3D Systems Corporation (NYSE: DDD) announced today its financial
results for the second quarter ended June 30, 2019.
For the second quarter of 2019, the company reported GAAP
revenue of $157.3 million, compared to $176.6 million in the second
quarter of the previous year. The company reported a GAAP loss of
$0.21 per share in the second quarter of 2019 compared to a GAAP
loss of $0.08 per share in the second quarter of 2018, and non-GAAP
earnings of $0.00 per share in the second quarter of 2019 compared
to $0.06 per share in the second quarter of 2018.
"We continue to see strength in customer demand for our core and
new products and solutions, but as expected, year over year revenue
growth was impacted by ordering patterns of a large enterprise
customer, the delay in shipping Factory metals systems as we
complete technical enhancements and weaker macro-economic
conditions in some areas of our market," commented Vyomesh Joshi
("VJ"), president and chief executive officer, 3D Systems.
The company reported 46.4 percent higher printer unit sales,
driven by sales of the Figure 4 platform. Printer revenue decreased
27.4 percent compared to the second quarter of the prior year
driven by year over year timing of large enterprise customer orders
and the softer macro industrial environment. Excluding the impact
of the large enterprise customer's order patterns, healthcare
solutions revenue increased 11.4 percent in the second quarter
compared to the prior year. During the second quarter, materials
revenue decreased 8.5 percent, on demand services decreased 12.4
percent and software decreased 0.5 percent compared to the second
quarter of the prior year.
The company reported GAAP gross profit margin of 46.6 percent
for the second quarter of 2019, a decrease of 220 basis points
compared to the second quarter of 2018. Non-GAAP gross profit
margin was 47.4 percent in the second quarter of 2019 compared to
48.9 percent in the second quarter of the prior year.
For the second quarter of 2019, GAAP operating expenses
decreased 1.5 percent to $92.5 million compared to $93.9 million in
the prior year period. GAAP SG&A expenses increased 0.7 percent
to $71.7 million, including a $3.5 million dollar litigation
settlement during the second quarter of 2019. GAAP R&D expenses
decreased 8.4 percent from the second quarter of the prior year to
$20.8 million. The company continues to execute its cost reduction
plans, and as a result of these actions, non-GAAP operating
expenses decreased 9.3 percent to $71.7 million compared to $79.0
million in the second quarter of 2018.
"I am pleased with the progress we are making on our cost
structure, and we will continue to be laser focused on additional
reduction opportunities in the second half of the year," continued
Joshi.
The company generated $18.7 million of cash from operations
during the quarter and had $150.4 million of unrestricted cash on
hand at June 30, 2019. Cash generation during the second
quarter was driven by improvements in working capital, including
planned reductions of inventory.
"We remain confident in our broad portfolio of additive
capabilities, workflow solutions and overall market opportunities;
and we remain keenly focused on executing on our strategy, reducing
costs and driving long-term profitable growth," concluded
Joshi.
Q2 2019 Conference Call and WebcastThe company
expects to file its Form 10-Q for the quarter ended June 30,
2019 with the Securities and Exchange Commission on August 7,
2019. 3D Systems plans to hold a conference call and simultaneous
webcast to discuss these results on Wednesday, August 7, 2019,
at 4:30 p.m. Eastern Time.
Date: Wednesday, August 7, 2019Time: 4:30 p.m. Eastern
TimeListen via Internet: www.3dsystems.com/investorParticipate via
telephone:Within the U.S.: 1-877-407-8291Outside the
U.S.: 1-201-689-8345
A replay of the webcast will be available approximately two
hours after the live presentation at
www.3dsystems.com/investor.
Forward-Looking StatementsCertain 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
ReleaseTo 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 Systems3D 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
CorporationUnaudited Condensed Consolidated
Balance SheetsJune 30, 2019 and December 31,
2018
| (in thousands, except
par value) |
June 30,2019 |
|
December 31,2018 |
|
ASSETS |
|
|
|
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
150,397 |
|
|
$ |
109,998 |
|
|
Accounts receivable, net of reserves — $8,509 (2019) and $8,423
(2018) |
114,093 |
|
|
126,618 |
|
|
Inventories |
133,936 |
|
|
133,161 |
|
|
Prepaid expenses and other current assets |
29,471 |
|
|
27,697 |
|
|
Total current assets |
427,897 |
|
|
397,474 |
|
| Property and equipment, net
(1) |
97,664 |
|
|
103,252 |
|
| Intangible assets, net |
57,267 |
|
|
68,275 |
|
| Goodwill |
222,293 |
|
|
221,334 |
|
| Right of use assets (1) |
37,626 |
|
|
4,466 |
|
| Deferred income tax asset |
5,420 |
|
|
4,217 |
|
| Other assets, net |
29,384 |
|
|
26,814 |
|
|
Total assets |
$ |
877,551 |
|
|
$ |
825,832 |
|
|
LIABILITIES AND EQUITY |
|
|
|
| Current liabilities: |
|
|
|
|
Current portion of long term debt |
$ |
4,050 |
|
|
$ |
— |
|
|
Current right of use liabilities (1) |
11,451 |
|
|
654 |
|
|
Accounts payable |
59,197 |
|
|
66,722 |
|
|
Accrued and other liabilities |
59,730 |
|
|
59,265 |
|
|
Customer deposits |
4,882 |
|
|
4,987 |
|
|
Deferred revenue |
41,690 |
|
|
32,432 |
|
|
Total current liabilities |
181,000 |
|
|
164,060 |
|
| Long-term debt |
75,378 |
|
|
25,000 |
|
| Long-term right of use
liabilities (1) |
35,273 |
|
|
6,392 |
|
| Deferred income tax
liability |
6,541 |
|
|
6,190 |
|
| Other liabilities |
42,041 |
|
|
39,331 |
|
|
Total liabilities |
340,233 |
|
|
240,973 |
|
| Redeemable noncontrolling
interests |
8,872 |
|
|
8,872 |
|
| Commitments and contingencies
(Note 13) |
|
|
|
| Stockholders’ equity: |
|
|
|
|
Common stock, $0.001 par value, authorized 220,000 shares; issued
120,506 (2019) and 118,650 (2018) |
120 |
|
|
117 |
|
|
Additional paid-in capital |
1,361,569 |
|
|
1,355,503 |
|
|
Treasury stock, at cost — 3,182 shares (2019) and 2,946 shares
(2018) |
(16,519 |
) |
|
(15,572 |
) |
|
Accumulated deficit |
(771,025 |
) |
|
(722,701 |
) |
|
Accumulated other comprehensive loss |
(37,313 |
) |
|
(38,978 |
) |
|
Total 3D Systems Corporation stockholders' equity |
536,832 |
|
|
578,369 |
|
| Noncontrolling interests |
(8,386 |
) |
|
(2,382 |
) |
|
Total stockholders’ equity |
528,446 |
|
|
575,987 |
|
| Total liabilities, redeemable
noncontrolling interests and stockholders’ equity |
$ |
877,551 |
|
|
$ |
825,832 |
|
(1) For comparative purposes, prior year finance
lease assets have been reclassified from "Property and equipment,
net" to "Right of use assets". Prior year finance lease liabilities
have been reclassified as right of use liabilities.
3D Systems
CorporationUnaudited Condensed Consolidated
Statements of OperationsQuarter and Six Months
Ended June 30, 2019 and 2018
| |
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| (in thousands, except
per share amounts) |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Revenue: |
|
|
|
|
|
|
|
|
Products |
$ |
93,758 |
|
|
$ |
110,785 |
|
|
$ |
186,105 |
|
|
$ |
216,231 |
|
|
Services |
63,514 |
|
|
65,783 |
|
|
123,147 |
|
|
126,206 |
|
|
Total revenue |
157,272 |
|
|
176,568 |
|
|
309,252 |
|
|
342,437 |
|
| Cost of sales: |
|
|
|
|
|
|
|
|
Products |
53,005 |
|
|
57,500 |
|
|
108,765 |
|
|
113,618 |
|
|
Services |
30,968 |
|
|
32,906 |
|
|
61,483 |
|
|
64,788 |
|
|
Total cost of sales |
83,973 |
|
|
90,406 |
|
|
170,248 |
|
|
178,406 |
|
| Gross profit |
73,299 |
|
|
86,162 |
|
|
139,004 |
|
|
164,031 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
71,654 |
|
|
71,172 |
|
|
136,982 |
|
|
140,625 |
|
|
Research and development |
20,811 |
|
|
22,712 |
|
|
42,714 |
|
|
48,594 |
|
| Total operating expenses |
92,465 |
|
|
93,884 |
|
|
179,475 |
|
|
189,219 |
|
| Loss from operations |
(19,166 |
) |
|
(7,722 |
) |
|
(40,471 |
) |
|
(25,188 |
) |
| Interest and other (expense)
income, net |
(2,755 |
) |
|
1,661 |
|
|
(3,957 |
) |
|
108 |
|
| Loss before income taxes |
(21,921 |
) |
|
(6,061 |
) |
|
(44,428 |
) |
|
(25,080 |
) |
| Provision for income
taxes |
(1,938 |
) |
|
(2,539 |
) |
|
(3,782 |
) |
|
(4,493 |
) |
| Net loss |
(23,859 |
) |
|
(8,600 |
) |
|
(48,210 |
) |
|
(29,573 |
) |
| Less: net income attributable
to noncontrolling interests |
70 |
|
|
262 |
|
|
114 |
|
|
246 |
|
| Net loss attributable to 3D
Systems Corporation |
$ |
(23,929 |
) |
|
$ |
(8,862 |
) |
|
$ |
(48,324 |
) |
|
$ |
(29,819 |
) |
| |
|
|
|
|
|
|
|
| Net loss per share available
to 3D Systems Corporation common stockholders - basic and
diluted |
$ |
(0.21 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.27 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3D Systems
CorporationUnaudited Condensed Consolidated
Statements of Cash FlowsSix Months Ended June 30,
2019 and 2018
| |
Six Months Ended June 30, |
| (in
thousands) |
2019 |
|
2018 |
|
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ |
(48,210 |
) |
|
$ |
(29,573 |
) |
|
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
26,574 |
|
|
29,948 |
|
|
Stock-based compensation |
13,592 |
|
|
13,734 |
|
|
Lower of cost or market adjustment |
— |
|
|
— |
|
|
Provision for bad debts |
1,169 |
|
|
1,356 |
|
|
Loss on the disposition of property, equipment and other
assets |
1,103 |
|
|
— |
|
|
Provision for deferred income taxes |
(852 |
) |
|
(2,287 |
) |
|
Impairment of assets |
1,728 |
|
|
1,411 |
|
|
Changes in operating accounts: |
|
|
|
|
Accounts receivable |
11,213 |
|
|
(3,384 |
) |
|
Inventories |
(3,124 |
) |
|
(14,937 |
) |
|
Prepaid expenses and other current assets |
(1,494 |
) |
|
(6,739 |
) |
|
Accounts payable |
(7,560 |
) |
|
2,762 |
|
|
Deferred revenue and customer deposits |
9,300 |
|
|
4,268 |
|
|
Accrued and other current liabilities |
(2,333 |
) |
|
14,940 |
|
|
All other operating activities |
2,445 |
|
|
(2,328 |
) |
|
Net cash provided by operating activities |
3,551 |
|
|
9,171 |
|
|
Cash flows from investing activities: |
|
|
|
|
Purchases of property and equipment |
(14,353 |
) |
|
(18,095 |
) |
|
Other investing activities |
105 |
|
|
(514 |
) |
|
Net cash used in investing activities |
(14,248 |
) |
|
(18,609 |
) |
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from borrowings |
100,000 |
|
|
— |
|
|
Repayment of borrowings/long term debt |
(45,000 |
) |
|
— |
|
|
Purchase of noncontrolling interest |
(2,500 |
) |
|
— |
|
|
Payments on earnout consideration |
— |
|
|
(2,675 |
) |
|
Other financing activities |
(1,898 |
) |
|
(2,148 |
) |
|
Net cash provided by (used in) financing activities |
50,602 |
|
|
(4,823 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
517 |
|
|
(2,502 |
) |
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
40,422 |
|
|
(16,763 |
) |
|
Cash, cash equivalents and restricted cash at the beginning of the
period (a) |
110,919 |
|
|
136,831 |
|
|
Cash, cash equivalents and restricted cash at the end of the period
(a) |
$ |
151,341 |
|
|
$ |
120,068 |
|
- The amounts for cash and cash equivalents shown above include
restricted cash of $944 and $755 as of June 30, 2019 and 2018,
respectively, and $921 and $487 as of December 31, 2017, and
2016, respectively, which were included in other assets, net in the
condensed consolidated balance sheets.
3D Systems
CorporationSchedule 1Loss Per
ShareQuarter and Six Months Ended June 30, 2019
and 2018
| |
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| (in thousands, except
per share amounts) |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Numerator for basic and
diluted net loss per share: |
|
|
|
|
|
|
|
|
Net loss attributable to 3D Systems Corporation |
$ |
(23,929 |
) |
|
$ |
(8,862 |
) |
|
$ |
(48,324 |
) |
|
$ |
(29,819 |
) |
| |
|
|
|
|
|
|
|
| Denominator for basic and
diluted net loss per share: |
|
|
|
|
|
|
|
| Weighted average shares |
113,433 |
|
|
111,920 |
|
|
113,350 |
|
|
111,870 |
|
| |
|
|
|
|
|
|
|
| Net loss per share - basic and
diluted |
$ |
(0.21 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.27 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3D Systems
CorporationSchedule 2Unaudited
Reconciliations of GAAP to Non-GAAP
MeasuresQuarter and Six Months Ended June 30, 2019
and 2018
| |
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| (in millions, except
per share amounts) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
GAAP Net loss attributable to 3D Systems Corporation |
$ |
(23.9 |
) |
|
$ |
(8.9 |
) |
|
$ |
(48.3 |
) |
|
$ |
(29.8 |
) |
| Adjustments: |
|
|
|
|
|
|
|
|
Amortization, stock-based compensation & other 1 |
12.6 |
|
|
14.5 |
|
|
24.8 |
|
|
29.6 |
|
|
Legal, acquisition and divestiture related 2 |
6.8 |
|
|
(0.4 |
) |
|
7.2 |
|
|
— |
|
|
Cost optimization plan, including severance costs 3 |
3.9 |
|
|
1.0 |
|
|
5.6 |
|
|
1.6 |
|
|
Impairment of cost-method investments 4 |
— |
|
|
— |
|
|
— |
|
|
1.4 |
|
| Non-GAAP net income
attributable to 3D Systems Corporation |
$ |
(0.6 |
) |
|
$ |
6.2 |
|
|
$ |
(10.7 |
) |
|
$ |
2.8 |
|
| Non-GAAP net income per share
available to 3D Systems common stock holders - basic and diluted
5 |
$ |
— |
|
|
$ |
0.06 |
|
|
$ |
(0.09 |
) |
|
$ |
0.02 |
|
| |
|
|
|
|
|
|
|
1 For the quarter ended June 30, 2019, the adjustment included
$0.1 in COGS and $12.5 in SG&A. For the quarter ended June 30,
2018, the adjustment included $0.1 in COGS and $14.4 in SG&A.
For the six months ended June 30, 2019, the adjustment included
$0.2 in COGS and $24.6 in SG&A. For the six months ended June
30, 2018, the adjustment included $0.2 in COGS and $29.4 in
SG&A.2 For the quarter ended June 30, 2019, the adjustment
included $(0.9) in Revenues, $1.4 in COGS, $4.6 in SG&A and
$1.8 in other income (expense). For the quarter ended June 30,
2018, the adjustment included $(0.4) in COGS. For the six months
ended June 30, 2019, the adjustment included $(2.7) in Revenues,
$3.3 in COGS, $5.3 in SG&A, and $1.3 in other income
(expense).3 For the quarter ended June 30, 2019, the adjustment
included $0.3 in COGS, $3.3 in SG&A and $0.3 in R&D. For
the quarter ended June 30, 2018, the adjustment included $0.2 in
COGS, $0.7 in SG&A and $0.1 in R&D. For the six months
ended June 30, 2019, the adjustment included $0.8 in COGS, $4.6 in
SG&A and $0.3 in R&D. For the six months ended June 30,
2018, the adjustment included $0.3 in COGS, $1.1 in SG&A and
$0.2 in R&D.4 For the quarter and six months ended June
30, 2018, the adjustment included $0.0 and $1.4 in interest and
other income (expense), net. No impairment was recorded in 2019.5
Denominator based on weighted average shares used in the GAAP EPS
calculation.
* Tables may not foot due to rounding; amounts calculated based
on dollars in thousands.
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