3D Systems Corporation (TDSC) Q1 2010 Earnings Call Transcript May 5, 2010 9:00 am ET Executives Amanda Molbert – IR Abe Reichental – President and CEO Damon Gregoire – VP and CFO Analysts Brian Drab – William Blair Jim Bartlett – Bartlett Investors Jay Harris – Goldsmith & Harris Presentation Operator
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Before we begin the discussion, I would like to mention the statements regarding forward-looking information that appears on Slide #4. Certain statements made in this presentation 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 include comments as to the Company's beliefs and expectations as to future events and trends affecting its business.Forward-looking statements are based upon management's current expectations concerning future events and trends and are necessarily subject to uncertainties, many of which are outside the control of the company. Please also see forward-looking statements and risk factors that appear in the Company's periodic filings with the Securities and Exchange Commission. At this time, I would like to introduce Abe Reichental, 3D Systems President and CEO. Abe Reichental Good morning, everyone, and thanks for taking the time to listen to our call this morning. As you know, earlier today, we released our operating results for the first quarter of 2010 and filed our Form 10-Q with the SEC this morning. Damon and I will review and discuss these operating results with you. Let me begin by saying that we are pleased with our continued revenue recovery and improved earnings from our operating leverage. During the first quarter we experienced improved business conditions across all regions and enjoyed quarter-over-quarter revenue growth from all of our revenue buckets, led by significant materials and 3D Printer revenue contribution. As indicated during our last earnings call we expected a lower first quarter seasonal impact than we experienced in previous years. And are pleased to report that seasonal decline shrunk from 45% for the '09 quarter to only 15% this quarter. On comparable basis we extended the gross profit margin primarily as a result of our higher level of sales coupled with the continued positive effects of our ongoing cost savings initiatives. We believe that our continued ability to improve our bottom-line relative to the prior year quarter for the fourth quarter in a row while absorbing the 10:26 plus negative margins driver demonstrates our sustained operating leverage.
During the first quarter and subsequently we continued to extend our 3Dproparts services through organic growth and additional acquisition. We believe that we’re benefiting competitively from our extending products and services portfolio and our stronger financial position that has allowed us to self-fund all of our recent growth initiatives.While we continue to expect the economic recovery to be slow based on the sequential progress we’ve made we believe that our marketplace conditions have stabilized. Accordingly, we remain optimistic with our positive quarter-over-quarter revenue trend may be sustained and expect to be able to preserve and expand our operating leverage. Now for a more detailed look at our financial performance for the first quarter of this year, I will turn the presentation over to Damon Gregoire, our Chief Financial Officer. Damon? Damon Gregoire Good morning. For the first quarter revenue increased 32% over the 2009 quarter. This increase was led by a $3.9 million improvement in systems sales. For the quarter gross (inaudible) expanded 167 basis points to 45% on a gross profit increase of $3.8 million as compared to the 2009 quarter. Consistent with our prior guidance V-Flash sales negatively impacted our gross margin by 2.2 percentage points. We also reported a 3% decline in operating expenses to $11.7 million, bringing our operating expenses as a percentage of revenue down to 37% from 50% in Q1 of 2009. Net income of $2 million and earnings per share of $0.09 had included the negative impact of $0.01 per share plan V-Flash ramp up and $0.04 per share from ongoing litigation activities. FX activity recorded in other income expense also negatively impacted EPS by $0.01 per share. As Abe mentioned earlier, all of our revenue bucket showed quarter-over-quarter growth in Q1 2010. Of the $3.9 million increase in system sales $2.1 million was from higher sales of 3-D Printers and $1.7 million was from an increased sales of large frame systems. Read the rest of this transcript for free on seekingalpha.com