3D Systems' (DDD) CEO Avi Reichental on Q1 2014 Earnings - Call Transcript

This transcript originally appeared on Seeking Alpha.

Title: 3D Systems' CEO Discusses Q1 2014 Results - Earnings Call Transcript

Symbol: DDD

Call Start: 09:00

Call End: 10:00

3D Systems Corporation (DDD)

Q1 2014 Earnings Conference Call

April 29, 2014 09:00 AM ET


Stacey Witten - Investor Relations Director

Avi N. Reichental - President and Chief Executive Officer

Damon Gregoire - Senior Vice President and Chief Financial Officer


Jim Ricchiuti - Needham & Company, LLC

John A. Baliotti - Janney Montgomery Scott LLC

Ananda Baruah - Brean Capital LLC

Steven M. Milunovich - UBS Securities LLC

Troy D. Jensen - Piper Jaffray & Co

Holden Lewis - BB&T Capital Markets

Bobby Burleson - Canaccord Genuity, Inc.

Sherri A. Scribner - Deutsche Bank Securities, Inc.

Weston D. Twigg - Pacific Crest Securities LLC

Jay Harris - Goldsmith & Harris Inc.

Amit Daryanani - RBC Capital Markets LLC

Kenneth Wong - Citigroup Global Markets Inc.

Peter J. Misek - Jefferies LLC



Good morning, and welcome to 3D Systems Conference Call and Audio Webcast to discuss the results of the First Quarter of 2014. My name is Tahisha, and I will facilitate the audio portion of today's interactive broadcast. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions)

At this time, I would like to turn the call over to Stacey Witten with 3D Systems. Please proceed.

Stacey Witten

Good morning and welcome to 3D Systems Conference Call. I am Stacey Witten, and with me on the call are Avi Reichental, our CEO; Damon Gregoire, our CFO; and Andrew Johnson, our General Counsel.

The webcast portion of this call contains a slide presentation that we will refer to during the call. Those following along on the phone who wish to access the slide portion of this presentation may do so via the web at www.3dsystems.com/investor.

Participants who would like to ask questions at the end of the session related to matters discussed in this conference call should call in using the phone numbers provided here on Slide 3. The phone numbers are also provided in the press release that we issued this morning. For those who have access the streaming portion of the webcast, please be aware that there is five second delay and that you will not be able to post questions via the web.

Before we begin the discussion, I would like to mention a statement regarding forward-looking information that appears on Slide 4. This presentation contains forward-looking statements as defined by Federal and State Securities Laws.

Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying assumptions and other statements which are other than statements of historical facts. All such forward-looking statements, whether written or oral and whether made by us or on our behalf, are expressly qualified by the cautionary statements described on the slide.

Forward-looking statements are only predictions that relate to future events or our future performance and are subject to known and unknown risks, uncertainties, assumptions, and other factors, many of which are beyond our control. As a result, we cannot guarantee future results or performance and past performance is not necessarily indicative of future results.

These forward-looking statements are based on current expectations, estimates, forecasts and projections, as well as beliefs and assumptions of management. We undertake no obligation and do not intend to update these forward-looking statements. Further, we encourage you to review the risks that we face and other information about us in our filings with the SEC, including our Annual Report on Form 10-K, which was filed February 28, 2014.

At this time, I would like to introduce Avi Reichental, 3D Systems' President and CEO.

Avi N. Reichental

Good morning, everyone and thanks for taking the time to listen to our call this morning. This morning Damon and I will go over our financial results in more depth, update you on our progress and provide an outlook for the remainder of 2014. We are pleased to report another strong quarter on robust demand for our design and manufacturing printers, on accelerated materials growth rate and a substantial unit sales increase that altogether delivered 45% revenue growth from the prior year to $147.8 million on expanding overall organic growth of 28%.

We generated unit growth of 54% including a 76% increase in design and manufacturing printers, and an impressive 48% growth in our consumer unit, not withstanding slowing demand for the current consumer printer models in anticipation of the commercial release of our new 2014 models.

Growing Direct Metal 3D printer sales, again outstripped our manufacturing capacity during the first quarter, even as we continued to add capacity and from previous year to our increased total printers backlog.

Our gross profit margin shouldered the attack of continued unfavorable mix and the absorption of manufacturing expansion costs that compress gross profit margin from 130 basis points from the prior year's quarter to 51.1%. All of our revenue categories contributed to record first quarter sales. But 3D printers and other products continue to outpace all other categories growing 53% to $60.8 million, primarily as a result of strengthening demand for our design and manufacturing printers.

Consistent with our expectations as placement and utilization of industrial printers continue to expand, our materials revenue growth rate accelerated to a record growth of 41%, contributing $40.4 million of revenue for the quarter.

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