D printing company, there is still a significant amount of work to be done to repair the last year and a half of damage. The first step is finding a new, permanent CEO to replace Reichental, a search that has been ongoing since the end of the third quarter. Discuss in the 3D Systems Financials forum over at 3DPB.com.