3D Systems Reports Second Quarter 2017 Financial Results
ROCK HILL, S.C., Aug. 2, 2017 /PRNewswire/ -- 3D Systems Corporation (NYSE: DDD) announced today its financial results for the second quarter and six months ended June 30, 2017.
For the second quarter of 2017, the company reported revenue growth of 1% to $159.5 million compared to $158.1 million in the second quarter of the previous year. The company reported a second quarter GAAP loss of $0.08 per share compared to a loss of $0.04 per share in the prior year and non-GAAP earnings of $0.08 per share compared to non-GAAP earnings of $0.12 per share in the second quarter of 2016.
Demand from healthcare and industrial customers as well as strength in EMEA was offset by softer sales in APAC and lower revenue from professional printers.
"We are pleased with the growth in production printers, materials, software and healthcare," commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems. "However, we have work to do in the second half of this year to improve our execution across the company and position ourselves well for long term success and profitable growth in 2018 and beyond."
Gross profit margin for the second quarter of 2017 was 50.6% compared to 50.9% in the second quarter of 2016 as cost savings from manufacturing and supply chain improvements continue to support strategic investments and competitive pricing.
For the second quarter of 2017, operating expenses were $87.5 million compared to $84.1 million in the prior year. SG&A expenses decreased less than 1% to $63.1 million and R&D expenses increased 17% over the second quarter of 2016 to $24.4 million, primarily from investments in production solutions including Figure 4, metals and materials.
"We continue to make strategic investments in IT, go to market and innovation. For the remainder of the year, we will also increase our focus on costs, including operating expenses, in support of 2017 and long term," commented John McMullen, Executive Vice President and Chief Financial Officer.
During the quarter, the company used $1.0 million of cash from operations and ended the quarter with $154.0 million of cash on hand.
For the first six months of 2017, revenue increased 2% to $315.9 million compared to $310.7 million in the first six months of 2016. The company reported a GAAP loss of $0.17 per share for the first six months of 2017 compared to a loss of $0.20 per share in the same period of the prior year and reported non-GAAP earnings of $0.14 per share in 2017 compared to non-GAAP earnings of $0.17 per share in the first six months of 2016.
"We are keenly focused on delivering production solutions that provide durability, repeatability, productivity and leadership in total cost of operations. We believe our investments, innovation and improved execution will position us well for the long term and enable us to drive the transition in 3D printing from prototyping to production," concluded Joshi.
Revised Full Year 2017 Guidance
Based on the results and plans for the remainder of the year, management revised full year 2017 guidance. For the full year 2017, management expects revenue growth of 2% to 6% resulting in a revenue range of $643 million to $671 million. Management expects GAAP earnings per share to be a loss of approximately 14 cents per share in 2017 compared to a loss of 35 cents per share in 2016. Management expects non-GAAP earnings per share to be approximately flat for the full year 2017 compared to non-GAAP earnings of 46 cents per share for the full year 2016. Additionally, management expects to generate positive cash flow from operations for the full year 2017.
Q2 2017 Conference Call and Webcast
The company expects to file its Form 10-Q for the quarter ended June 30, 2017 with the Securities and Exchange Commission on August 2, 2017. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Wednesday, August 2, 2017, at 4:30 p.m. Eastern Time.
Date: Wednesday, August 2, 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 and Six Months Ended June 30, 2017 and 2016
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
(in thousands, except per share amounts) 2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Products $94,421 $94,899 $189,151 $185,863
Services 65,046 63,212 126,747 124,803
------ ------ ------- -------
Total revenue 159,467 158,111 315,898 310,666
Cost of sales:
Products 46,554 46,200 91,302 90,361
Services 32,240 31,500 63,737 62,381
------ ------ ------ ------
Total cost of sales 78,794 77,700 155,039 152,742
------ ------ ------- -------
Gross profit 80,673 80,411 160,859 157,924
Operating expenses:
Selling, general and administrative 63,088 63,228 129,493 137,195
Research and development 24,449 20,900 47,301 41,205
------ ------ ------ ------
Total operating expenses 87,537 84,128 176,794 178,400
------ ------ ------- -------
Loss from operations (6,864) (3,717) (15,935) (20,476)
Interest and other income, net 933 208 1,134 334
--- --- ----- ---
Loss before income taxes (5,931) (3,509) (14,801) (20,142)
Provision for income taxes 2,067 1,700 3,108 2,879
----- ----- ----- -----
Net loss (7,998) (5,209) (17,909) (23,021)
Less: net income (loss) attributable to noncontrolling interests 418 (561) 478 (585)
--- ---- --- ----
Net loss attributable to 3D Systems Corporation $(8,416) $(4,648) $(18,387) $(22,436)
======= ======= ======== ========
Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted $(0.08) $(0.04) $(0.17) $(0.20)
====== ====== ====== ======
Other comprehensive income (loss):
Pension adjustments, net of taxes $(101) $67 $(81) $36
Foreign currency translation gain (loss) 12,489 (6,654) 20,881 1,285
------ ------ ------ -----
Total other comprehensive income (loss) 12,388 (6,587) 20,800 1,321
Less foreign currency translation gain attributable to noncontrolling interests 74 (43) 135 46
--- --- --- ---
Other comprehensive income attributable to 3D Systems Corporation 12,314 (6,544) 20,665 1,275
------ ------ ------ -----
Comprehensive income (loss) 4,390 (11,796) 2,891 (21,700)
Less comprehensive income (loss) attributable to noncontrolling interests 492 (604) 613 (539)
Comprehensive income (loss) attributable to 3D Systems Corporation $3,898 $(11,192) $2,278 $(21,161)
====== ======== ====== ========
3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
June 30, 2017 and December 2016
June 30, December 31,
(in thousands, except par value) 2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $153,991 $184,947
Accounts receivable, net of reserves - $11,036 (2017) and $12,920 (2016) 126,287 127,114
Inventories 110,816 103,331
Prepaid expenses and other current assets 20,748 17,558
------ ------
Total current assets 411,842 432,950
Property and equipment, net 87,316 79,978
Intangible assets, net 115,011 121,501
Goodwill 225,104 181,230
Long term deferred income tax asset 7,983 8,123
Other assets, net 27,989 25,371
------ ------
Total assets $875,245 $849,153
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Current portion of capitalized lease obligations $613 $572
Accounts payable 46,448 40,514
Accrued and other liabilities 45,812 49,968
Customer deposits 5,139 5,857
Deferred revenue 42,404 33,494
------ ------
Total current liabilities 140,416 130,405
Long term portion of capitalized lease obligations 7,360 7,587
Long term deferred income tax liability 17,250 17,601
Other liabilities 56,068 57,988
------ ------
Total liabilities 221,094 213,581
------- -------
Redeemable noncontrolling interests 8,872 8,872
----- -----
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, authorized 220,000 shares; 115 115
issued 115,583 (2017) and 115,113 (2016)
Additional paid-in capital 1,314,880 1,307,428
Treasury stock, at cost - 1,702 shares (2017) and 1,498 shares (2016) (4,628) (2,658)
Accumulated deficit (629,968) (621,787)
Accumulated other comprehensive loss (32,560) (53,225)
------- -------
Total 3D Systems Corporation stockholders' equity 647,839 629,873
------- -------
Noncontrolling interests (2,560) (3,173)
------ ------
Total stockholders' equity 645,279 626,700
------- -------
Total liabilities, redeemable noncontrolling interests and stockholders' equity $875,245 $849,153
======== ========
3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2017 and 2016
Six Months Ended June 30,
-------------------------
(In thousands) 2017 2016
---- ----
Cash flows from operating activities:
Net loss $(17,909) $(23,021)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 30,575 30,435
Stock-based compensation 14,450 18,893
Provision for bad debts 166 2,677
Benefit of deferred income taxes (1,580) (2,201)
Changes in operating accounts, net of acquisitions:
Accounts receivable 5,549 30,375
Inventories (9,766) (16,153)
Prepaid expenses and other current assets (2,532) (2,463)
Accounts payable 4,343 (4,526)
Accrued and other current liabilities (6,727) (4,328)
Deferred revenue 8,032 8,198
All other operating activities (6,209) (6,846)
Net cash provided by operating activities 18,392 31,040
------ ------
Cash flows from investing activities:
Cash paid for acquisitions, net of cash assumed (34,291) -
Purchases of property and equipment (11,243) (7,597)
Additions to license and patent costs (571) (790)
Other investing activities (1,650) (1,000)
Proceeds from disposition of property and equipment 271 -
Net cash used in investing activities (47,484) (9,387)
------- ------
Cash flows from financing activities:
Payments on earnout consideration (3,206) -
Repurchase of stock, net, and employer paid tax on employee awards (1,970) (1,307)
Repayment of capital lease obligations (290) (524)
Net cash used in financing activities (5,466) (1,831)
------ ------
Effect of exchange rate changes on cash and cash equivalents 3,602 783
----- ---
Net (decrease) increase in cash and cash equivalents (30,956) 20,605
------- ------
Cash and cash equivalents at the beginning of the period 184,947 155,643
------- -------
Cash and cash equivalents at the end of the period $153,991 $176,248
======== ========
Cash interest payments $400 $211
Cash income tax payments, net $3,367 $5,933
Transfer of equipment from inventory to property and equipment, net (a) $7,689 $7,529
Transfer of equipment to inventory from property and equipment, net (b) $907 $2,075
Stock issued for acquisitions $3,208 $ -
3D Systems Corporation
Schedule 1
Earnings (Loss) Per Share
Quarter and Six Months Ended June 30, 2017 and 2016
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
(in thousands, except per share amounts) 2017 2016 2017 2016
---- ---- ---- ----
Numerator for basic and diluted net loss per share:
Net loss attributable to 3D Systems Corporation $(8,416) $(4,684) $(18,387) $(22,436)
Denominator for basic and diluted net loss per share:
Weighted average shares 111,398 111,166 111,350 111,288
Net loss per share, basic and diluted $(0.08) $(0.04) $(0.17) $(0.20)
====== ====== ====== ======
3D Systems Corporation
Schedule 2
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Six Months Ended June 30, 2017 and 2016
($ in millions, except per share amounts) Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
GAAP Net loss attributable to 3D Systems Corporation $(8.4) $(4.6) $(18.4) $(22.4)
Adjustments:
Amortization, stock-based compensation & other(1) 16.3 16.1 32.3 36.6
Legal and acquisiton-related(2) 0.7 1.8 1.7 2.7
Portfolio restructuring(3) - - - -
Tax effect of adjustments(3) - - - 1.5
--- ---
Non-GAAP net income attributable to 3D Systems Corporation $8.6 $13.2 $15.6 $18.4
---- ----- ----- -----
Non-GAAP net income per share available to 3D Systems $0.08 $0.12 $0.14 $0.17
common stock holders - basic and diluted4
===
1 For the quarter ended June 30, 2017, the adjustment included $0.1 in COGS and $16.2 in SG&A. For the quarter ended June 30, 2016, the adjustment included $0.1 in COGS and $16.0 SG&A. For the six months ended June 30, 2017, the adjustment included $0.2 in
COGS and $32.1 in SG&A. For the six months ended June 30, 2016, the adjustment included $0.2 in COGS and $36.4 in SG&A.
2 For the quarter ended June 30, 2017, the adjustment included $0.5 in SG&A and $0.2 in interest and other income, net. For the quarter ended June 30, 2016 the adjustment included included $1.8 in SG&A. For the six months ended June 30, 2017, the adjustment
included $1.5 in SG&A and $0.2 in interest and other income, net. For the six months ended June 30, 2016 the adjustment included $2.7 in SG&A.
(3)Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for the quarters ended after March 31, 2016 were calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to
valuation allowances in connection with GAAP net losses.
4 Denominator based on diluted shares used in the GAAP EPS calculation.
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
-----------------
GAAP Earnings per
Share $(0.14)
======
Estimated adjustments to arrive at non-GAAP
Earnings per Share:
Amortization 0.30
Stock Based
Compensation 0.25
Acquisition,
severance and
settlements 0.05
----
Total Adjustments $0.60
Non-GAAP Earnings
per Share $0.46
=====
-Tax effect is calculated based on the Company's quarterly U.S. tax
rate. As a result of the valuation allowance previously recorded in
connection with GAAP net losses, tax effect is expected to be 0% in
2017.
View original content with multimedia:http://www.prnewswire.com/news-releases/3d-systems-reports-second-quarter-2017-financial-results-300498509.html
SOURCE 3D Systems Corporation
