The 3D printing space has incredible promise. Growth rates within both the consumer and manufacturing sides of the market have been quite staggering these past couple of years. Where there is growth, there is a keen interest among investors to follow the money. In a nine month period, from around March of 2013 until the very start of this year, we saw stocks within the 3D printing space soar, some close to 300%.
Among these stocks was 3D Systems (NYSE: DDD). On March 15, 2013, shares of the company were trading at a meager $29.16. Fast forward to January of this year and shares reached as high as $97.28. Here we are three weeks into the 4th quarter of 2014 and shares of 3D Systems are trading at close to a 50% discount from their highs.
With the company expected to announce their third quarter earnings on November 4, investors have been waiting eagering to see the report in order to determine whether or not this is the time to jump in, or if they should continue to wait on the sidelines.
This morning, we all awoke to a surprise, and not a good one if you are already an investor in the company. 3D Systems has just announced preliminary third quarter 2014 results. They anticipate third quarter revenue to fall somewhere between $164 million and $169 million, with GAAP earnings per share coming in around $0.01 to $0.03. Non-GAAP EPS should be in the range of $0.16 to $0.19.
Although the company has strengthened their sales in the area of healthcare, design, and manufacturing, it was not enough to overcome the manufacturing constraints within their direct metal 3D printer line of products and service.
“We are disappointed that we failed to fully capitalize on the robust demand for our direct metal and consumer products during the quarter,” said Avi Reichental, President and Chief Executive Officer, 3DS. “While we worked very hard to deliver these products sooner, achieving manufacturing scale, quality and user experience targets took significantly longer than we had anticipated.”
The company has also had to trim their full year guidance, based on this quarter’s unexpected shortfall. For the full year 2014, they now expect revenue to come in between $650 million to $690 million, with GAAP EPS of $0.18 to $0.28. Not everything was bad news though. The company has been rapidly expanding via acquisitions, some of which have led to pressure on their gross margins, but should result in additional profits as the new purchases are integrated into a streamlined business model.
“Our accelerated investments in new products and acquisitions contributed to a record order book in every period of this year, but disrupted revenue generation and pressured our gross profit margins. Now that we are shifting our attention to fine-tuning these investments, we expect to leverage them into a valuable and sustainable first-mover advantage,” stated Reichental who has remained very upbeat despite these recent earnings disappointments.
Shares of DDD are down over 10% in pre-market trading. Let’s hear your thoughts on this preliminary report in the 3D Systems Third Quarter forum thread on 3DPB.com.
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