3D Systems Reports Third Quarter And Nine Months 2016 Financial Results

  • Growth in production printers, materials and software as well as healthcare solutions drove quarterly revenue of $156.4 million
  • Generated $7.2 million of cash from operations during the quarter

ROCK HILL, S.C., Nov. 03, 2016 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the third quarter and nine months ended September 30, 2016.

For the third quarter of 2016, the company reported revenue of $156.4 million compared to $151.6 million in the third quarter of the previous year. The company reported a third quarter GAAP loss of $0.19 per share compared to a loss of $0.29 per share in the prior year and non-GAAP earnings of $0.14 per share compared to $0.01 per share in the third quarter of 2015.

Higher sales of 3D printers and materials into production applications as well as strong demand for the company's software and healthcare solutions resulted in a 3% increase in revenue compared to the third quarter of 2015.

"We believe strong demand for our production printers, materials and software as well as healthcare solutions during the quarter is indicative of our growth potential and market opportunities," commented Vyomesh Joshi (VJ), Chief Executive Officer, 3D Systems. 

Gross profit margin for the third quarter of 2016 was 44.1%. Gross profit margin was negatively impacted by non-recurring charges of $10.7 million related to prioritizing products and resources, consistent with the company's recently announced strategy. Excluding these charges, gross profit margin for the third quarter of 2016 was 51.0%. Gross profit margin for the third quarter of 2015, excluding discontinued consumer products, was 50.6%.

For the third quarter of 2016, operating expenses were $91.0 million. Compared to the third quarter of 2015, SG&A expenses decreased 22% to $64.8 million on lower amortization and legal expenses. A $6.1 million non-recurring write-off of assets related to exiting projects drove a 16% increase in R&D expenses over the prior year period to $26.1 million.

"Our focus is to drive operational excellence and build an appropriate cost structure, which will provide capacity to invest into quality, reliability and innovation," commented John McMullen, Executive Vice President and Chief Financial Officer. "We believe this will position us to drive profitable growth and continued positive cash generation."

The company generated $7.2 million of cash from operations during the quarter and $38.2 million in the first nine months of 2016 and had $179.4 million of cash on hand at the end of September.

For the first nine months of 2016, revenue decreased 3% to $467.0 million compared to $482.8 million in the first nine months of 2015. The company reported a GAAP loss of $0.39 per share for the first nine months of 2016 compared to a loss of $0.53 per share in the same period of the prior year and non-GAAP earnings of $0.31 per share compared to $0.08 per share in the first nine months of 2015.

"We believe our synergistic portfolio of technologies, our talent and our 3D printing ecosystem uniquely position us to support complete digital manufacturing workflows to make 3D production real," concluded Joshi.

Q3 2016 Conference Call and Webcast The company expects to file its third quarter 2016 Form 10-Q with the Securities and Exchange Commission on November 3, 2016. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Thursday, November 3, 2016, at 8:30 a.m. Eastern Time. 

Date: Thursday, November 3, 2016Time: 8:30 a.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

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 managements 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 Nine Months Ended September 30, 2016 and 2015
 
  Quarter Ended September 30,     Nine Months Ended September 30,  
  (in thousands, except per share amounts) 2016   2015   2016   2015
Revenue:                      
Products  $   94,543     $   87,747     $   280,406     $   292,146  
Services      61,819         63,827         186,622         190,654  
Total revenue      156,362         151,574         467,028         482,800  
Cost of sales:                      
Products      56,321         48,472         146,682         156,432  
Services      31,104         32,064         93,485         94,719  
Total cost of sales      87,425         80,536         240,167         251,151  
Gross profit      68,937         71,038         226,861         231,649  
Operating expenses:                      
Selling, general and administrative      64,814         83,212         202,009         237,242  
Research and development      26,140         22,463         67,345         70,410  
Total operating expenses      90,954         105,675         269,354         307,652  
Loss from operations      (22,017 )       (34,637 )       (42,493 )       (76,003 )
Interest and other expense, net      1,624         1,373         1,290         4,029  
Loss before income taxes      (23,641 )       (36,010 )       (43,783 )       (80,032 )
Provision (benefit) for income taxes      (2,214 )       (3,524 )       665         (20,563 )
Net loss     (21,427 )       (32,486 )       (44,448 )       (59,469 )
Less: net loss attributable to noncontrolling interests     (214 )       (237 )       (799 )       (343 )
Net loss attributable to 3D Systems Corporation $   (21,213 )   $   (32,249 )   $   (43,649 )   $   (59,126 )
                       
Net loss per share available to 3D Systems Corporation common stockholders — basic and diluted $   (0.19 )   $   (0.29 )   $   (0.39 )   $   (0.53 )
                       
Other comprehensive income (loss):                      
Pension adjustments $   18     $   14     $   54     $   276  
Foreign currency translation gain (loss)     4,282         (9,957 )       5,567         (17,903 )
Total other comprehensive income (loss)     4,300         (9,943 )       5,621         (17,627 )
Less foreign currency translation gain (loss) attributable to noncontrolling interests     22         (882 )       68         (2,588 )
Other comprehensive income (loss) attributable to 3D Systems Corporation     4,278         (9,061 )       5,553         (15,039 )
                       
Comprehensive loss     (17,127 )       (42,429 )       (38,827 )       (77,096 )
Less comprehensive loss attributable to noncontrolling interests     (192 )       (1,119 )       (731 )       (2,931 )
Comprehensive loss attributable to 3D Systems Corporation $   (16,935 )   $   (41,310 )   $   (38,096 )   $   (74,165 )
                       

3D Systems Corporation Unaudited Condensed Consolidated Balance Sheets September 30, 2016 and December 31, 2015  
   
    September 30,   December 31,  
  (in thousands, except par value)   2016   2015  
ASSETS              
Current assets:              
Cash and cash equivalents    $   179,358     $   155,643    
Accounts receivable, net of reserves — $15,408 (2016) and $14,139 (2015)        120,630         157,406    
Inventories, net of reserves — $25,938 (2016) and $28,225 (2015)       113,717         105,877    
Prepaid expenses and other current assets        15,196         13,541    
Total current assets        428,901         432,467    
Property and equipment, net        80,837         85,995    
Intangible assets, net        133,518         157,466    
Goodwill        189,018         187,875    
Long term deferred income tax asset       5,374         3,216    
Other assets, net        24,700         26,256    
Total assets    $   862,348     $   893,275    
LIABILITIES AND EQUITY              
Current liabilities:              
Current portion of capitalized lease obligations    $   581     $   529    
Accounts payable        37,113         46,869    
Accrued and other liabilities        46,746         54,699    
Customer deposits        5,789         8,229    
Deferred revenue        37,385         35,145    
Total current liabilities        127,614         145,471    
Long term portion of capitalized lease obligations        7,781         8,187    
Long term deferred income tax liability        15,026         17,944    
Other liabilities        60,338         58,155    
Total liabilities        210,759         229,757    
Redeemable noncontrolling interests       8,872         8,872    
               
Stockholders' equity:              
Common stock, $0.001 par value, authorized 220,000 shares; issued 114,301 (2016) and 113,115 (2015)       114         113    
Additional paid-in capital        1,306,903         1,279,738    
Treasury stock, at cost — 1,330 shares (2016) and 892 shares (2015)        (1,294 )       (1,026 )  
Accumulated deficit       (627,017 )       (583,368 )  
Accumulated other comprehensive loss       (33,995 )       (39,548 )  
Total 3D Systems Corporation stockholders' equity       644,711         655,909    
Noncontrolling interests       (1,994 )       (1,263 )  
Total stockholders' equity        642,717         654,646    
Total liabilities, redeemable noncontrolling interests and stockholders' equity   $   862,348     $   893,275    
               

3D Systems Corporation Unaudited Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 and 2015  
   
  Nine Months Ended September 30,    
(In thousands)     2016         2015    
Cash flows from operating activities:            
Net loss $   (44,448 )   $   (59,469 )  
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:            
Benefit of deferred income taxes      (5,464 )       (21,971 )  
Depreciation and amortization      45,731         63,905    
Provision for arbitration award             11,282    
Impairment of assets     8,590         1,111    
Provision for bad debts      1,488         4,123    
Inventory reserve of discontinued products     10,723            
Stock-based compensation      28,405         28,850    
Loss on the disposition of property and equipment     2,052         1,182    
Changes in operating accounts:            
Accounts receivable      36,357         37,426    
Inventories      (16,977 )       (40,987 )  
Prepaid expenses and other current assets      (1,619 )       (10,136 )  
Accounts payable      (9,938 )       (19,657 )  
Accrued and other current liabilities     (8,452 )       (5,348 )  
Customer deposits     (2,389 )       566    
All other operating activities     (5,819 )       (1,485 )  
Net cash provided by (used in) operating activities      38,240         (10,608 )  
Cash flows from investing activities:            
Purchases of property and equipment      (12,014 )       (18,064 )  
Additions to license and patent costs      (790 )       (719 )  
Cash paid for acquisitions, net of cash assumed              (91,799 )  
Other investing activities     (1,000 )       (3,750 )  
Net cash used in investing activities      (13,804 )       (114,332 )  
Cash flows from financing activities:                
Tax benefits from share-based payment arrangements             467    
Proceeds, repurchase and retirement of stock, net     (1,507 )       748    
Repayment of capital lease obligations      (786 )       (788 )  
Net cash provided by (used in) financing activities      (2,293 )       427    
Effect of exchange rate changes on cash and cash equivalents     1,572         (2,896 )  
Net increase (decrease) in cash and cash equivalents      23,715         (127,409 )  
Cash and cash equivalents at the beginning of the period      155,643         284,862    
Cash and cash equivalents at the end of the period  $   179,358     $   157,453    
             

3D Systems Corporation Schedule 1 Earnings (Loss) Per Share Quarter and Nine Months Ended September 30, 2016 and 2015
 
  Quarter Ended September 30,     Nine Months Ended September 30,  
(in thousands, except per share amounts) 2016   2015   2016   2015
Numerator for basic and diluted net loss per share:                      
Net loss attributable to 3D Systems Corporation $   (21,213 )   $   (32,249 )   $   (43,649 )   $   (59,126 )
                       
Denominator for basic and diluted net loss per share:                      
Weighted average shares     111,008         112,010         111,194         111,920  
                       
Net loss per share, basic and diluted $   (0.19 )   $   (0.29 )   $   (0.39 )   $   (0.53 )
                       

3D Systems Corporation Schedule 2 Unaudited Reconciliations of GAAP to Non-GAAP Measures Quarter and Nine Months Ended September 30, 2016 and 2015
 
    Quarter Ended September 30, 2016   Quarter Ended September 30, 2015
            Adjustments                 Adjustments      
  (in thousands, except per share amounts)     GAAP     Amortization and Stock-Based Compensation     Legal and Acquisition-Related     Portfolio   Re-alignment     Non-GAAP     GAAP     Amortization and Stock-Based Compensation     Legal and Acquisition-Related     Portfolio   Re-alignment     Non-GAAP
                                                             
Revenue   $   156,362     $       $   $       $   156,362     $   151,574     $       $   $   $   151,574  
Cost of sales       87,425         (83 )           (10,723 )       76,619         80,536         (81 )               80,455  
Gross profit        68,937         83             10,723         79,743         71,038         81                 71,119  
Gross profit margin       44.1 %                         51.0 %       46.9 %                         46.9 %
Operating expenses:                                                            
Selling, general and administrative        64,814         (18,286 )       (1,781 )       (35 )       44,712         83,212         (24,562 )       (11,971 )           46,679  
Research and development        26,140                         (6,072 )       20,068         22,463                             22,463  
Total operating expenses        90,954         (18,286 )       (1,781 )       (6,107 )       64,780         105,675         (24,562 )       (11,971 )           69,142  
Income (loss) from operations        (22,017 )       18,369         1,781         16,830         14,963         (34,637 )       24,643         11,971             1,977  
Interest and other expense, net        1,624                                 1,624         1,373                             1,373  
Income (loss) before income taxes        (23,641 )       18,369         1,781         16,830         13,339         (36,010 )       24,643         11,971             604  
Provision (benefit) for income taxes (a)       (2,214 )                               (2,214 )       (3,524 )       2,411         1,171             58  
Net income (loss)       (21,427 )       18,369         1,781         16,830         15,553         (32,486 )       22,232         10,800             546  
Less: net loss attributable to noncontrolling interests       (214 )                               (214 )       (237 )                           (237 )
Net income (loss) attributable to 3D Systems Corporation $   (21,213 )   $   18,369     $   1,781     $   16,830     $   15,767     $   (32,249 )   $   22,232     $   10,800     $   $   783  
                                                             
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted   $   (0.19 )                     $   0.14     $   (0.29 )                     $   0.01  
                                                             
                                                             
    Nine Months Ended September 30, 2016   Nine Months Ended September 30, 2015
            Adjustments                 Adjustments      
  (in thousands, except per share amounts)     GAAP     Amortization and Stock-Based Compensation     Legal and Acquisition-Related     Portfolio   Re-alignment     Non-GAAP     GAAP     Amortization and Stock-Based Compensation     Legal and Acquisition-Related     Portfolio   Re-alignment     Non-GAAP
                                                             
Revenue   $   467,028     $       $       $       $   467,028     $   482,800     $       $   $   $   482,800  
Cost of sales       240,167         (248 )               (10,723 )       229,196         251,151         (232 )               250,919  
Gross profit        226,861         248                 10,723         237,832         231,649         232                 231,881  
Gross profit margin       48.6 %                         50.9 %       48.0 %                         48.0 %
Operating expenses:                                                            
Selling, general and administrative        202,009         (54,693 )       (4,491 )       (35 )       142,790         237,242         (76,458 )       (17,147 )           143,637  
Research and development        67,345                         (6,072 )       61,273         70,410                             70,410  
Total operating expenses        269,354         (54,693 )       (4,491 )       (6,107 )       204,063         307,652         (76,458 )       (17,147 )           214,047  
Income (loss) from operations        (42,493 )       54,941         4,491         16,830         33,769         (76,003 )       76,690         17,147             17,834  
Interest and other expense, net        1,290                                 1,290         4,029                             4,029  
Income (loss) before income taxes        (43,783 )       54,941         4,491         16,830         32,479         (80,032 )       76,690         17,147             13,805  
Provision (benefit) for income taxes (a)       665         (1,452 )       (67 )               (854 )       (20,563 )       22,474         3,108             5,019  
Net income (loss)       (44,448 )       56,393         4,558         16,830         33,333         (59,469 )       54,216         14,039             8,786  
Less: net loss attributable to noncontrolling interests       (799 )                               (799 )       (343 )                           (343 )
Net income (loss) attributable to 3D Systems Corporation $   (43,649 )   $   56,393     $   4,558     $   16,830     $   34,132     $   (59,126 )   $   54,216     $   14,039     $   $   9,129  
                                                             
Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted   $   (0.39 )                     $   0.31     $   (0.53 )                     $   0.08  
                                                             

(a) Tax effect for the quarter ended March 31, 2016 and earlier periods was calculated quarterly, based on the Company's overall tax rate for each quarter. Tax effect for the quarter ended September 30, 2016 was calculated based on the Company's quarterly U.S. tax rate, which was 0% as a result of the valuation allowance that was recorded in the fourth quarter of 2015, in connection with GAAP net losses.
Investor Contact:	Stacey Witten	Email: Investor.relations@3dsystems.com		Media Contact: 	Timothy Miller	Email: Press@3dsystems.com

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