3D Systems Reports Third Quarter and Nine Months 2015 Financial Results

ROCK HILL, S.C., Nov. 4, 2015 (GLOBE NEWSWIRE) — 3D Systems Corporation (NYSE:DDD) announced today its financial results for the third quarter and nine months ended September 30, 2015.

For the third quarter of 2015, the company reported revenue of $151.6 million, a decrease of 9% over the comparable quarter in 2014, or a 3% decrease on a constant currency basis. The company reported a GAAP loss of $0.29 per share and non-GAAP earnings of $0.01 per share.

“We are disappointed with our overall results and the lower revenue from our 3D printing products and services, which we believe were negatively impacted by continued challenging market conditions that extended customers’ capital investment cycles and reduced demand across all geographies,” commented Andrew Johnson, Interim President & Chief Executive Officer and Chief Legal Officer, 3D Systems. “However, we are pleased that our 3D healthcare simulators and services and 3D software contributed favorably to our results.”

Gross profit margin decreased 90 basis points compared to the third quarter of 2014 to 46.9% due primarily to the negative impact of consumer products.

For the third quarter of 2015, operating expenses remained flat sequentially at $105.7 million, inclusive of $22.5 million of R&D expenditures and an $11.3 million expense for an arbitration award related to a business acquisition completed in 2011.

The company reported a third quarter GAAP net loss of $32.2 million, or a $0.29 loss per share. The company reported non-GAAP net income of $0.8 million, or $0.01 earnings per share.

The company used $4.3 million of cash for operations during the quarter and had $157.5 million of cash on hand at the end of September.

For the first nine months of 2015, revenue grew 4% to $482.8 million, or a 12% increase on a constant currency basis, resulting in a GAAP loss of $0.53 per share and non-GAAP earnings of $0.08 per share.

“As we navigate challenging market conditions, we are taking decisive steps to reduce our cost structure and better prioritize our resources around near-term opportunities while continuing investments in quality initiatives, partner-centric programs and new products,” concluded Johnson.

Recent Business Developments

The company is focusing on leveraging its domain expertise in key verticals into new products and partnerships that it believes could drive incremental adoption. Recently, the company has:

  • Expanded its healthcare reach with new modules for cardiology training and surgical planning and partnered with MirrorMe3D to bring 3D printing to cosmetic surgery;
     
  • Expanded its partnerships with Phillips Corporation, U.S. Army Research Lab and Pennsylvania State University, to advance material and process developments, including critical defense and aerospace applications;
     
  • Added Methods Machine Tools, a leading supplier of precision machine tools and automation for manufacturing, as a channel partner;
     
  • Partnered with GPI Prototype & Manufacturing Services to expand use cases for its Direct Metal Printers;
     
  • Introduced Nylon material and Infinity™ Rinse-Away water soluble support material for its desktop 3D printers; and
     
  • Introduced the next generation of GibbsCam Software for production machining.

Q3 Conference Call and Webcast

The company expects to file its third quarter 2015 Form 10-Q with the Securities and Exchange Commission on November 4, 2015. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Wednesday, November 4, 2015, at 8:30 a.m. Eastern Time. 

Date: Wednesday, November 4, 2015
 
Time: 8:30 a.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 may 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 addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking.  Forward-looking statements 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, including but not limited to, statements about management’s expectations regarding the company’s performance, initiatives and strategies. The factors described under the headings “Forward-Looking Statements,” “Cautionary Statements and Risk Factors,” 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. 3D Systems undertakes no obligation to update or revise any forward-looking statements, even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

Presentation of Information in This Press release

To facilitate a better understanding of the impact that several strategic acquisitions had on its financial results, the company reported non-GAAP measures that adjust net income and earnings per share by excluding the impact of amortization of intangibles, non-cash interest expense, acquisition and severance expenses, an arbitration award related to litigation, loss on conversion of notes and stock-based compensation expense. A reconciliation of GAAP to non-GAAP results is provided in the accompanying schedule.  

About 3D Systems

3D Systems provides the most advanced and comprehensive 3D digital design and fabrication solutions available today, including 3D printers, print materials and cloud-sourced custom parts. Its powerful ecosystem transforms entire industries by empowering professionals and consumers everywhere to bring their ideas to life using its vast material selection, including plastics, metals, ceramics and edibles. 3DS’ leading personalized medicine capabilities include end-to-end simulation, training and planning, and printing of surgical instruments and devices for personalized surgery and patient specific medical and dental devices. Its democratized 3D digital design, fabrication and inspection products provide seamless interoperability and incorporate the latest immersive computing technologies. 3DS’ products and services disrupt traditional methods, deliver improved results and empower its customers to manufacture the future now.

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 Nine Months Ended September 30, 2015 and 2014
         
  Quarter Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2015 2014 2015 2014
Revenue:        
Products $ 87,747 $ 111,926 $ 292,146 $ 313,104
Services 63,827 55,018 190,654 153,110
Total revenue 151,574 166,944 482,800 466,214
Cost of sales:        
Products 48,472 57,627 156,432 155,675
Services 32,064 29,519 94,719 82,871
Total cost of sales 80,536 87,146 251,151 238,546
Gross profit 71,038 79,798 231,649 227,668
Operating expenses:        
Selling, general and administrative 83,212 53,656 237,242 152,698
Research and development 22,463 17,934 70,410 52,883
Total operating expenses 105,675 71,590 307,652 205,581
Income (loss) from operations (34,637) 8,208 (76,003) 22,087
Interest and other expense, net 1,373 3,955 4,029 6,479
Income (loss) before income taxes (36,010) 4,253 (80,032) 15,608
Provision (benefit) for income taxes (3,524) 1,113 (20,563) 5,366
Net income (loss) (32,486) 3,140 (59,469) 10,242
Less net income (loss) attributable to noncontrolling interests (237) 56 (343) 156
Net income (loss) attributable to 3D Systems Corporation $ (32,249) $ 3,084 $ (59,126) $ 10,086
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted $ (0.29) $ 0.03 $ (0.53) $ 0.09
         
Other comprehensive income (loss):        
Pension adjustments, net of taxes $ 14 $ 91 $ 276 $ 136
Foreign currency loss  (9,957)  (10,897)  (17,903)  (9,263)
Other comprehensive loss  (9,943)  (10,806)  (17,627)  (9,127)
Less foreign currency translation loss attributable to noncontrolling interests  (882)  (73)  (2,588)  (71)
Other comprehensive loss attributable to 3D Systems Corporation  (9,061)  (10,733)  (15,039)  (9,056)
         
Comprehensive income (loss)  (42,429)  (7,666)  (77,096)  1,115
Less comprehensive income (loss) attributable to noncontrolling interests  (1,119)  (17)  (2,931)  85
Comprehensive income (loss) attributable to 3D Systems Corporation $ (41,310) $ (7,649) $ (74,165) $ 1,030
     
3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
September 30, 2015 and December 31, 2014
     
  September 30, December 31,
(in thousands, except par value) 2015 2014
ASSETS    
Current assets:    
Cash and cash equivalents $ 157,453 $ 284,862
Accounts receivable, net of allowance for doubtful accounts of $15,797 (2015) and $10,300 (2014) 134,492 168,441
Inventories, net 138,181 96,645
Prepaid expenses and other current assets 25,898 15,769
Current deferred income tax asset 25,025 14,973
Total current assets 481,049 580,690
Property and equipment, net 88,540 81,881
Intangible assets, net 267,182 251,561
Goodwill 622,431 589,537
Long term deferred income tax asset 705 816
Other assets, net 21,602 21,485
Total assets $ 1,481,509 $ 1,525,970
LIABILITIES AND EQUITY    
Current liabilities:    
Current portion of debt and capitalized lease obligations $ 523 $ 684
Accounts payable 48,508 64,378
Accrued and other liabilities 49,577 44,219
Customer deposits 7,653 6,946
Deferred revenue 35,455 32,264
Total current liabilities 141,716 148,491
Long term portion of capitalized lease obligations 8,372 8,905
Long term deferred income tax liability 26,880 30,679
Other liabilities 41,793 34,898
Total liabilities 218,761 222,973
Redeemable noncontrolling interests 8,872 8,872
     
Stockholders’ equity:    
Common stock, $0.001 par value, authorized 220,000 shares; issued 112,425 (2015) and 112,233 (2014) 112 112
Additional paid-in capital 1,275,565 1,245,462
Treasury stock, at cost: 378 shares (2015) and 709 shares (2014) (412) (374)
Accumulated earnings 12,988 72,124
Accumulated other comprehensive loss (39,445) (24,406)
Total 3D Systems Corporation stockholders’ equity 1,248,818 1,292,918
Noncontrolling interests 5,058 1,207
Total stockholders’ equity 1,253,876 1,294,125
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 1,481,509 $ 1,525,970
     
3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2015 and 2014
     
  Nine Months Ended September 30,
(in thousands) 2015 2014
Cash flows from operating activities:    
Net income (loss) $ (59,469) $ 10,242
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:    
Benefit of deferred income taxes (21,971) (19,113)
Depreciation and amortization 63,905 39,563
Provision for ligation award 11,282
Impairment of investment 1,111
Non-cash interest on convertible notes 224
Provision for bad debts 4,123 4,394
Provision for obsolescence and revaluation 9,191 2,065
Stock-based compensation 28,850 23,738
Loss on the disposition of property and equipment  1,182 176
Loss on conversion of convertible debt 1,806
Changes in operating accounts:    
Accounts receivable 37,426 (40,347)
Inventories (50,178) (40,101)
Prepaid expenses and other current assets (10,136) (6,725)
Accounts payable (19,657) 11,925
Accrued and other liabilities (5,348) 8,254
Customer deposits 566 1,848
Deferred revenue (1,748) 5,813
Other operating assets and liabilities 263 24,136
Net cash provided by (used in) operating activities (10,608) 27,898
Cash flows from investing activities:    
Purchases of property and equipment (18,064) (16,783)
Additions to license and patent costs (719) (547)
Cash paid for acquisitions, net of cash assumed (91,799) (244,290)
Other investing activities (3,750) (300)
Net cash used in investing activities (114,332) (261,920)
Cash flows from financing activities:    
Tax benefits from share-based payment arrangements 467  6,870
Proceeds from issuance of common stock  299,729
Proceeds from exercise of stock options and restricted stock, net  748  1,603
Repayment of capital lease obligations  (788)  (317)
Net cash provided by financing activities  427  307,885
Effect of exchange rate changes on cash  (2,896)  (2,844)
Net increase (decrease) in cash and cash equivalents  (127,409)  71,019
Cash and cash equivalents at the beginning of the period  284,862  306,316
Cash and cash equivalents at the end of the period $ 157,453 $ 377,335
         
3D Systems Corporation
Schedule 1
Earnings (Loss) Per Share
Quarter and Nine Months Ended September 30, 2015 and 2014
         
  Quarter Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2015 2014 2015 2014
Numerator for basic and diluted net earnings per share:        
Net income (loss) attributable to 3D Systems Corporation $ (32,249) $ 3,084 $ (59,126) $ 10,086
         
Denominator for basic and diluted net earnings per share:        
Weighted average shares 112,010 110,737 111,920 106,923
         
Earnings (loss) per share, basic and diluted (0.29) 0.03 (0.53) 0.09
         
Interest expense excluded from diluted earnings per share calculation (a) $ — $ — $ — $ 362
5.50% Convertible notes shares excluded from diluted earnings per share calculation (a) 584
Restricted stock units excluded from diluted earnings per share calculation(b) 109 61
         
(a) Average outstanding diluted earnings (loss) per share calculation excludes shares that may be issued upon conversion of the outstanding senior convertible notes since the effect of their inclusion would have been anti-dilutive.
(b) Average outstanding diluted earnings (loss) per share calculation excludes restricted stock units since the effect of their inclusion would have been anti-dilutive.
         
3D Systems Corporation
Schedule 2
Unaudited Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
Quarter and Nine Months Ended September 30, 2015 and 2014
         
  Quarter Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2015 2014 2015 2014
GAAP net income (loss) attributable to 3D Systems Corporation $ (32,249) $ 3,084 $ (59,126) $ 10,086
Cost of sales adjustments:        
Amortization of intangibles 81 74 232 209
Operating expense adjustments:        
Amortization of intangibles 15,762 11,032 47,608 28,301
Acquisition and severance expenses 689 1,441 5,865 4,836
Non-cash stock-based compensation expense 8,800 8,100 28,850 23,738
Arbitration award  11,282  —   11,282
Interest and other expense adjustments:        
Non-cash interest expense 31 225
Loss on convertible notes  1,806  1,806
Tax effect (a) (3,584) (5,888) (25,582) (17,839)
Non-GAAP net income $ 781 $ 19,680 $ 9,129 $ 51,362
         
Non-GAAP basic and diluted earnings per share $ 0.01 $ 0.18 $ 0.08 $ 0.48
(a) tax effect is calculated quarterly, based on the actual tax rate for each quarter.
CONTACT: Investor Contact: Stacey Witten
         Email: Investor.relations@3dsystems.com
         
         Media Contact: Timothy Miller
         Email: Press@3dsystems.com

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