3D Systems Reports First Quarter 2019 Financial Results

Date : 05/07/2019 @ 9:05PM
Source : GlobeNewswire Inc.
Stock : 3D Systems Corp. (DDD)
Quote : 8.66  0.17 (2.00%) @ 12:23AM

3D Systems Reports First Quarter 2019 Financial Results

3D Systems (NYSE:DDD)
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3D Systems Corporation (NYSE: DDD) announced today its financial results for the first quarter ended March 31, 2019.

For the first quarter of 2019, the company reported revenue of $152.0 million, a decrease of 8 percent compared to $165.9 million in the first quarter of the previous year. The company reported a GAAP loss of $0.22 per share in the first quarter of 2019 and a GAAP loss of $0.19 per share in the first quarter of 2018, and a non-GAAP loss of $0.09 per share in the first quarter of 2019 compared to a non-GAAP loss of $0.03 per share in the first quarter of 2018.

The company reported 90 percent higher printer unit sales, but as a result of the mix of unit sales, printer revenue decreased 29 percent compared to the first quarter of the prior year. Healthcare services and simulation increased, however timing of large customer orders for printers and materials offset the increases, and total healthcare revenue decreased 5 percent from the first quarter of 2018. During the first quarter, materials revenue decreased 3 percent, software decreased 8 percent and on demand services decreased 12 percent.

The company reported GAAP gross profit margin of 43.2 percent for the first quarter of 2019 compared to gross profit margin of 46.9 percent in the prior year period. Under absorption of overhead driven by lower revenue and production combined with mix of sales resulted in lower gross profit margin in the first quarter of 2019.

For the first quarter of 2019, GAAP operating expenses decreased 9 percent to $87.0 million compared to $95.3 million in the prior year period. SG&A expenses decreased 6 percent to $65.1 million and R&D expenses decreased 15 percent from the first quarter of the prior year to $21.9 million.

The company used $15.2 million of cash in operations and ended the quarter with $157.3 million of unrestricted cash on hand. The use of cash during the first quarter was driven by lower than anticipated sales during the quarter and higher inventory in support of new product ramps.

“While we expected seasonality in our revenue this year from ordering patterns of enterprise customers, the first quarter was lower than anticipated as a result of shipment timing and additional on demand weakness,” commented Vyomesh Joshi (VJ) chief executive officer, 3D Systems. "We are taking actions to improve performance for the balance of the year, including accelerating cost reductions."

"With the breadth and strength of our portfolio, we continue to have significant market opportunities to expand our market share and are committed to executing our plans to drive long term profitable growth," concluded Joshi.

Q1 2019 Conference Call and WebcastThe company expects to file its Form 10-Q for the quarter ended March 31, 2019 with the Securities and Exchange Commission on May 7, 2019. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Tuesday, May 7, 2019, at 4:30 p.m. Eastern Time.

Date: Tuesday, May 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 SheetsMarch 31, 2019 and December 31, 2018

(in thousands, except par value)March 31, 2019 December 31, 2018
ASSETS   
Current assets:   
Cash and cash equivalents$157,260  $109,998 
Accounts receivable, net of reserves — $8,111 (2019) and $8,423 (2018)128,774  126,618 
Inventories137,919  133,161 
Prepaid expenses and other current assets29,345  27,697 
Current deferred tax assets   
Total current assets453,298  397,474 
Property and equipment, net100,171  103,252 
Intangible assets, net62,500  68,275 
Goodwill221,506  221,334 
Right of use assets39,570  4,466 
Deferred income tax asset5,840  4,217 
Other assets, net27,504  26,814 
Total assets$910,389  $825,832 
LIABILITIES AND EQUITY   
Current liabilities:   
Current portion of long term debt$5,000  $ 
Current right of use liabilities12,184  654 
Accounts payable54,503  66,722 
Accrued and other liabilities56,336  59,265 
Current deferred tax liabilities   
Customer deposits4,284  4,987 
Deferred revenue44,954  32,432 
Total current liabilities177,261  164,060 
Long-term debt94,387  25,000 
Long-term right of use liabilities36,257  6,392 
Deferred income tax liability7,315  6,190 
Other liabilities42,439  39,331 
Total liabilities357,659  240,973 
Redeemable noncontrolling interests8,872  8,872 
Commitments and contingencies   
Stockholders’ equity:   
Common stock, $0.001 par value, authorized 220,000 shares; issued 117,459 (2019) and 118,650 (2018)118  117 
Additional paid-in capital1,354,683  1,355,503 
Treasury stock, at cost — 2,219 shares (2019) and 2,946 shares (2018)(16,056) (15,572)
Accumulated deficit(747,095) (722,701)
Accumulated other comprehensive loss(39,362) (38,978)
Total 3D Systems Corporation stockholders' equity552,288  578,369 
Noncontrolling interests(8,430) (2,382)
Total stockholders’ equity543,858  575,987 
Total liabilities, redeemable noncontrolling interests and stockholders’ equity$910,389  $825,832 

3D Systems CorporationUnaudited Condensed Consolidated Statements of OperationsQuarter Ended March 31, 2019 and 2018

 Quarter Ended March 31,
(in thousands, except per share amounts)2019 2018
Revenue:   
Products$92,347  $105,447 
Services59,633  60,422 
Total revenue151,980  165,869 
Cost of sales:   
Products55,760  56,118 
Services30,515  31,882 
Total cost of sales86,275  88,000 
Gross profit65,705  77,869 
Operating expenses:   
Selling, general and administrative65,107  69,452 
Research and development21,903  25,882 
Total operating expenses87,010  95,334 
Loss from operations(21,305) (17,465)
Interest and other expense, net(1,201) (1,552)
Loss before income taxes(22,506) (19,017)
Provision for income taxes(1,844) (1,954)
Net loss(24,350) (20,971)
Less: net income (loss) attributable to noncontrolling interests44  (16)
Net loss attributable to 3D Systems Corporation$(24,394) $(20,955)
    
Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted$(0.22) $(0.19)

3D Systems CorporationUnaudited Condensed Consolidated Statements of Cash FlowsQuarter Ended March 31, 2019 and 2018

 Quarter Ended March 31,
(in thousands)2019 2018
Cash flows from operating activities:   
Net loss$(24,350) $(20,971)
Adjustments to reconcile net loss to net cash used in by operating activities:   
Depreciation and amortization13,144  15,186 
Stock-based compensation6,706  7,128 
Lower of cost or market adjustment   
Provision for bad debts219  1,017 
Provision for deferred income taxes(498) (898)
Impairment of assets180  1,411 
Changes in operating accounts:   
Accounts receivable(2,928) (3,774)
Inventories(5,192) (5,571)
Prepaid expenses and other current assets354  (3,667)
Accounts payable(11,987) (647)
Deferred revenue and customer deposits11,811  10,018 
Accrued and other current liabilities(5,531) 2,579 
All other operating activities2,914  (3,350)
Net cash used in operating activities(15,158) (1,539)
Cash flows from investing activities:   
Purchases of property and equipment(8,837) (10,764)
Other investing activities(37) (230)
Net cash used in investing activities(8,874) (10,994)
Cash flows from financing activities:   
Proceeds from borrowings100,000   
Repayment of borrowings/long term debt(25,000)  
Purchase of noncontrolling interest(2,500)  
Payments on earnout consideration  (2,675)
Other financing activities(1,263) (965)
Net cash provided by (used in) financing activities71,237  (3,640)
Effect of exchange rate changes on cash, cash equivalents and restricted cash57  1,438 
Net increase (decrease) in cash, cash equivalents and restricted cash47,262  (14,735)
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)$158,181  $122,096 

(a) The amounts for cash and cash equivalents shown above include restricted cash of $921 and $794 as of March 31, 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 Ended March 31, 2019 and 2018

 Quarter Ended March 31,
(in thousands, except per share amounts)2019 2018
Numerator for basic and diluted net loss per share:   
Net loss attributable to 3D Systems Corporation$(24,394) $(20,955)
    
Denominator for basic and diluted net loss per share:   
Weighted average shares113,267  111,819 
    
Net loss per share - basic and diluted$(0.22) $(0.19)

3D Systems CorporationSchedule 2Unaudited Reconciliations of GAAP to Non-GAAP MeasuresQuarter Ended March 31, 2019 and 2018

 Quarter Ended March 31,
(in millions, except per share amounts)2019 2018
GAAP Net loss attributable to 3D Systems Corporation$(24.4) $(21.0)
Adjustments:   
Amortization, stock-based compensation & other 112.2  15.2 
Legal, acquisition and divestiture related 20.4  0.5 
Cost optimization plan, including severance costs 31.7  0.5 
Impairment of cost-method investments 4  1.4 
Non-GAAP net income attributable to 3D Systems Corporation$(10.1) $(3.4)
Non-GAAP net income per share available to 3D Systems common stock holders - basic and diluted 5$(0.09) $(0.03)
    

1 For the quarter ended March 31, 2019, the adjustment included $0.1 in COGS and $12.1 in SG&A. For the quarter ended March 31, 2018, the adjustment included $0.1 in COGS and $15.1 in SG&A.2 For the quarter ended March 31, 2019, the adjustment included $(1.8) in Revenues $1.9 in COGS and $0.7 in SG&A and $(0.5) in other income (expense). For the quarter ended March 31, 2018, the adjustment included $0.5 in SG&A.3 For the quarter ended March 31, 2019, the adjustment included $0.4 in COGS, $1.2 in SG&A. For the quarter ended March 31, 2018, the adjustment included $0.2 in COGS and $0.3 in SG&A.4 For the quarter ended March 31, 2018, the adjustment included $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.

Investor Contact:Stacey WittenInvestor.relations@3dsystems.com

Media Contact:Nicole Yorkpress@3dsystems.com 

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