3D Systems Reports Record Revenue for Fourth Quarter and Full Year 2014

ROCK HILL, South Carolina – February 26, 2015 - 3D Systems Corporation (NYSE: DDD) announced today its financial results for the fourth quarter and full year 2014.

For the quarter ended December 31, 2014, the company reported record revenue of $187.4 million, representing a 21% increase over the comparable 2013 quarter despite significant foreign currency headwinds that reduced its total revenue by some $6 million during the quarter.

For the same period, the company reported GAAP earnings of $0.01 per share and non-GAAP earnings of $0.21 per share.

The company recorded an impressive 46% revenue increase from its EMEA region, over the same quarter in 2013, notwithstanding a challenging operating environment, outperforming all other regions with 28% organic growth. Channel productivity, primarily in North America, fell well short of the company’s expectations, restricting total organic growth to 7% for the quarter.

The company’s direct metals and healthcare performance continued to surpass industry growth rates, increasing in revenue over the fourth quarter of 2013 by 178% and 96%, respectively. Consumer revenue increased substantially over the same 2013 period, growing by 68%. The company’s order book held steady at $46.5 million, even as its fourth quarter revenue increased 12% sequentially.

“We are disappointed that we were not able to fully capitalize on the strength of our portfolio in all geographies equally, but are very pleased with the impressive growth rate that our EMEA channel delivered in the face of adverse foreign currency rates,” said Avi Reichental, 3DS’ President and Chief Executive Officer. ”We are taking decisive steps to improve the productivity and coverage of our North American and APAC channels to the level of our EMEA region.”

For the fourth quarter of 2014, gross profit margin remained firm at the previous quarter’s level of 47.9%, contributing to GAAP net income of $1.6 million, and non-GAAP net income of $23.8 million. The company generated $23.2 million of cash from operations during the fourth quarter and ended the year with $284.9 million of cash on hand.

For the full year 2014, the company recorded revenue and non-GAAP earnings per share within its recently revised guidance ranges. Specifically, the company reported a revenue increase of 27% to a record $653.7 million, GAAP earnings of $0.11 per share and non-GAAP earnings of $0.70 per share for the year. Expanding materials and services margins and higher revenue contributed to a 19% increase in gross profit in 2014 over 2013, but a higher number of new product introductions, ongoing manufacturing capacity expansion and unfavorable mix constrained gross profit margin to 48.6% for the year.

Fourth quarter operating expenses increased 38% from the prior year quarter, reflecting a step up of 36% in R&D and 38% in SG&A costs, in line with the company’s previously disclosed strategic initiatives.

“As expected, higher spending levels in support of our expansion plans pressured our earnings throughout 2014, as we fast-tracked assembly of the talent, assets and infrastructure required to take our business to the next level,” continued Reichental. “Having completed this investment phase, we expect to recover our operating leverage and expand our profitability throughout 2015.”

Business Highlights

• During the fourth quarter, the company continued to expand its manufacturing and IT infrastructure.
  • Increased production capacity for several design, manufacturing and consumer printers at its recently leased 200,000 square foot manufacturing facility in Rock Hill, South Carolina, to meet growing demand.
  • Continued to ramp production at a Direct Metal Printers manufacturing facility, located in the U.S., to meet rising demand for metals printers.
  • Completed the ramp up of its new consumer materials manufacturing facility in Barberton, Ohio, in support of its growing consumer installed base.
  • Broke ground on a 70,000 square foot healthcare facility in Littleton, Colorado, to support its expanding portfolio and increasing demand for its personalized medicine products and services.
  • Continued to make network wide IT infrastructure, capacity and business continuity investments

Management believes that its ongoing foundational investments are sufficient to support its ambitious growth plans.

• The company continued to add synergistic technology, domain expertise and complementary sales channels through its strategic and early stage investments.
  • Completed the acquisition of Cimatron in February 2015, strengthening the company’s 3D digital design and fabrication portfolio.
  • Acquired botObjects in December 2014, strengthening 3DS’ desktop product line with the addition of the CubePro C, the first affordable full-color plastic 3D printer.
  • Completed the acquisition of Robtec in November 2014, providing a strategic growth platform in Latin America.

2015 Guidance

Management expects several transitional factors to constrain its top line growth-rate during the first half of 2015.

• The company entered 2015 at a lower revenue run-rate than previously expected as a result of delayed new products and gaps in its North American channel performance, and expects that it may take several periods to make up this shortfall.
• The company expects that the planned discontinuation of several legacy products and ongoing pruning of lower margin services will reduce historical revenue contributions.  
• Management anticipates ongoing foreign currency headwinds well into the second half of 2015.

Management expects 2015 revenue to be in the range of $850 million to $900 million, with a greater percentage of revenue generated during the second half, GAAP earnings per share in the range of $0.35 to $0.45 and non-GAAP earnings per share to be in the range of $0.90 to $1.10.

Management plans to keep its 2015 capital expenditures at 3% of revenue and expects to moderate its M&A activities as it decisively shifts its focus towards leveraging recently acquired assets to generate greater profitability progressively throughout 2015.

“We are in the early innings of mainstreaming adoption for our products and services and believe that the effective and disciplined investments we have made over the past 15 months position us extremely well for the open-ended opportunities in front of us,” continued Reichental. “Having assembled the technological building blocks, infrastructure, talents and partners required to scale our business and extend our first mover advantage in key verticals, we are now poised to strengthen our execution to create greater value faster.” 

Q4 and Full Year 2014 Conference Call and Webcast

3D Systems plans to hold a conference call and simultaneous webcast to discuss its financial results for the fourth quarter and full year 2014 on Thursday, February 26, 2015, at 8:30 a.m. Eastern Time.  The company expects to release these financial results and to file its Form 10-K on February 26, 2015.

Date: Thursday, February 26, 2015

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 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. 3D Systems undertakes no obligation to update or revise any forward-looking statements, even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

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 provides the most advanced and comprehensive 3D digital design and fabrication solutions available today, including 3D printers, print materials and cloud-sourced custom parts. Its powerful ecosystem transforms entire industries by empowering professionals and consumers everywhere to bring their ideas to life using our vast material selection, including plastics, metals, ceramics and edibles. 3DS’ leading personalized medicine capabilities save lives and include end-to-end simulation, training and planning, and printing of surgical instruments and devices for personalized surgery and patient specific medical and dental devices. Its democratized 3D digital design, fabrication and inspection products provide seamless interoperability and incorporate the latest immersive computing technologies. 3DS’ products and services disrupt traditional methods, deliver improved results and empower our customers to manufacture the future now.

Leadership Through Innovation and Technology

•3DS invented 3D printing with its Stereolithography (SLA) printer and was the first to commercialize it in 1989.

•3DS invented Selective Laser Sintering (SLS) printing and was the first to commercialize it in 1992.

•3DS invented the ColorJet Printing (CJP) class of 3D printers and was the first to commercialize 3D powder-based systems in 1994.

•3DS invented MultiJet Printing (MJP) printers and was the first to commercialize it in 1996.

•3DS Medical Modeling pioneered virtual surgical planning (VSP) and its services are world-leading, helping many thousands of patients on an annual basis.

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.

Tables Follow in the PDF file