3D Systems Reports First Quarter 2017 Financial Results

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| Source: 3D Systems Corporation
  • Revenue grew 3% to $156 million and gross profit margin expanded to 51.3%
  • Non-GAAP EPS increased 20% and GAAP EPS improved 44%
  • Generated $19 million of cash from operations
  • Reiterates full year 2017 guidance

ROCK HILL, S.C., May 03, 2017 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the first quarter of 2017.

For the first quarter of 2017, the company reported revenue of $156.4 million compared to $152.6 million in the first quarter of the previous year. The company reported a first quarter GAAP loss of $0.09 per share compared to a loss of $0.16 per share in the prior year and non-GAAP earnings of $0.06 per share compared to $0.05 earnings per share in the first quarter of 2016.

Revenue grew 3% compared to the first quarter of the prior year driven by increased demand from industrial customers and growth in healthcare and materials.

“We are pleased with the continued growth in healthcare and strong demand for our production printers and materials as well as the improvement in on demand manufacturing services in the first quarter,” commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems. “We are delighted with early positive industry and customer feedback received during the quarter on our breakthrough Figure 4 technology platform and expansion in the healthcare market with the acquisition of Vertex.”

Gross profit margin for the first quarter of 2017 was 51.3% compared to 50.8% in the first quarter of 2016 as cost savings continue to be realized from supply chain and manufacturing improvements.

For the first quarter of 2017, operating expenses were $89.3 million compared to $94.3 million in the prior year. Compared to the prior year, SG&A expenses decreased 10% to $66.4 million on lower stock based compensation and bad debt expense. R&D expenses increased 13% over the prior year period to $22.9 million, primarily from focused investments in production application solutions including Figure 4 and materials.

“We believe we are striking the right balance between investments in go to market and innovation while driving operational excellence across our business,” commented John McMullen, Executive Vice President and Chief Financial Officer. “We have many initiatives in place which will continue throughout the year while we continue to drive profitable growth.”  

The company generated $19.4 million of cash from operations during the first quarter, and ended the quarter with $161.7 million of cash on hand, after paying for the acquisition of Vertex Global, compared to $184.9 million at the end of 2016.

“We continue to focus on expanding the market and accelerating adoption in key verticals. We are delivering advanced solutions that provide durability, repeatability, productivity and effective total cost of operations to drive the shift in 3D printing from prototyping to production,” concluded Joshi.

Reiterated Guidance for 2017
Based on the results of the first quarter and expectations for the remainder of the year, management reiterated previously provided guidance for 2017. 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.

Q1 2017 Conference Call and Webcast
The company expects to file its Form 10-Q for the quarter ended March 31, 2017 with the Securities and Exchange Commission on May 3, 2017. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Wednesday, May 3, 2017, at 4:30 p.m. Eastern Time. 

Date: Wednesday, May 3, 2017
Time: 4:30 p.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 management’s 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 Ended March 31, 2017 and 2016
       
  Quarter Ended March 31,
  (in thousands, except per share amounts)2017
 2016
 Revenue:     
 Products $94,730  $90,964 
 Services  61,701   61,591 
 Total revenue  156,431   152,555 
 Cost of sales:     
 Products  44,748   44,161 
 Services  31,497   30,881 
 Total cost of sales  76,245   75,042 
 Gross profit  80,186   77,513 
 Operating expenses:     
 Selling, general and administrative  66,405   73,967 
 Research and development  22,852   20,305 
 Total operating expenses  89,257   94,272 
 Loss from operations  (9,071)  (16,759)
 Interest and other income, net    (201)  (126
 Loss before income taxes  (8,870)  (16,633)
 Provision for income taxes  1,041   1,179 
 Net loss (9,911)  (17,812)
 Less: net income (loss) attributable to noncontrolling interests 60   (24)
 Net loss attributable to 3D Systems Corporation$(9,971) $(17,788)
       
 Net loss per share available to 3D Systems Corporation common stockholders — basic and diluted$(0.09) $(0.16)
       
 Other comprehensive income (loss):     
 Pension adjustments, net of taxes$20  $(31)
 Foreign currency translation gain 8,392   7,939 
 Total other comprehensive income 8,412   7,908 
 Less foreign currency translation gain attributable to noncontrolling interests 61   89 
 Other comprehensive income  attributable to 3D Systems Corporation 8,351   7,819 
       
 Comprehensive loss (1,499)  (9,904)
 Less comprehensive income attributable to noncontrolling interests 121   65 
 Comprehensive loss attributable to 3D Systems Corporation$(1,620) $(9,969)
       


 
3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
March 31, 2017 and December 2016

       
  March 31, December 31,
 (in thousands, except par value) 2017
 2016 
ASSETS      
Current assets:      
Cash and cash equivalents  $161,662  $184,947 
Accounts receivable, net of reserves — $11,424 (2017) and $12,920 (2016)  124,581   127,114 
Inventories, net of reserves — $12,206 (2017) and $14,770 (2016)  105,105   103,331 
Prepaid expenses and other current assets   17,909   17,558 
Total current assets   409,257   432,950 
Property and equipment, net   84,803   79,978 
Intangible assets, net   122,594   121,501 
Goodwill   215,156   181,230 
Long term deferred income tax asset  7,958   8,123 
Other assets, net   25,862   25,371 
Total assets  $865,630  $849,153 
LIABILITIES AND EQUITY      
Current liabilities:      
Current portion of capitalized lease obligations  $584  $572 
Accounts payable   40,752   40,514 
Accrued and other liabilities   48,736   49,968 
Customer deposits   6,549   5,857 
Deferred revenue   45,079   33,494 
Total current liabilities   141,700   130,405 
Long term portion of capitalized lease obligations   7,454   7,587 
Long term deferred income tax liability   18,289   17,601 
Other liabilities   54,863   57,988 
Total liabilities   222,306   213,581 
Redeemable noncontrolling interests  8,872   8,872 
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value, authorized 220,000 shares; issued 115,419 (2017) and 115,113 (2016)115   115 
Additional paid-in capital   1,307,561   1,307,428 
Treasury stock, at cost — 1,631 shares (2017) and 1,498 shares (2016)  (3,746)  (2,658)
Accumulated deficit  (621,552)  (621,787)
Accumulated other comprehensive loss  (44,874)  (53,225)
Total 3D Systems Corporation stockholders' equity  637,504   629,873 
Noncontrolling interests  (3,052)  (3,173)
Total stockholders’ equity   634,452   626,700 
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $865,630  $849,153 
       


      
3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Quarter Ended March 31, 2017 and 2016
      
 Quarter Ended March 31,
(In thousands) 2017   2016 
Cash flows from operating activities:     
Net loss$(9,911) $(17,812)
Adjustments to reconcile net loss to net cash provided by operating activities:     
Depreciation and amortization  14,973   15,089 
Stock-based compensation  7,131   11,667 
Provision for bad debts  155   2,388 
Benefit of deferred income taxes  (1,069)  (1,092)
Changes in operating accounts, net of acquisitions:     
Accounts receivable  5,336   21,544 
Inventories  (4,120)  (7,984)
Prepaid expenses and other current assets  12   (434)
Accounts payable  (643)  (5,956)
Accrued and other current liabilities (2,849)  (4,056)
Deferred revenue 11,218   11,019 
All other operating activities (852)  (6,255)
Net cash provided by operating activities  19,381   18,118 
Cash flows from investing activities:     
Cash paid for acquisitions, net of cash assumed  (34,291)   
Purchases of property and equipment  (5,620)  (4,246)
Additions to license and patent costs  (280)  (231)
Proceeds from disposition of property and equipment 24    
Net cash used in investing activities  (40,167)  (4,477)
Cash flows from financing activities:     
Payments on earnout consideration (3,206)   
Repurchase of stock, net, and employer paid tax on employee awards (1,088)  (810)
Repayment of capital lease obligations  (142)  (262)
Net cash (used in financing activities  (4,436)  (1,072)
Effect of exchange rate changes on cash and cash equivalents 1,937   1,562 
Net increase (decrease) in cash and cash equivalents  (23,285)  14,131 
Cash and cash equivalents at the beginning of the period  184,947   155,643 
Cash and cash equivalents at the end of the period $161,662  $169,774 
      


      
3D Systems Corporation
Schedule 1
Earnings (Loss) Per Share
Quarter Ended March 31, 2017 and 2016
      
 Quarter Ended March 31,
(in thousands, except per share amounts)2017  2016 
Numerator for basic and diluted net loss per share:     
Net loss attributable to 3D Systems Corporation$(9,971) $(17,788)
      
Denominator for basic and diluted net loss per share:     
Weighted average shares 111,289   112,197 
      
Net loss per share, basic and diluted$(0.09) $(0.16)
      


 
3D Systems Corporation
Schedule 2
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter Ended March 31, 2017 and 2016
             
  Quarter Ended March 31, 2017
 (in thousands, except per share amounts)  GAAP  Amortization,
Stock-Based
Compensation
& Other
  Legal and
Acquisition-
Related
  Non-GAAP
             
Revenue $156,431  $  $  $156,431 
Cost of sales  76,245   (89)     76,156 
Gross profit   80,186   89      80,275 
Gross profit margin  51.3%        51.3%
Operating expenses:            
Selling, general and administrative   66,405   (15,874)  (1,063)  49,468 
Research and development   22,852         22,852 
Total operating expenses   89,257   (15,874)  (1,063)  72,320 
Income (loss) from operations   (9,071)  15,963   1,063   7,955 
Interest and other expense, net   (201)        (201)
Income (loss) before income taxes   (8,870)  15,963   1,063   8,156 
Benefit for income taxes (a)  1,041         1,041 
Net income (loss)  (9,911)  15,963   1,063   7,115 
Less: net loss attributable to noncontrolling interests 60         60 
Net income (loss) attributable to 3D Systems Corporation$(9,971) $15,963  $1,063  $7,055 
             
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $(0.09)       $0.06 
             


             
  Quarter Ended March 31, 2016
 (in thousands, except per share amounts)  GAAP  Amortization,
Stock-Based
Compensation
& Other
  Legal and
Acquisition-
Related
  Non-GAAP
             
Revenue $152,555  $  $  $152,555 
Cost of sales  75,042   (84)     74,958 
Gross profit   77,513   84      77,597 
Gross profit margin  50.8%        50.9%
Operating expenses:            
Selling, general and administrative   73,967   (20,401)  (939)  52,627 
Research and development   20,305         20,305 
Total operating expenses   94,272   (20,401)  (939)  72,932 
Income (loss) from operations   (16,759)  20,485   939   4,665 
Interest and other expense, net   (126)        (126)
Income (loss) before income taxes   (16,633)  20,485   939   4,791 
Benefit for income taxes (a)  1,179   (1,452)  (67)  (340)
Net income (loss)  (17,812)  21,937   1,006   5,131 
Less: net loss attributable to noncontrolling interests (24)        (24)
Net income (loss) attributable to 3D Systems Corporation$(17,788) $21,937  $1,006  $5,155 
             
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $(0.16)       $0.05 


(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.


 
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 EPS $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 Net Income $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