3D Systems Reports Second Quarter and Six Months 2014 Financial Results
- Expanding installed base and increased utilization fueled materials revenue growth of 30%
- Higher demand for design and manufacturing printers drove a 126% unit sales increase for the category
- Increased revenue guidance on strong business fundamentals and recent announcements
- Improving enterprise-wide synergies delivered $19 million of cash from operations
ROCK HILL, South Carolina – July 31, 2014 - 3D Systems Corporation (NYSE: DDD) announced today that its second quarter revenue grew $30.7 million, or 25%, from the prior year to $151.5 million on strong demand for its design and manufacturing printers, materials and services, resulting in second quarter GAAP earnings of $0.02 per share and non-GAAP earnings of $0.16 per share.
Organic growth amounted to 10% as additional orders-in-hand, including $23.1 million of printer orders, a 29% sequential increase over the March backlog for printers, expanded the company’s second quarter total backlog to a record $31.9 million.
“We are pleased that unit sales of our design and manufacturing printers increased 126% and helped fuel a 30% increase in materials revenue. We believe that the record order book that we exited the quarter with reflects the vibrancy of our business and our organic growth trajectory,” said Avi Reichental, 3DS’ President and Chief Executive Officer.
Second Quarter 2014 Revenue Highlights (compared to second quarter 2013):
- Design and manufacturing revenue increased 28% to $144.2 million on a 126% increase in units sold.
- Growing installed base and increased printer utilization fueled materials revenue growth of 30%.
- Expanding services menu contributed to a 38% increase in services revenue.
- Delayed new products availability held consumer revenue to $7.4 million, but didn’t impede higher consumer bookings of an additional $7.7 million.
- Healthcare revenue increased 46% to $27.5 million from expanding services and capabilities.
Gross profit margin shouldered the transitional effects of concentrated new product launches as well as the absorption of legacy products obsolescence and manufacturing expansion costs. Together, these factors and changed mix compressed gross profit margin some 400 basis points from the prior year’s quarter to 47.8%.
“While transitional forces temporarily pressured our gross profit margin, a detailed examination of the specific drivers, confirms that the fundamentals of our business are intact and our gross profit margins are poised to rebound and resume their expansion trajectory,” continued Reichental.
The company effectively kept its operating expenses flat, on a sequential basis, even with continued investments in R&D, sales, marketing and manufacturing capacity. The company generated $19.0 million of cash from operations during the second quarter as returns on its recent investments began to materialize and enterprise-wide integration synergies continued to accrue. The company ended the quarter with $570.3 million cash on hand, inclusive of an equity raise completed earlier in the quarter.
“As we advance our market leadership and scale in key verticals through our increased investments, our progress is ahead of schedule and our enterprise-wide synergies are already generating substantial cash from operations,” continued Reichental.
For the six months 2014, revenue grew $76.4 million, or 34%, with growth distributed broadly across all categories, to $299.3 million, resulting in GAAP earnings per share of $0.07 per share and non-GAAP earnings per share of $0.30 per share.
Recent Business Highlights
- The company acquired Medical Modeling, a leading provider of FDA cleared, personalized surgical treatment planning and patient specific medical devices, to create the most comprehensive 3D printing medical device capabilities and enhance its 3D printing digital thread.
- The company signed a definitive agreement to acquire Robtec, which will provide a strategic sales and service platform and scalable gateway into Latin America.
- The company extended its global reseller channel, adding several key distributors including ScanSource, Konica Minolta and Cannon Marketing Japan.
- The company signed a definitive agreement to acquire Simbionix, the global leader in 3D virtual reality surgical simulation, to extend its healthcare reach from the training room to the operating room with the addition of powerful synergistic technology, deep experience and domain expertise.
3DS entered the second half of this year with a substantially larger order book and favorable growth indicators. The company typically realizes a higher portion of its annual revenue during the second half of the year, and expects the same in the remainder of 2014 as the full impact of its new products and services and recent investments materializes. Factoring in the expected net contribution after closure of the Simbionix acquisition and delayed closing of the Robtec acquisition that was already included in its previous guidance, management raised its 2014 revenue guidance. Management expects revenue to be in the range of $700 million to $740 million and its GAAP earnings per share to be in the range of $0.44 to $0.56 and non-GAAP earnings per share to be in the range of $0.73 to $0.85.
“Consistent with our historical performance, we expect to generate a higher portion of our revenue during the second half on rebounding margins. Record bookings for our design and manufacturing printers together with rising orders for our consumer products provides us with confidence in our ability to achieve our 2014 guidance,” concluded Reichental.
Q2 2014 Conference Call and Webcast
3D Systems plans to hold a conference call and simultaneous webcast to discuss its financial results for the second quarter and first six months of 2014 on Thursday, July 31, 2014, at 9:00 a.m. Eastern Time, and expects to file its Form 10-Q before market open on the same day.
Date: Thursday, July 31, 2014
Time: 9:00 a.m. Eastern Time
Listen via Internet: www.3dsystems.com/investor
Participate via telephone:
Within the U.S.: 1-866-953-6860
Outside the U.S.: 1-617-399-3484
Participant code: 39529244
The recorded webcast will be available beginning approximately two hours after the live presentation at www.3dsystems.com/investor.
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 may 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 addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements 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,” “Cautionary Statements and Risk Factors,” 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.
Presentation of Information in This Press release
To facilitate a better understanding of the impact that several strategic acquisitions had on its financial results, the company reported non-GAAP measures that adjust net income and earnings per share by excluding the impact of amortization of intangibles, non-cash interest expense, acquisition and severance expenses, litigation settlements, loss on conversion of notes and stock-based compensation expense. A reconciliation of GAAP to non-GAAP results is provided in the accompanying schedule.
About 3D Systems
3D Systems is a leading provider of 3D printing centric design-to-manufacturing solutions including 3D printers, print materials and cloud sourced on-demand custom parts for professionals and consumers alike in materials including plastics, metals, ceramics and edibles. The company also provides integrated 3D scan-based design, freeform modeling and inspection tools and an integrated 3D planning and printing digital thread for personalized surgery and patient specific medical devices. Its products and services replace and complement traditional methods and reduce the time and cost of designing new products by printing real parts directly from digital input. These solutions are used to rapidly design, create, communicate, prototype or produce functional parts and assemblies, empowering customers to manufacture the future.
Today its comprehensive range of 3D printers is the industry’s benchmark for production-grade manufacturing in aerospace, automotive, patient specific medical device and a variety of consumer, electronic and fashion accessories.
More information on the company is available at www.3DSystems.com.
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