3D Systems Reports Third Quarter and Nine Months 2016 Financial Results


  • Growth in production printers, materials and software as well as healthcare solutions drove quarterly revenue of $156.4 million
  • Generated $7.2 million of cash from operations during the quarter

ROCK HILL, S.C., Nov. 03, 2016 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the third quarter and nine months ended September 30, 2016.

For the third quarter of 2016, the company reported revenue of $156.4 million compared to $151.6 million in the third quarter of the previous year. The company reported a third quarter GAAP loss of $0.19 per share compared to a loss of $0.29 per share in the prior year and non-GAAP earnings of $0.14 per share compared to $0.01 per share in the third quarter of 2015.

Higher sales of 3D printers and materials into production applications as well as strong demand for the company’s software and healthcare solutions resulted in a 3% increase in revenue compared to the third quarter of 2015.

“We believe strong demand for our production printers, materials and software as well as healthcare solutions during the quarter is indicative of our growth potential and market opportunities,” commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems. 

Gross profit margin for the third quarter of 2016 was 44.1%. Gross profit margin was negatively impacted by non-recurring charges of $10.7 million related to prioritizing products and resources, consistent with the company’s recently announced strategy. Excluding these charges, gross profit margin for the third quarter of 2016 was 51.0%. Gross profit margin for the third quarter of 2015, excluding discontinued consumer products, was 50.6%.

For the third quarter of 2016, operating expenses were $91.0 million. Compared to the third quarter of 2015, SG&A expenses decreased 22% to $64.8 million on lower amortization and legal expenses. A $6.1 million non-recurring write-off of assets related to exiting projects drove a 16% increase in R&D expenses over the prior year period to $26.1 million.

“Our focus is to drive operational excellence and build an appropriate cost structure, which will provide capacity to invest into quality, reliability and innovation,” commented John McMullen, Executive Vice President and Chief Financial Officer. “We believe this will position us to drive profitable growth and continued positive cash generation.”

The company generated $7.2 million of cash from operations during the quarter and $38.2 million in the first nine months of 2016 and had $179.4 million of cash on hand at the end of September.

For the first nine months of 2016, revenue decreased 3% to $467.0 million compared to $482.8 million in the first nine months of 2015. The company reported a GAAP loss of $0.39 per share for the first nine months of 2016 compared to a loss of $0.53 per share in the same period of the prior year and non-GAAP earnings of $0.31 per share compared to $0.08 per share in the first nine months of 2015.

“We believe our synergistic portfolio of technologies, our talent and our 3D printing ecosystem uniquely position us to support complete digital manufacturing workflows to make 3D production real,” concluded Joshi.

Q3 2016 Conference Call and Webcast
The company expects to file its third quarter 2016 Form 10-Q with the Securities and Exchange Commission on November 3, 2016. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Thursday, November 3, 2016, at 8:30 a.m. Eastern Time. 

Date: Thursday, November 3, 2016
Time: 8:30 a.m. Eastern Time
Listen via Internet: www.3dsystems.com/investor
Participate via telephone:
Within the U.S.:  1-877-407-8291
Outside the U.S.:  1-201-689-8345

The recorded webcast will be available beginning approximately two hours after the live presentation at www.3dsystems.com/investor.

Forward-Looking Statements
Certain statements made in this release that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In many cases, forward looking statements can be identified by terms such as “believes,” “belief,” “expects,” “may,” “will,” “estimates,” “intends,” “anticipates” or “plans” or the negative of these terms or other comparable terminology.  Forward-looking statements are based upon managements beliefs, assumptions and current expectations and may include comments as to the company’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the control of the company.  The factors described under the headings “Forward-Looking Statements” and “Risk Factors” in the company’s periodic filings with the Securities and Exchange Commission, as well as other factors, could cause actual results to differ materially from those reflected or predicted in forward-looking statements. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved. The forward-looking statements included are made only as the date of the statement. 3D Systems undertakes no obligation to update or review any forward-looking statements made by management or on its behalf, whether as a result of future developments, subsequent events or circumstances or otherwise.

Presentation of Information in This Press Release
To facilitate a better understanding of the impact that strategic acquisitions, non-recurring charges and certain non-cash expenses had on its financial results, the company reported non-GAAP measures excluding the impact of amortization of intangibles, non-cash interest expense, acquisition and severance expenses, stock-based compensation expense, litigation settlements and charges related to strategic decisions and portfolio realignment. A reconciliation of GAAP to non-GAAP results is provided in the accompanying schedule.  

About 3D Systems
3D Systems provides comprehensive 3D products and services, including 3D printers, print materials, on-demand manufacturing services and digital design tools. Its ecosystem supports advanced applications from the product design shop to the factory floor to the operating room. 3D Systems’ precision healthcare capabilities include simulation, Virtual Surgical Planning, and printing of medical and dental devices as well as patient-specific surgical instruments. As the originator of 3D printing and a shaper of future 3D solutions, 3D Systems has spent its 30 year history enabling professionals and companies to optimize their designs, transform their workflows, bring innovative products to market and drive new business models.

More information on the company is available at www.3dsystems.com

Tables Follow

3D Systems Corporation
Unaudited Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
Quarter and Nine Months Ended September 30, 2016 and 2015
 
 Quarter Ended September 30,  Nine Months Ended September 30, 
 (in thousands, except per share amounts)2016 2015 2016 2015
Revenue:           
Products $ 94,543  $ 87,747  $ 280,406  $ 292,146 
Services   61,819    63,827    186,622    190,654 
Total revenue   156,362    151,574    467,028    482,800 
Cost of sales:           
Products   56,321    48,472    146,682    156,432 
Services   31,104    32,064    93,485    94,719 
Total cost of sales   87,425    80,536    240,167    251,151 
Gross profit   68,937    71,038    226,861    231,649 
Operating expenses:           
Selling, general and administrative   64,814    83,212    202,009    237,242 
Research and development   26,140    22,463    67,345    70,410 
Total operating expenses   90,954    105,675    269,354    307,652 
Loss from operations   (22,017)   (34,637)   (42,493)   (76,003)
Interest and other expense, net   1,624    1,373    1,290    4,029 
Loss before income taxes   (23,641)   (36,010)   (43,783)   (80,032)
Provision (benefit) for income taxes   (2,214)   (3,524)   665    (20,563)
Net loss  (21,427)   (32,486)   (44,448)   (59,469)
Less: net loss attributable to noncontrolling interests  (214)   (237)   (799)   (343)
Net loss attributable to 3D Systems Corporation$ (21,213) $ (32,249) $ (43,649) $ (59,126)
            
Net loss per share available to 3D Systems Corporation common stockholders — basic and diluted$ (0.19) $ (0.29) $ (0.39) $ (0.53)
            
Other comprehensive income (loss):           
Pension adjustments$ 18  $ 14  $ 54  $ 276 
Foreign currency translation gain (loss)  4,282    (9,957)   5,567    (17,903)
Total other comprehensive income (loss)  4,300    (9,943)   5,621    (17,627)
Less foreign currency translation gain (loss) attributable to noncontrolling interests  22    (882)   68    (2,588)
Other comprehensive income (loss) attributable to 3D Systems Corporation  4,278    (9,061)   5,553    (15,039)
            
Comprehensive loss  (17,127)   (42,429)   (38,827)   (77,096)
Less comprehensive loss attributable to noncontrolling interests  (192)   (1,119)   (731)   (2,931)
Comprehensive loss attributable to 3D Systems Corporation$ (16,935) $ (41,310) $ (38,096) $ (74,165)
            


3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
September 30, 2016 and December 31, 2015
 
  
  September 30, December 31, 
 (in thousands, except par value) 2016 2015 
ASSETS       
Current assets:       
Cash and cash equivalents  $ 179,358  $ 155,643  
Accounts receivable, net of reserves — $15,408 (2016) and $14,139 (2015)    120,630    157,406  
Inventories, net of reserves — $25,938 (2016) and $28,225 (2015)   113,717    105,877  
Prepaid expenses and other current assets    15,196    13,541  
Total current assets    428,901    432,467  
Property and equipment, net    80,837    85,995  
Intangible assets, net    133,518    157,466  
Goodwill    189,018    187,875  
Long term deferred income tax asset   5,374    3,216  
Other assets, net    24,700    26,256  
Total assets  $ 862,348  $ 893,275  
LIABILITIES AND EQUITY       
Current liabilities:       
Current portion of capitalized lease obligations  $ 581  $ 529  
Accounts payable    37,113    46,869  
Accrued and other liabilities    46,746    54,699  
Customer deposits    5,789    8,229  
Deferred revenue    37,385    35,145  
Total current liabilities    127,614    145,471  
Long term portion of capitalized lease obligations    7,781    8,187  
Long term deferred income tax liability    15,026    17,944  
Other liabilities    60,338    58,155  
Total liabilities    210,759    229,757  
Redeemable noncontrolling interests   8,872    8,872  
        
Stockholders’ equity:       
Common stock, $0.001 par value, authorized 220,000 shares; issued 114,301 (2016) and 113,115 (2015)   114    113  
Additional paid-in capital    1,306,903    1,279,738  
Treasury stock, at cost — 1,330 shares (2016) and 892 shares (2015)    (1,294)   (1,026) 
Accumulated deficit   (627,017)   (583,368) 
Accumulated other comprehensive loss   (33,995)   (39,548) 
Total 3D Systems Corporation stockholders' equity   644,711    655,909  
Noncontrolling interests   (1,994)   (1,263) 
Total stockholders’ equity    642,717    654,646  
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 862,348  $ 893,275  
        


3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2016 and 2015
 
  
 Nine Months Ended September 30,  
(In thousands)  2016    2015  
Cash flows from operating activities:      
Net loss$ (44,448) $ (59,469) 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Benefit of deferred income taxes   (5,464)   (21,971) 
Depreciation and amortization   45,731    63,905  
Provision for arbitration award      11,282  
Impairment of assets  8,590    1,111  
Provision for bad debts   1,488    4,123  
Inventory reserve of discontinued products  10,723      
Stock-based compensation   28,405    28,850  
Loss on the disposition of property and equipment  2,052    1,182  
Changes in operating accounts:      
Accounts receivable   36,357    37,426  
Inventories   (16,977)   (40,987) 
Prepaid expenses and other current assets   (1,619)   (10,136) 
Accounts payable   (9,938)   (19,657) 
Accrued and other current liabilities  (8,452)   (5,348) 
Customer deposits  (2,389)   566  
All other operating activities  (5,819)   (1,485) 
Net cash provided by (used in) operating activities   38,240    (10,608) 
Cash flows from investing activities:      
Purchases of property and equipment   (12,014)   (18,064) 
Additions to license and patent costs   (790)   (719) 
Cash paid for acquisitions, net of cash assumed       (91,799) 
Other investing activities  (1,000)   (3,750) 
Net cash used in investing activities   (13,804)   (114,332) 
Cash flows from financing activities:        
Tax benefits from share-based payment arrangements      467  
Proceeds, repurchase and retirement of stock, net  (1,507)   748  
Repayment of capital lease obligations   (786)   (788) 
Net cash provided by (used in) financing activities   (2,293)   427  
Effect of exchange rate changes on cash and cash equivalents  1,572    (2,896) 
Net increase (decrease) in cash and cash equivalents   23,715    (127,409) 
Cash and cash equivalents at the beginning of the period   155,643    284,862  
Cash and cash equivalents at the end of the period $ 179,358  $ 157,453  
       


3D Systems Corporation
Schedule 1
Earnings (Loss) Per Share
Quarter and Nine Months Ended September 30, 2016 and 2015
 
 Quarter Ended
September 30,
 
 Nine Months Ended
September 30,
 
(in thousands, except per share amounts)2016 2015 2016 2015
Numerator for basic and diluted net loss per share:           
Net loss attributable to 3D Systems Corporation$ (21,213) $ (32,249) $ (43,649) $ (59,126)
            
Denominator for basic and diluted net loss per share:           
Weighted average shares  111,008    112,010    111,194    111,920 
            
Net loss per share, basic and diluted$ (0.19) $ (0.29) $ (0.39) $ (0.53)
            


3D Systems Corporation
Schedule 2
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Nine Months Ended September 30, 2016 and 2015
 
  Quarter Ended September 30, 2016 Quarter Ended September 30, 2015
      Adjustments        Adjustments   
 (in thousands, except per share amounts)  GAAP  Amortization and Stock-Based Compensation  Legal and Acquisition-Related  Portfolio  Re-alignment  Non-GAAP  GAAP  Amortization and Stock-Based Compensation  Legal and Acquisition-Related  Portfolio  Re-alignment  Non-GAAP
                               
Revenue $ 156,362  $   $ $   $ 156,362  $ 151,574  $   $ $ $ 151,574 
Cost of sales   87,425    (83)     (10,723)   76,619    80,536    (81)       80,455 
Gross profit    68,937    83      10,723    79,743    71,038    81        71,119 
Gross profit margin   44.1%            51.0%   46.9%            46.9%
Operating expenses:                              
Selling, general and administrative    64,814    (18,286)   (1,781)   (35)   44,712    83,212    (24,562)   (11,971)     46,679 
Research and development    26,140            (6,072)   20,068    22,463              22,463 
Total operating expenses    90,954    (18,286)   (1,781)   (6,107)   64,780    105,675    (24,562)   (11,971)     69,142 
Income (loss) from operations    (22,017)   18,369    1,781    16,830    14,963    (34,637)   24,643    11,971      1,977 
Interest and other expense, net    1,624                1,624    1,373              1,373 
Income (loss) before income taxes    (23,641)   18,369    1,781    16,830    13,339    (36,010)   24,643    11,971      604 
Provision (benefit) for income taxes (a)   (2,214)               (2,214)   (3,524)   2,411    1,171      58 
Net income (loss)   (21,427)   18,369    1,781    16,830    15,553    (32,486)   22,232    10,800      546 
Less: net loss attributable to noncontrolling interests   (214)               (214)   (237)             (237)
Net income (loss) attributable to 3D Systems Corporation$ (21,213) $ 18,369  $ 1,781  $ 16,830  $ 15,767  $ (32,249) $ 22,232  $ 10,800  $ $ 783 
                               
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $ (0.19)          $ 0.14  $ (0.29)          $ 0.01 
                               
                               
  Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015
      Adjustments        Adjustments   
 (in thousands, except per share amounts)  GAAP  Amortization and Stock-Based Compensation  Legal and Acquisition-Related  Portfolio  Re-alignment  Non-GAAP  GAAP  Amortization and Stock-Based Compensation  Legal and Acquisition-Related  Portfolio  Re-alignment  Non-GAAP
                               
Revenue $ 467,028  $   $   $   $ 467,028  $ 482,800  $   $ $ $ 482,800 
Cost of sales   240,167    (248)       (10,723)   229,196    251,151    (232)       250,919 
Gross profit    226,861    248        10,723    237,832    231,649    232        231,881 
Gross profit margin   48.6%            50.9%   48.0%            48.0%
Operating expenses:                              
Selling, general and administrative    202,009    (54,693)   (4,491)   (35)   142,790    237,242    (76,458)   (17,147)     143,637 
Research and development    67,345            (6,072)   61,273    70,410              70,410 
Total operating expenses    269,354    (54,693)   (4,491)   (6,107)   204,063    307,652    (76,458)   (17,147)     214,047 
Income (loss) from operations    (42,493)   54,941    4,491    16,830    33,769    (76,003)   76,690    17,147      17,834 
Interest and other expense, net    1,290                1,290    4,029              4,029 
Income (loss) before income taxes    (43,783)   54,941    4,491    16,830    32,479    (80,032)   76,690    17,147      13,805 
Provision (benefit) for income taxes (a)   665    (1,452)   (67)       (854)   (20,563)   22,474    3,108      5,019 
Net income (loss)   (44,448)   56,393    4,558    16,830    33,333    (59,469)   54,216    14,039      8,786 
Less: net loss attributable to noncontrolling interests   (799)               (799)   (343)             (343)
Net income (loss) attributable to 3D Systems Corporation$ (43,649) $ 56,393  $ 4,558  $ 16,830  $ 34,132  $ (59,126) $ 54,216  $ 14,039  $ $ 9,129 
                               
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $ (0.39)          $ 0.31  $ (0.53)          $ 0.08 
                               

(a) Tax effect for the quarter ended March 31, 2016 and earlier periods was calculated quarterly, based on the Company’s overall tax rate for each quarter. Tax effect for the quarter ended September 30, 2016 was calculated based on the Company’s quarterly U.S. tax rate, which was 0% as a result of the valuation allowance that was recorded in the fourth quarter of 2015, in connection with GAAP net losses.


            

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