3D Systems (NASDAQ: DDD) shares surged in aftermarket trading after the company announced its earnings results for the full year 2021 on February 28, 2022. The Rock Hill, South Carolina 3D printer manufacturer, reported sales worth $615.6 million, a 10.5% increase compared to last year’s revenue of $557 million and just shy of 2019’s $639 annual revenue. Strengthened by the acquisition of software startups Additive Works and Oqton and bioprinting manufacturers Volumetric and Allevi, 3D Systems complemented its core technologies, fueling its growth and profitability in the future.
Net income in 2021 was $56.6 million, or $0.46 per share, increasing fourfold from a net loss of $13.1 million, or $0.11 per share, a year earlier. Additionally, it reported gross profit margins of 42.8%, compared to 40.1% in the prior year, and generated $48.1 million of cash from operations.
As demand continues to expand, the company said it expects sales to keep increasing this year, returning to pre-pandemic levels, ranging between $570 million and $630 million. With an installed base that currently prints over 700,000 parts per day, the business expects full-year 2022 non-GAAP gross margins to be between 40% to 44% and non-GAAP operating expenses to be between $225 million and $250 million.
Here’s what 3D Systems reported for its fiscal fourth quarter ended on December 31, 2021: revenue for the fourth quarter of 2021 decreased 12.6% to $150.9 million compared to the same period last year, but solely a result of business divested during 2021 (more about that below). When excluding revenue from divestitures, the firm had strong double-digit growth of 13.1% over the same period last year. These results reflect continued growth in 3D Systems healthcare segment and an increase in demand from its industrial solutions customers.
During the last quarter of the year, the solid divestiture-adjusted double-digit revenue growth was driven primarily by higher revenue in the industrial solutions segment, which increased 22.2% from the fourth quarter 2020 and 12.4% from the third quarter 2021. This is reportedly the fourth consecutive quarter of year-over-year divestiture-adjusted revenue growth in the industrial solutions segment. While revenue adjusted for divestitures from healthcare increased 5.1% compared to the same period last year and increased 8.4% compared to the third quarter of 2021.
Quarterly earnings of $11.5 million, or $0.09 per share, beat analyst estimates. The Zacks Consensus Estimate, in particular, had anticipated a net income of $0.03 per share. However, this earnings report posted a surprise of 200%.
As for 3D Systems stock, even though aftermarket trading was up, and the stock opened on March 1, 2022, with an uptick of almost 15% at $20.48 following the report’s release, it receded later that same morning. Even though experts at Simply Wall Street suggest that 3D Systems stock has underperformed the US Tech industry (which returned 27.3% over the past year), the company is optimistic about the future.
With its 18-month long four-phased plan that began in May 2020, now finalized, 3D Systems has reorganized its operations into two business units (healthcare and industrial solutions), restructured to gain efficiencies, and divested its non-core assets. As a result, 3D Systems is now ready to transition to the final phase, investing for growth. As a result, CEO Jeffrey Graves announced during the company’s earnings call that he would prioritize internal investments in R&D and infrastructure, firming up new product plans and priorities.
“Given our operating momentum, our demand outlook, and our financial strength, we continue to look for investments that will enhance our customers’ capability to adopt additive manufacturing, while delivering strong returns for our shareholders,” pointed out Graves.
On the heels of the release of three new powder bed printing systems, including the SLS 380 polymer-based system, DMP Flex 200, and DMP 350 dual metal-based printers, the organization said it is already expanding its market opportunities, particularly in its healthcare segment, where “productivity benefits to medical device customers have proved compelling.” In addition, just last month, 3DPrint.com reported on 3D Systems’ latest acquisition of Kumovis, an engineering company with a strong focus on the development and commercialization of a unique 3D printing system for use with medical-quality PEEK materials.
Described as a “perfect fit” by Graves, Kumovis will allow 3D Systems to offer customers a choice between titanium and PEEK polymeric solutions, each of which has specific use cases. In addition, the executive specified that integrating Kumovis into 3D Systems’ healthcare business will drive growth in craniomaxillofacial reconstruction through PEEK implants, surgical instrumentation, and anatomical models.
Other areas that will benefit from the synergy include spinal cages and bone plates for trauma patients. In addition, the German startup also has a unique self-contained cleanroom printing system, which opens new opportunities for 3D Systems to expand its point-of-care market segment for trauma patients, where printing capability is provided locally within the hospital, such as for large medical institutions like the veterans (VA) hospital system.
In addition to the new 3D printing systems released in 2021, the company launched its largest number of new materials, addressing key application needs such as precision surface finishes, fire retardancy, and improved strength and toughness characteristics.
Another highlight of the earnings call was a reference to the ongoing Russian invasion of Ukraine, as Graves informed investors that the company has elected to “immediately suspend all sales to Russia.” 3D Systems is now one of the countless companies pulling out of the Eastern European nation, including many AM businesses, like EOS, which also announced a halt to any business with Russian customers.
With an exciting lineup in all of 3D Systems’ product lines and what it considers a “rapidly growing demand outlook,” Graves says 2022 will be a year of “meaningful progress.” Significantly, as the effects of the pandemic recede and consistent, sustainable economic performance regains strength. He concludes that despite the significant challenges faced in 2021, it was “a tremendous year of renewal for 3D Systems.”
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