3D Systems Reports Fourth Quarter and Full Year 2016 Financial Results

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| Source: 3D Systems Corporation
  • Revenue of $165.9 million in the fourth quarter with continued strong gross profit margin
  • GAAP earnings of $0.05 per share and non-GAAP earnings of $0.15 per share in the fourth quarter
  • Generated $18.7 million of cash from operations during the quarter

ROCK HILL, S.C., Feb. 28, 2017 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the fourth quarter and full year ended December 31, 2016.

For the fourth quarter of 2016, the company reported revenue of $165.9 million compared to $183.4 million in the fourth quarter of the previous year. The company reported fourth quarter GAAP earnings of $0.05 per share compared to a loss of $5.32 per share in the prior year and non-GAAP earnings of $0.15 per share compared to $0.19 per share in the fourth quarter of 2015.

Demand from industrial customers combined with growth in software and healthcare services were not enough to offset the impact of weaker sales of professional printers and on-demand services, resulting in a 10% decrease in revenue in the fourth quarter of 2016 compared to the fourth quarter of 2015.

“Continued demand for our production printers and materials reaffirms our belief that our industry is at an inflection point in the transition from prototyping to production,” commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems.

Gross profit margin for the fourth quarter of 2016 was 50.0%. Gross profit margin for the fourth quarter of 2015, excluding charges related to discontinued consumer products, was 47.7%.

For the fourth quarter of 2016, operating expenses were $78.8 million. Operating expenses for the fourth quarter of 2015 were $88.9 million, excluding goodwill and intangible impairment charges. Compared to the prior year, SG&A expenses decreased 13% to $57.8 million on lower stock based compensation, amortization and legal expenses. R&D expenses decreased 6% over the prior year period to $21.1 million.

“We are seeing clear progress in our initiatives to drive operational excellence and establish an appropriate cost structure,” commented John McMullen, Executive Vice President and Chief Financial Officer. “We still have a lot of work to do, but we are making improvements in our key processes, infrastructure and operations. We expect continued positive cash generation and improved profitability while we make investments in IT, go to market and innovation.”

The company generated $18.7 million of cash from operations during the fourth quarter and $56.9 million in the full year 2016, and ended the year with $184.9 million of cash on hand compared to $155.6 million at the end of 2015.

For the full year 2016, revenue decreased 5% to $633.0 million compared to $666.2 million in 2015, which included approximately $20 million of revenue from consumer products that the company discontinued at the end of 2015. The company reported a GAAP loss of $0.35 per share for 2016 compared to a loss of $5.85 per share in 2015 and non-GAAP earnings of $0.46 per share compared to non-GAAP earnings of $0.27 per share in 2015.

“We see tremendous market opportunities for 3D production. With focused innovation and execution, we are delivering solutions for key verticals, use case by use case to drive profitable growth and make 3D production real,” concluded Joshi.

2017 Guidance
For the full year 2017, management expects revenue growth of 2% to 8% resulting in a revenue range of $643 million to $684 million. Management expects GAAP earnings per share in the range of $0.02 to $0.06 and non-GAAP earnings per share in the range of $0.51 to $0.55. Additionally, management expects to continue to generate positive cash flow from operations in 2017.

Q4 2016 Conference Call and Webcast
The company expects to file its Annual Report on Form 10-K for the year ended December 31, 2016 with the Securities and Exchange Commission on February 28, 2017. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Tuesday, February 28, 2017, at 8:30 a.m. Eastern Time. 

Date: Tuesday, February 28, 2017
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 Full Year Ended December 31, 2016 and 2015
 
  Quarter Ended December 31, Full Year Ended December 31,
 (in thousands, except per share amounts) 2016  2015  2016  2015 
Revenue:            
Products $99,977  $115,973  $  380,383  $  408,119 
Services  65,960   67,390     252,582     258,044 
Total revenue  165,937   183,363     632,965     666,163 
Cost of sales:            
Products  48,746   87,207     195,428     243,639 
Services  34,301   35,996     127,786     130,715 
Total cost of sales  83,047   123,203     323,214     374,354 
Gross profit  82,890   60,160     309,751     291,809 
Operating expenses:            
Selling, general and administrative  57,767   66,542     259,776     303,784 
Research and development  21,050   22,360     88,395     92,770 
Impairment of goodwill and other intangible assets   —   537,179    —     537,179 
Total operating expenses  78,817   626,081     348,171     933,733 
Income (loss) from operations  4,073   (565,921)    (38,420)    (641,924)
Interest and other expense, net    102   9,000     1,392     13,029 
Income (loss) before income taxes  3,971   (574,921)    (39,812)    (654,953)
Provision (benefit) for income taxes  (1,212)  29,535     (547)    8,972 
Net income (loss)  5,183   (604,456)    (39,265)    (663,925)
Less: net income (loss) attributable to noncontrolling interests  (47)  (8,090)    (846)    (8,433)
Net income (loss) attributable to 3D Systems Corporation $5,230  $(596,366) $  (38,419) $  (655,492)
             
Net income (loss) per share available to 3D Systems Corporation common
stockholders — basic and diluted
 $0.05  $(5.32) $  (0.35) $(5.85)
             
Other comprehensive loss:            
Pension adjustments, net of taxes $(956) $62  $(902) $338 
Gain on liquidation of non-US entity  288      288    
Foreign currency translation loss  (18,525)  1,603   (12,958)  (16,300)
Total other comprehensive loss  (19,193)  1,665   (13,572)  (15,962)
                 
Less foreign currency translation gain (loss) attributable to noncontrolling interests  37   1,768   105   (820)
Other comprehensive loss attributable to 3D Systems Corporation  (19,230)  (103)  (13,677)  (15,142)
             
Comprehensive loss  (14,010)  (602,791)  (52,837)  (679,887)
Less comprehensive income (loss) attributable to noncontrolling interests(10)  (6,322)  (741)  (9,253)
Comprehensive loss attributable to 3D Systems Corporation $(14,000) $(596,469) $(52,096) $(670,634)
             


 

3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
December 31, 2016 and 2015
 
  December 31, December 31,
 (in thousands, except par value) 2016  2015 
ASSETS      
Current assets:      
Cash and cash equivalents $184,947  $155,643 
Accounts receivable, net of reserves — $12,920 (2016) and $14,139 (2015)  127,114   157,406 
Inventories, net of reserves — $14,770 (2016) and $28,225 (2015)  103,331   105,877 
Prepaid expenses and other current assets  17,558   13,541 
Total current assets  432,950   432,467 
Property and equipment, net  79,978   85,995 
Intangible assets, net  121,501   157,466 
Goodwill  181,230   187,875 
Long term deferred income tax asset  8,123   1,900 
Other assets, net  25,371   26,256 
Total assets $849,153  $891,959 
LIABILITIES AND EQUITY      
Current liabilities:      
Current portion of capitalized lease obligations $572  $529 
Accounts payable  40,514   46,869 
Accrued and other liabilities  49,968   54,699 
Customer deposits  5,857   8,229 
Deferred revenue  33,494   35,145 
Total current liabilities  130,405   145,471 
Long term portion of capitalized lease obligations  7,587   8,187 
Long term deferred income tax liability   17,601   17,944 
Other liabilities  57,988   56,839 
Total liabilities  213,581   228,441 
Redeemable noncontrolling interests  8,872   8,872 
Commitments and contingencies (Note 22)      
Stockholders’ equity:      
Common stock, $0.001 par value, authorized 220,000 shares; issued 115,113 (2016) and 113,115 (2015)  115   113 
Additional paid-in capital  1,307,428   1,279,738 
Treasury stock, at cost — 1,498 shares (2016) and 892 shares (2015)  (2,658)  (1,026)
Accumulated deficit  (621,787)  (583,368)
Accumulated other comprehensive loss  (53,225)  (39,548)
Total 3D Systems Corporation stockholders' equity  629,873   655,909 
Noncontrolling interests  (3,173)  (1,263)
Total stockholders’ equity  626,700   654,646 
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $849,153  $891,959 
       


 

3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Full Year Ended December 31, 2016 and 2015
 
(In thousands) 2016  2015 
Cash flows from operating activities:      
Net income (loss) $(39,265) $(663,925)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Benefit of deferred income taxes  (6,566)  (2,875)
Depreciation and amortization  60,535   83,069 
Provision for arbitration award     11,282 
Impairment of assets  8,618   544,611 
Non-cash interest on convertible notes      
Provision for bad debts  1,552   3,766 
Provision for inventory reserves and revaluation, net  11,053   21,550 
Stock-based compensation  31,295   34,733 
(Gain) loss on the disposition of property and equipment  2,529   (43)
Loss on conversion of convertible debt      
Changes in operating accounts, net of acquisitions:      
Accounts receivable  27,130   20,890 
Inventories  (22,178)  (31,241)
Prepaid expenses and other current assets  (4,369)  2,197 
Accounts payable  (5,878)  (18,904)
Accrued and other current liabilities  (6,652)  624 
All other operating activities  (902)  (8,862)
Net cash provided by (used in) operating activities  56,902   (3,128)
Cash flows from investing activities:      
Purchases of property and equipment  (16,567)  (22,399)
Additions to license and patent costs  (1,132)  (907)
Proceeds from disposition of property and equipment  350    
Purchase of noncontrolling interest  (3,533)   
Cash paid for acquisitions, net of cash assumed     (91,799)
Other investing activities  (1,000)  (5,750)
Net cash used in investing activities  (21,882)  (120,855)
Cash flows from financing activities:      
Tax benefits (provision) from share-based payment arrangements     (1,243)
Proceeds from issuance of common stock      
Proceeds, repurchase and retirement of stock, net  (2,871)  135 
Repayment of capital lease obligations  (1,055)  (1,049)
Net cash provided by (used in) financing activities  (3,926)  (2,157)
Effect of exchange rate changes on cash and cash equivalents  (1,790)  (3,079)
Net increase (decrease) in cash and cash equivalents  29,304   (129,219)
Cash and cash equivalents at the beginning of the period  155,643   284,862 
Cash and cash equivalents at the end of the period $184,947  $155,643 
       


 

3D Systems Corporation
Schedule 1
Earnings (Loss) Per Share
Quarter and Full Year Ended December 31, 2016 and 2015
 
  Quarter Ended December 31, Full Year Ended December 31,
(in thousands, except per share amounts) 2016 2015
 2016
 2015
Numerator for basic and diluted net loss per share:            
Net income (loss) attributable to 3D Systems Corporation   $5,230 $(596,366) $(38,419) $(655,492)
             
Denominator for basic and diluted net loss per share:            
Weighted average shares  111,174  112,115   111,189   111,969 
             
Net income (loss) per share, basic and diluted $0.05 $(5.32) $(0.35) $(5.85)
             


 

3D Systems Corporation
Schedule 2
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Full Year Ended December 31, 2016 and 2015
 
                                          
              Quarter Ended December 31, 2016 Quarter Ended December 31, 2015
(in thousands, except per share amounts)
 GAAP  Amortization,
Stock-Based
Compensation
& Other
  Legal and Acquisition-Related  Portfolio Restructuring  Non-GAAP  GAAP  Amortization,
Stock-Based Compensation
& Other
  Legal and Acquisition-Related  Portfolio Restructuring  Non-GAAP
                                    
Revenue       $165,937  $  $  $  $165,937  $183,363  $  $  $  $183,363 
Cost of sales        83,047   (85)        82,962   123,203   (71)     (27,390)  95,742 
Gross profit        82,890   85         82,975   60,160   71      27,390   87,621 
Gross profit margin        50.0%           50.0%  32.8%           47.7%
Operating expenses:                                    
Selling, general and administrative   57,767   (11,394)  (1,249)     45,124   66,542   (19,038)  (3,409)     44,095 
Research and development    21,050            21,050   22,360            22,360 
Impairment of goodwill and other intangible assets                537,179      (537,179)      
Total operating expenses    78,817   (11,394)  (1,249)     66,174   626,081   (19,038)  (540,588)     66,455 
Income (loss) from operations    4,073   11,479   1,249      16,801   (565,921)  19,109   540,588   27,390   21,166 
Interest and other expense, net   102            102   9,000            9,000 
Income (loss) before income taxes    3,971   11,479   1,249      16,699   (574,921)  19,109   540,588   27,390   12,166 
Provision (benefit) for income taxes (a) (1,212)  1,245         33   29,535   (982)  (27,771)  (1,408)  (626)
Net income (loss)        5,183   10,234   1,249      16,666   (604,456)  20,091   568,359   28,798   12,792 
Less: net income (loss) attributable to noncontrolling interests(47)           (47)  (8,090)           (8,090)
Net income (loss) attributable to 3D Systems Corporation$5,230  $10,234  $1,249  $  $16,713  $(596,366) $20,091  $568,359  $28,798  $20,882 
                                    
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $0.05           $0.15  $(5.32)          $0.19 
                                    
                                    
        Full Year Ended December 31, 2016 Full Year Ended December 31, 2015
 (in thousands, except per share amounts)
 GAAP  Amortization,
Stock-Based Compensation
& Other
  Legal and Acquisition-Related  Portfolio Restructuring  Non-GAAP  GAAP  Amortization,
Stock-Based Compensation
& Other
  Legal and Acquisition-Related  Portfolio Restructuring  Non-GAAP
                                    
Revenue       $632,965  $  $  $  $632,965  $666,163  $  $  $  $666,163 
Cost of sales        323,214   (332)     (10,723)  312,159   374,354   (303)     (27,390)  346,661 
Gross profit        309,751   332      10,723   320,806   291,809   303      27,390   319,502 
Gross profit margin
  48.9%           50.7%  43.8%           48.0%
Operating expenses:                                    
Selling, general and administrative  259,776   (66,087)  (5,741)  (34)  187,914   303,784   (95,496)  (20,556)     187,732 
Research and development    88,395         (6,072)  82,323   92,770            92,770 
Impairment of goodwill and other intangible assets                537,179      (537,179)      
Total operating expenses   348,171   (66,087)  (5,741)  (6,106)  270,237   933,733   (95,496)  (557,735)     280,502 
Income (loss) from operations  (38,420)  66,419   5,741   16,829   50,569   (641,924)  95,799   557,735   27,390   39,000 
Interest and other expense, net  1,392            1,392   13,029            13,029 
Income (loss) before income taxes  (39,812)  66,419   5,741   16,829   49,177   (654,953)  95,799   557,735   27,390   25,971 
Provision (benefit) for income taxes (a) (547)  (207)  (67)     (821)  8,972   21,493   (24,663)  (1,408)  4,394 
Net income (loss)        (39,265)  66,626   5,808   16,829   49,998   (663,925)  74,306   582,398   28,798   21,577 
Less: net income (loss) attributable to noncontrolling interests(846)           (846)  (8,433)           (8,433)
Net income (loss) attributable to 3D Systems Corporation$(38,419) $66,626  $5,808  $16,829  $50,844  $(655,492) $74,306  $582,398  $28,798  $30,010 
                                    
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $(0.35)          $0.46  $(5.85)          $0.27 

(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 quarters ended after March 31, 2016 were 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. The amount in the fourth quarter of 2016 also includes $1.2 million related to an adjustment for a prior period.


3D Systems Corporation
Schedule 3
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Expected Full Year Ended December 31, 2017
 
 Full Year Ended December 31, 2017
 (in millions, except per share amounts)  Low   High
        
Revenue $643  $684
        
GAAP Earnings per Share $0.02  $0.06
Estimated adjustments to arrive at non-GAAP EPS:       
Amortization  0.30   0.30
Stock Based Compensation  0.14   0.14
Acquisition, severance and settlements  0.05   0.05
Total Adjustments $0.49  $0.49
Non-GAAP Earnings per Share $0.51  $0.55

Tax effect for non-GAAP adjustments is based on the company’s U.S. tax rate. As a result of the valuation allowance that was recorded in the fourth quarter of 2015, in connection with GAAP net losses, tax effect is expected to be 0% in 2017.

Investor Contact:
Stacey Witten
Email: investor.relations@3dsystems.com

Media Contact:
Diane Parrish
Email: press@3dsystems.com