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3D Systems Reports Second Quarter 2018 Financial Results
Globe Newswire 7-Aug-2018 4:01 PM
ROCK HILL, S.C., Aug. 07, 2018 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the second quarter ended June 30, 2018.
For the second quarter of 2018, the company reported 11 percent revenue growth to $176.6 million compared to $159.5 million in the second quarter of the previous year. The company reported a GAAP loss of $0.08 per share in the second quarter of 2018 and 2017, and non-GAAP earnings of $0.06 per share in the second quarter of 2018 compared to non-GAAP earnings of $0.08 per share in the second quarter of 2017.
"We are pleased with our results for the second quarter, which were driven by strong revenue growth, including growth in both printer revenue and units as we continue to improve execution and are seeing the early returns on our investments in both innovation and go-to-market," commented Vyomesh Joshi (VJ) chief executive officer, 3D Systems.
The company reported 41 percent higher printer revenue on 37 percent higher printer unit sales, 26 percent growth in healthcare solutions, and growth in materials and on demand manufacturing.
The company reported GAAP gross profit margin of 48.8 percent for the second quarter of 2018 compared to 50.6 percent in the second quarter of the prior year. The impact of mix of sales and investment in services and on demand manufacturing offset cost improvements from ongoing supply chain cost reduction initiatives.
For the second quarter of 2018, GAAP operating expenses were $93.9 million compared to $87.5 million in the prior year period. SG&A expenses increased 13 percent to $71.2 million, which included continued investment in go-to-market, IT transformation and higher legal fees. R&D expenses decreased 7 percent from the second quarter of the prior year to $22.7 million as the company began to ship the previously announced new products. The company expects to continue to roll out new products as planned throughout 2018.
"We are very pleased with the progress we are seeing in the first half of 2018 from both our investments and the hard work by our employees," commented John McMullen, executive vice president and chief financial officer. "We continue to make the investments we believe are critical for success while at the same time improving our cost structure over the long term."
During the quarter, the company generated $10.7 million of cash in operations and ended the quarter with $119.3 million of unrestricted cash on hand.
"In addition to our performance in the second quarter, we are also very pleased to be partnering with Georg Fischer, a highly regarded leader in machining solutions, to create new integrated solutions and expand our global network and market opportunity. With our product rollouts in 2018, we believe our portfolio is second to none in regards to breadth and competitiveness, and we continue to be keenly focused on execution and operational efficiency to drive long-term growth and profitability," concluded Joshi.
Q2 2018 Conference Call and Webcast The company expects to file its Form 10-Q for the quarter ended June 30, 2018 with the Securities and Exchange Commission on August 7, 2018. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Tuesday, August 7, 2018, at 4:30 p.m. Eastern Time.
Date: Tuesday, August 7, 2018 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
A replay of the webcast will be available 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.
3D Systems Corporation Unaudited Condensed Consolidated Balance Sheets June 30, 2018 and December 31, 2017
(in thousands, except par value)
June 30, 2018
December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents
$
119,313
$
136,344
Accounts receivable, net of reserves — $10,049 (2018) and $10,258 (2017)
130,870
129,879
Inventories
114,493
103,903
Insurance proceeds receivable
50,000
50,000
Prepaid expenses and other current assets
25,428
18,296
Total current assets
440,104
438,422
Property and equipment, net
104,679
97,521
Intangible assets, net
82,141
98,783
Goodwill
224,955
230,882
Deferred income tax asset
7,216
4,020
Other assets, net
26,217
27,136
Total assets
$
885,312
$
896,764
LIABILITIES AND EQUITY
Current liabilities:
Current portion of capitalized lease obligations
$
646
$
644
Accounts payable
58,019
55,607
Accrued and other liabilities
72,400
65,899
Accrued litigation settlement
50,000
50,000
Customer deposits
5,903
5,765
Deferred revenue
38,617
29,214
Total current liabilities
225,585
207,129
Long term portion of capitalized lease obligations
6,732
7,078
Deferred income tax liability
9,892
8,983
Other liabilities
46,398
48,754
Total liabilities
288,607
271,944
Redeemable noncontrolling interests
8,872
8,872
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, authorized 220,000 shares; issued 117,249 (2018) and 117,025 (2017)
116
115
Additional paid-in capital
1,339,984
1,326,250
Treasury stock, at cost — 2,503 shares (2018) and 2,219 shares (2017)
(10,007
)
(8,203
)
Accumulated deficit
(707,015
)
(677,772
)
Accumulated other comprehensive loss
(32,878
)
(21,536
)
Total 3D Systems Corporation stockholders' equity
590,200
618,854
Noncontrolling interests
(2,367
)
(2,906
)
Total stockholders' equity
587,833
615,948
Total liabilities, redeemable noncontrolling interests and stockholders' equity
$
885,312
$
896,764
3D Systems Corporation Unaudited Condensed Consolidated Statements of Operations Quarter and Six Months Ended June 30, 2018 and 2017
Quarter Ended June 30,
Six Months Ended June 30,
(in thousands, except per share amounts)
2018
2017
2018
2017
Revenue:
Products
$
110,785
$
97,579
$
216,231
$
195,518
Services
65,783
61,888
126,206
120,380
Total revenue
176,568
159,467
342,437
315,898
Cost of sales:
Products
57,500
49,840
113,618
97,948
Services
32,906
28,954
64,788
57,091
Total cost of sales
90,406
78,794
178,406
155,039
Gross profit
86,162
80,673
164,031
160,859
Operating expenses:
Selling, general and administrative
71,172
63,088
140,625
129,493
Research and development
22,712
24,449
48,594
47,301
Total operating expenses
93,884
87,537
189,219
176,794
Loss from operations
(7,722
)
(6,864
)
(25,188
)
(15,935
)
Interest and other (expense) income, net
1,661
933
108
1,134
Loss before income taxes
(6,061
)
(5,931
)
(25,080
)
(14,801
)
Provision for income taxes
2,539
2,067
4,493
3,108
Net loss
(8,600
)
(7,998
)
(29,573
)
(17,909
)
Less: net income attributable to noncontrolling interests
262
418
246
478
Net loss attributable to 3D Systems Corporation
$
(8,862
)
$
(8,416
)
$
(29,819
)
$
(18,387
)
Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted
$
(0.08
)
$
(0.08
)
$
(0.27
)
$
(0.17
)
3D Systems Corporation Unaudited Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2018 and 2017
Six Months Ended June 30,
(in thousands)
2018
2017
Cash flows from operating activities:
Net loss
$
(29,573
)
$
(17,909
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization
29,948
30,575
Stock-based compensation
13,734
14,450
Impairment of assets
1,411
—
Provision for bad debts
1,356
166
Provision for deferred income taxes
(2,287
)
(1,580
)
Changes in operating accounts, net of acquisitions:
Accounts receivable
(3,384
)
5,549
Inventories
(14,937
)
(9,766
)
Prepaid expenses and other current assets
(6,739
)
(2,345
)
Accounts payable
2,762
4,343
Accrued and other current liabilities
19,208
(6,727
)
All other operating activities
(2,328
)
1,823
Net cash provided by operating activities
9,171
18,579
Cash flows from investing activities:
Cash paid for acquisitions, net of cash assumed
—
(34,291
)
Purchases of property and equipment
(18,095
)
(11,243
)
Additions to license and patent costs
(523
)
(571
)
Other investing activities
—
(1,650
)
Proceeds from disposition of property and equipment
9
271
Net cash used in investing activities
(18,609
)
(47,484
)
Cash flows from financing activities:
Payments on earnout consideration
(2,675
)
(3,206
)
Payments related to net-share settlement of stock-based compensation
(1,804
)
(1,970
)
Repayment of capital lease obligations
(344
)
(290
)
Net cash used in financing activities
(4,823
)
(5,466
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(2,502
)
3,602
Net decrease in cash, cash equivalents and restricted cash
(16,763
)
(30,769
)
Cash, cash equivalents and restricted cash at the beginning of the period (a)
136,831
185,248
Cash, cash equivalents and restricted cash at the end of the period (a)
$
120,068
$
154,479
The amounts for cash and cash equivalents shown above include restricted cash of $755 and $488 as of June 30, 2018 and 2017, respectively, and $487 and $301 as of December 31, 2017, and 2016, respectively, which were included in other assets, net in the condensed consolidated balance sheets.
3D Systems Corporation Schedule 1 Loss Per Share Quarter and Six Months Ended June 30, 2018 and 2017
Quarter Ended June 30,
Six Months Ended June 30,
(in thousands, except per share amounts)
2018
2017
2018
2017
Numerator for basic and diluted net loss per share:
Net loss attributable to 3D Systems Corporation
$
(8,862
)
$
(8,416
)
$
(29,819
)
$
(18,387
)
Denominator for basic and diluted net loss per share:
Weighted average shares
111,920
111,398
111,870
111,350
Net loss per share - basic and diluted
$
(0.08
)
$
(0.08
)
$
(0.27
)
$
(0.17
)
3D Systems Corporation Schedule 2 Unaudited Reconciliations of GAAP to Non-GAAP Measures Quarter and Six Months Ended June 30, 2018 and 2017
Quarter Ended June 30,
Six Months Ended June 30,
(in millions, except per share amounts)
2018
2017
2018
2017
GAAP net loss attributable to 3D Systems Corporation
$
(8.9
)
$
(8.4
)
$
(29.8
)
$
(18.4
)
Adjustments:
Amortization, stock-based compensation & other 1
14.5
16.3
29.6
32.3
Legal and acquisition-related 2
(0.4
)
0.7
—
1.7
Cost optimization plan 3
1.0
—
1.6
—
Impairment of cost-method investments 4
—
—
1.4
—
Non-GAAP net income (loss) attributable to 3D Systems Corporation
$
6.2
$
8.6
$
2.8
$
15.6
Non-GAAP net income (loss) per share available to 3D Systems common stock holders - basic and diluted 5
$
0.06
$
0.08
$
0.02
$
0.14
1 For the quarter ended June 30, 2018, the adjustment included $0.1 in COGS and $14.4 in SG&A. For the quarter ended June 30, 2017, the adjustment included $0.1 in COGS and $16.2 in SG&A. For the six months ended June 30, 2018, the adjustment included $0.2 in COGS and $29.4 in SG&A. For the six months ended June 30, 2017, the adjustment included $0.2 in COGS and $32.1 in SG&A.
2 For the quarter ended June 30, 2018, the adjustment included ($0.4) in SG&A. 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 six months ended June 30, 2017, the adjustment included $1.5 in SG&A and $0.2 in interest and other income, net.
3 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, 2018, the adjustment included $0.3 in COGS, $1.1 in SG&A, and approximately $0.2 in R&D.
4 The Company has minority investments of less than 20% ownership in enterprises that benefit from, or are powered by its technology portfolio. The value of each of these investments is assessed periodically, and impairment recorded when required. For the quarter and six months ended June 30, 2018, the adjustment included zero and $1.4, respectively, in interest and other expense, net. The Company excluded this amount as it is not related to on-going operations, and intends to exclude these impairment amounts from non-GAAP net income going forward.
5 Denominator based on weighted average shares used in the GAAP EPS calculation.
