Additive Manufacturing Strategies

3D Systems’ (DDD) Second Quarter Results Fall Shy Of Estimates

ST Medical Devices

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31If I were to use one word to describe the recent stock selloff within the 3D printing space, it would probably be ‘disastrous’. The last 8-12 months has been a nightmare for investors who have taken a liking to any number of stocks within the space, many of which are down anywhere from 75-90% from their all-time highs only 18-24 months ago. Last week, one of the two giants within the 3D printing space, Stratasys reported earnings, and although the numbers came in at around what analysts had expected, it was the company’s lack of clarity about the future which sent shares tumbling across the industry once more.

Today it was the other 3D printing giant, 3D Systems’ (NYSE:DDD) turn to show the world how they performed last quarter, with investors hoping that an inkling of good news could send shares rebounding, not only for 3D Systems’ shareholders but for shareholders of the other beaten down stocks within the industry as well.

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Unfortunately the news was not as good as many had hoped. While analysts, on average, had been expecting the company to report an EPS of around $0.08 for the second quarter, the company missed that mark by $0.05, reporting just $0.03 per share on a non-GAAP basis. Additionally, the company’s revenue fell shy of the $173.19M that analysts had expected, as they reported just $170.5M.  With that said, this was still a 12.5% year-over-year increase on the quarter. Organic revenue for the quarter declined 5% compared to last year, however.

The company’s CEO, Avi Reichental was not pleased with this quarter’s report, however many of the issues such as currency fluctuation and a possible ‘wait and see’ approach being taken from potential clients may be somewhat out of the company’s control, and more related to macroeconomic weaknesses.34

“We are disappointed with our overall results,” said Avi Reichental, President and Chief Executive Officer, 3DS. “While a period of high growth enabled us to acquire strategic assets and build critical expertise, our rapid expansion permitted certain operating inefficiencies that we are currently addressing. Specifically, we are enhancing the quality of our products and services, accelerating synergy and cost reduction measures, driving process improvements and working closely with our channel partners to improve our sales operations and worldwide coverage.”

For the second quarter, 3D Systems reported operating expenses totaling $105.5 million of which $25.7 million can be attributed to R&D. This represents an increase in operating expenses compared to last year’s second quarter of 11%, primarily due to the integration of recent acquisitions. In total, the quarter resulted in a GAAP net loss of $13.7 million or a non-GAAP net income of $3.1 million.

“While industry conditions may constrain growth rates in the near term, we believe our focus on quality, innovation, operational excellence and partner friendliness will enhance our customer attractiveness and deliver greater earnings power as industry growth resumes,” stated Reichental.

One of the bright spots for the company was their 25% quarter-over-quarter growth within the European, Middle Eastern and African markets, while the Asian Pacific regions saw a decline in revenue of approximately 9%.

Certainly this report could have been worse, but likely won’t do much to spark any kind of major rebound within the industry. Are you a 3D Systems shareholder? What are your thoughts on this latest quarterly report? Discuss in the 3D Systems Earnings forum thread on 3DPB.com.

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