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3D Systems Reports Second Quarter 2017 Financial Results

12:23 EDT 2 Aug 2017 | PR Newswire

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 GuidanceBased 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 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 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;
issued 115,583 (2017) and 115,113 (2016)

115

115

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 & other1

16.3

16.1

32.3

36.6

Legal and acquisiton-related2

0.7

1.8

1.7

2.7

Portfolio restructuring3

-

-

-

-

Tax effect of adjustments3

-

-

-

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
common stock holders - basic and diluted4

$

0.08

$

0.12

$

0.14

$

0.17

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.

3Tax 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.

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SOURCE 3D Systems Corporation

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