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Rock Hill, South Carolina, May. 30, 2007 -
3D Systems Corporation (NASDAQ: TDSC), a leading provider of 3-D Modeling, Rapid Prototyping and Manufacturing solutions, announced today its operating results for the first quarter of 2007. These results were generally in line with the previously announced expectations that the company issued on May 10. The company also filed its Form 10-Q for the first quarter of 2007 with the SEC today.
The company will hold a conference call and simultaneous webcast to discuss its first quarter results tomorrow morning, May 31, 2007, at 9:00 a.m., Eastern Time. Additional information relating to that call and webcast is provided below.
For the first quarter of 2007, revenue increased 9.8% to a first-quarter record of $36.9 million from $33.6 million for the first quarter of 2006. This increase was led by revenue from engineered materials and composites, which increased 29.4% to $15.4 million from $11.9 million in the 2006 quarter. Revenue from systems and other products increased 6.6% to $13.2 million from $12.4 million for the first quarter of 2006. Revenue from services decreased 10.8% to $8.4 million from $9.4 million in the 2006 quarter.
On a consolidated basis, gross profit for the current quarter increased to $15.9 million from $13.6 million for the first quarter of 2006. Gross profit margin increased to 43.1% of total revenue from 40.4% of total revenue for the 2006 quarter, reflecting the company’s higher profit margins on sales of engineered materials and systems, but partially offset by a decline in profit margins on service revenue. For the first quarter of 2007, cost of sales increased 4.9%, a rate less than the rate of increase in total revenue, to $21.0 million from $20.0 million for the first quarter of 2006.
Operating expenses were $3.0 million higher in the first quarter of 2007 than in the first quarter of 2006 primarily due to $4.8 million of higher selling, general and administrative expenses. The increase in SG&A was due primarily to $2.3 million of costs associated with the company’s restatement of its financial statements and year-end audit, $1.0 million of severance and stock-based compensation expense primarily related to the departure of its former chief financial officer and $0.4 million of additional depreciation expense related to the Rock Hill facility and ERP equipment.
Operating expenses for the three months ended March 31, 2007, were aided by the absence of $1.6 million of restructuring costs that the company incurred in the first quarter of 2006 related to its relocation to Rock Hill, South Carolina.
While research and development expenses declined by $0.2 million in the first quarter of 2007, the company continues to work on selected new product developments and expects to incur $12 million to $13 million of research and development expenses in 2007.
Net loss available to the common stockholders increased to $3.1 million in the first quarter of 2007 from $1.9 million for the first quarter of 2006, primarily reflecting the company’s operating loss, higher interest expenses and higher tax provisions. Diluted net loss per share available to common stockholders was $0.16 and $0.13 for the quarters ended March 31, 2007 and 2006, respectively.
The company ended its first quarter of 2007 with $7.0 million of unrestricted cash, which primarily reflected borrowings under its Silicon Valley Bank credit facility that comes due at the beginning of July. The company expects to repay or refinance those borrowings when they become due out of available cash, the renewal or replacement of that credit facility or other sources of financing. Borrowings under that credit facility were $8.2 million at March 31, 2007.
“I am very pleased that we are finally catching up in our financial reporting and are able to share with you our first quarter's financial results,” said Abe Reichental, 3D Systems' president and chief executive officer. “We are working very hard to return to timely reporting of our operating results.”
Operating Results
($ in millions except for per share amounts) |
| Operating Highlights |
First Quarter |
| 2007 |
2006 |
%
Change |
Revenue |
$36.9 |
$33.6 |
9.8% |
Gross profit
% of Revenue |
$15.9
43.1% |
$13.6
40.4% |
16.9% |
Operating expenses
% of Revenue |
$18.0
48.7% |
$15.0
44.5% |
20.3% |
Operating loss
|
($2.1)
|
($1.3)
|
NM |
Net loss available to common stockholders
|
($3.1)
|
($1.9)
|
NM |
| Diluted net loss per share available to common stockholders |
($0.16) |
($0.13) |
NM |
Depreciation and amortization
% of Revenue |
$1.8
4.9% |
$1.6
4.8% |
12.5% |
NM=not meaningful
“I am particularly pleased that sales of our engineered materials and composites continued to increase at a double-digit rate for the first quarter of 2007. I am also gratified that the decline in revenue from certain legacy products and less profitable services continues as planned. We believe that our overall results reflect the continued demand for our products and demonstrate that the strategic actions that we have taken since late 2003 to reshape our organization, transform our product portfolio and re-engineer our business model are taking effect.
“As I shared with you few weeks ago, we believe that our growing installed base, coupled with the integration of our new systems with proprietary materials cartridges and our continuum of expert solutions, should improve the profitability of our business as revenue from materials continues to outpace our growth in systems. Over time, this trend should improve the stability of our revenue base as consumables’ sales rise as a percentage of the product mix relative to systems,” continued Reichental.
“During the first quarter we incurred abnormally high operating expenses primarily related to accounting and severance costs which largely contributed to our operating loss for the first quarter. These higher operating expenses more than offset our higher gross profit from higher revenue and favorable mix in the first quarter,” added Reichental.
“We believe that the majority of our operational issues have been resolved successfully. We remain confident in our overall direction and expect that the key initiatives and investments that we undertook throughout 2006 will provide us with the right platform to achieve our long-term objectives," concluded Reichental.
Conference Call and Audio Webcast Details
3D Systems will hold a conference call and audio Webcast to discuss its first quarter 2007 financial results tomorrow morning, May 31, 2007, at 9:00 a.m., Eastern Time.
To access the Conference call, dial 1-888-336-3485 (or 706-634-0653 from outside the United States). A recording will be available two hours after completion of the call for five days. To access the recording, dial 1-800-642-1687 (or 706-645-9291 from outside the United States) and enter 2097397, the conference call ID number.
To access the audio Webcast, log onto 3D Systems’ website at www.3dsystems.com. The link to the Webcast is provided on the homepage of the website. To ensure timely participation and technical capability, we recommend logging on a few minutes prior to the conference call to activate your participation. The Webcast will be available for replay beginning approximately 48 hours after completion of the call at: www.3dsystems.com under the Investor Relations’ section.
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 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 expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, you are urged to consider statements in the conditional or future tense or that include terms 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 the future events and trends affecting its business and expectations 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 filing 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.
About 3D Systems Corporation
3D Systems is a leading provider of 3-D Modeling, Rapid Prototyping and Manufacturing solutions. Its systems and materials reduce the time and cost of designing products and facilitate direct and indirect manufacturing by creating actual parts directly from digital input. These solutions are used for design communication and prototyping well as for production of functional end-use parts: Transform your products.
More information on the company is available at www.3dsystems.com, or via email at moreinfo@3dsystems.com.
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