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3D Systems Reports Third Quarter 2021 Financial Results

ROCK HILL, S.C., Nov. 08, 2021 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the third quarter ended September 30, 2021.

Third Quarter Financial and Operational Results

  Quarter Ended September 30,
(in millions, expect per share data) 2021 2020
Revenue $156.1   $136.2  
Operating loss $(17.2)  $(67.6) 
Net income (loss) $292.7   $(72.9) 
Net income (loss) per share - basic $2.39   $(0.61) 
Net income (loss) per share - diluted $2.34   $(0.61) 
     
Non-GAAP measures for year-over-year comparisons (1)  
Non-GAAP operating income (loss) $10.6   $  
Non-GAAP net income (loss) $10.0   $(4.1) 
Non-GAAP income (loss) per share - basic $0.08   $(0.03) 
Non-GAAP income (loss) per share - diluted $0.08   $(0.03) 
Adjusted EBITDA $16.3   $7.2  

(1) See Appendix for reconciliation of non-GAAP to GAAP measures

Summary Comments on Results

Commenting on the results, President and Chief Executive Officer, Dr. Jeffrey Graves said, “In the third quarter last year we experienced the beginnings of a recovery from the depths of the COVID-19 pandemic.   Businesses were opening up, and customers were returning.   A year later, global economies are much stronger.   We still see continued challenges with COVID-19, and new challenges around supply chains, but thanks to the great work by our team here at 3D Systems, we are pleased to report another strong quarter of double-digit growth as compared to the same period in both 2020 and pre-pandemic 2019, adjusted for divestitures.   While we were delivering these results through our core portfolio of business, we also completed our divestitures of non-core assets and began the transition to a strategic growth phase.   Our focus during this phase is investing in significant opportunities that we believe will drive high-margin recurring revenue, as evidenced by our acquisition in the software space of Oqton, and the hiring of a new Chief Scientist to further advance our technology development.   More recently we made two announcements in the exciting area of regenerative medicine:   the acquisition of Volumetric Biotechnologies and the expansion of our development agreement with United Therapeutics to include two additional human organs.   The acquisition brings unique biological talent to our organization, including a new Chief Scientist for Regenerative Medicine, that we believe will allow us to expand and accelerate our growth in human and laboratory applications for bioprinting.   These investments in software, products platforms, and regenerative medicine compliment an existing business portfolio that generated $20.7 million in cash from operations during the third quarter to bolster a balance sheet that boasted $503 million of cash, ready to support additional growth.”

Dr. Graves summarized, “I couldn’t be more pleased with our performance this quarter, both organic and inorganic.   We will continue to focus investment in areas that we believe solve customers’ complex needs, drive adoption of additive manufacturing, and generate high margin, recurring revenue streams.”   

Summary of Third Quarter Results

Revenue for the third quarter of 2021 increased 14.6% to $156.1 million compared to the same period last year and increased 35.9% when excluding businesses divested in 2020 and 2021. The results reflect ongoing strength in Industrial, which had revenue growth of 4.0% to $79.7 million compared to the same period last year. Adjusted for divestitures, Industrial revenue increased 28.1% year-over-year.

Revenue from Healthcare increased 28.3% to $76.4 million, compared to the same period last year. Adjusted for divestitures, Healthcare revenue increased 44.5% year-over-year, as we saw high demand for dental applications, both printers and materials.

Gross profit margin in the third quarter of 2021 was 41.2% compared to 43.1% in the same period last year. Non-GAAP gross profit margin was 41.5% compared to 43.2% in the same period last year. Gross profit margin decreased primarily as a result of businesses divested in 2020 and 2021. Excluding the impact of divestitures, gross profit margin increased 80 basis points in the third quarter of 2021 compared to the same period last year.

Operating expenses decreased 35.4% to $81.5 million in the third quarter of 2021, compared to the same period a year ago, primarily as a result of an impairment to goodwill recorded in the third quarter 2020. On a non-GAAP basis, operating expenses were $54.1 million, an 8.0% decrease from the third quarter of the prior year. The lower non-GAAP operating expenses reflect savings achieved from cost restructuring activities and divestitures, partly offset by spending in targeted areas to support future growth.

2021 Gross Profit Margin Outlook

Updating prior guidance, on a non-GAAP basis the company expects 2021 gross profit margins to be between 41% and 43%.

Financial Liquidity

At September 30, 2021, the company had cash on hand of $502.8 million and no debt. Cash has increased $418.4 million since December 31, 2020, driven primarily by net proceeds from divestitures of $427.3 million and cash generated from operations of $62.7 million, partially offset by capital expenditures and repayment of debt.

Q3 2021 Conference Call and Webcast

3D Systems expects to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 with the Securities and Exchange Commission today, November 8, 2021. The company will host a conference call and simultaneous webcast to discuss these results tomorrow morning, which may be accessed as follows:

Date: Tuesday, November 9, 2021
Time: 8:30 a.m. Eastern Time
Listen via webcast: www.3dsystems.com/investor
Participate via telephone: 201-689-8345

A replay of the webcast will be available 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 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 revise any forward-looking statements made by management or on its behalf, whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law.

Presentation of Information in this Press Release

3D Systems reports is financial results in accordance with GAAP. To facilitate a better understanding of the impact that strategic acquisitions, non-recurring charges and certain non-cash expenses had on its financial results, management reviews certain non-GAAP measures, including non-GAAP revenue, non-GAAP revenue adjusted for divestitures, non-GAAP Cost of Sales, non-GAAP Operating Income, non-GAAP Net Income (Loss), non-GAAP Basic and Diluted Income (Loss) per Share, non-GAAP Gross Profit, non-GAAP Gross Profit Margin, non-GAAP Gross Profit Margin adjusted for divestitures, non-GAAP SG&A Expenses, non-GAAP R&D, non-GAAP Other Income and Expense and non-GAAP Operating Expenses, each of which exclude the impact of amortization of intangibles, acquisition and severance expenses, stock-based compensation expense, litigation settlements and charges related to strategic decisions and portfolio realignment, and Adjusted EBITDA, defined as non-GAAP Operating Income plus depreciation, and Adjusted EBITDA Margin, defined as Adjusted EBITDA divided by revenue, to better evaluate period-over-period performance. A reconciliation of GAAP to non-GAAP results is provided in the accompanying schedule.

3D Systems does not provide forward-looking guidance on a GAAP basis. The company is unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures without unreasonable effort because 3D Systems cannot reliably forecast legal, acquisition and divestiture expenses, restructuring expenses, product end of life adjustments and goodwill impairment, which are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.

About 3D Systems

More than 30 years ago, 3D Systems brought the innovation of 3D printing to the manufacturing industry. Today, as the leading Additive Manufacturing solutions partner, we bring innovation, performance, and reliability to every interaction - empowering our customers to create products and business models never before possible. Thanks to our unique offering of hardware, software, materials and services, each application-specific solution is powered by the expertise of our application engineers who collaborate with customers to transform how they deliver their products and services. 3D Systems’ solutions address a variety of advanced applications in Healthcare and Industrial markets such as Medical and Dental, Aerospace & Defense, Automotive and Durable Goods. More information on the company is available at www.3dsystems.com

Investor Contact: Email Contact 
Media Contact: Email Contact 

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3D Systems Corporation
Unaudited Condensed Consolidated Balance Sheets
September 30, 2021 and December 31, 2020

(In thousands, except par value) September 30, 2021 (unaudited) December 31, 2020
ASSETS   
Current assets:   
Cash and cash equivalents$502,752   $75,010  
Accounts receivable, net of reserves — $3,470 and $4,39289,926   114,254  
Inventories89,325   116,667  
Prepaid expenses and other current assets25,963   33,145  
Current assets held for sale   18,439  
Total current assets707,966   357,515  
Property and equipment, net57,720   75,356  
Intangible assets, net30,251   28,083  
Goodwill139,906   161,765  
Right of use assets44,514   48,620  
Deferred income tax asset3,475   6,247  
Assets held for sale   31,684  
Other assets21,271   23,785  
Total assets$1,005,103   $733,055  
LIABILITIES AND EQUITY   
Current liabilities:   
Current portion of long-term debt$   $2,051  
Current right of use liabilities8,176   9,534  
Accounts payable44,946   45,174  
Accrued and other liabilities78,152   69,812  
Customer deposits9,405   7,750  
Deferred revenue27,509   30,302  
Current liabilities held for sale   11,107  
Total current liabilities168,188   175,730  
Long-term debt, net of deferred financing costs   19,218  
Long-term right of use liabilities45,533   48,469  
Deferred income tax liability3,142   4,716  
Liabilities held for sale   2,952  
Other liabilities39,090   51,247  
Total liabilities255,953   302,332  
    
Commitments and contingencies (Note 14)   
    
Stockholders’ equity:   
Common stock, $0.001 par value, authorized 220,000 shares; issued 126,758 and 127,626127   128  
Additional paid-in capital1,410,576   1,404,964  
Treasury stock, at cost — 1,623 shares and 3,494 shares(10,492)  (22,590) 
Accumulated deficit(615,051)  (943,303) 
Accumulated other comprehensive loss(36,010)  (8,476) 
Total stockholders’ equity749,150   430,723  
Total liabilities and stockholders’ equity$1,005,103   $733,055  

3D Systems Corporation
Unaudited Condensed Consolidated Statements of Operations
Quarter Ended September 30, 2021 and 2020

 Quarter Ended September 30,
(in thousands, except per share amounts)2021 2020
Revenue:   
Products$108,884   $78,296  
Services47,212   57,880  
Total revenue156,096   136,176  
Cost of sales:   
Products64,252   48,213  
Services27,529   29,336  
Total cost of sales91,781   77,549  
Gross profit64,315   58,627  
Operating expenses:   
Selling, general and administrative65,737   59,065  
Research and development15,786   18,866  
Impairment of goodwill   48,300  
Total operating expenses81,523   126,231  
Loss from operations(17,208)  (67,604) 
Interest and other income (expense), net315,859   (2,419) 
Income (loss) before income taxes298,651   (70,023) 
Benefit (provision) for income taxes(5,995)  (2,866) 
Net income (loss)$292,656   $(72,889) 
    
Net income (loss) per common share:   
Basic$2.39   $(0.61) 
Diluted$2.34   $(0.61) 
    
Weighted average shares outstanding:   
Basic 122,663   118,527  
Diluted 125,289   118,527  

3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2021 and 2020

 Nine Months Ended September 30,
(in thousands)2021 2020
Cash flows from operating activities:   
Net income (loss)$328,252   $(129,764) 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
Depreciation and amortization26,292   34,830  
Stock-based compensation43,991   16,621  
Provision for inventory obsolescence and revaluation1,100   10,894  
Loss on hedge accounting de-designation and termination721   1,235  
Provision for bad debts620   1,039  
Gain on the disposition of businesses, property, equipment and other assets(351,981)  434  
Provision for deferred income taxes and reserve adjustments(9,380)    
Impairment of goodwill and assets   54,072  
Changes in operating accounts:   
Accounts receivable(2,151)  12,668  
Inventories7,095   (23,987) 
Prepaid expenses and other current assets5,338   (15,376) 
Accounts payable15,517   (9,166) 
Deferred revenue and customer deposits5,401   2,714  
Accrued and other liabilities(9,859)  6,309  
All other operating activities1,696   4,828  
Net cash provided by (used in) operating activities62,652   (32,649) 
Cash flows from investing activities:   
Purchases of property and equipment(14,814)  (11,015) 
Proceeds from sale of assets and businesses, net of cash427,664   552  
Business acquisitions, net of cash acquired(10,936)    
Purchase of noncontrolling interest(4,000)  (12,500) 
Other investing activities(2,273)  504  
Net cash provided by (used in) investing activities395,641   (22,459) 
Cash flows from financing activities:   
Proceeds from revolving credit facilities   20,000  
Payments on revolving credit facilities   (20,000) 
Repayment of borrowings/long-term debt(21,392)  (26,547) 
Proceeds from issuance of common stock   25,003  
Proceeds from inventory financing agreements   2,509  
Payments related to net-share settlement of stock-based compensation(10,386)  (5,034) 
Other financing activities(424)  296  
Net cash used in financing activities(32,202)  (3,773) 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(7,737)  526  
Net increase (decrease) in cash, cash equivalents and restricted cash418,354   (58,355) 
Cash, cash equivalents and restricted cash at the beginning of the period (a)84,711   134,617  
Cash, cash equivalents and restricted cash at the end of the period (a)$503,065   $76,262  

(a)    The amounts for cash and cash equivalents shown above include restricted cash of $540 and $952 as of September 30, 2021 and 2020, respectively, and $998 and $9,161 as of December 31, 2020, and 2019, respectively, which were included in Other assets, net, and $9,161 as of December 31, 2020, which was included in Current assets held for sale in the condensed consolidated balance sheets.

3D Systems Corporation
Income (Loss) Per Share
Quarter Ended September 30, 2021 and 2020

 Quarter Ended September 30,
(in thousands, except per share amounts)2021 2020
Numerator:   
Net income (loss)$292,656  $(72,889) 
Denominator:   
Weighted average shares - basic122,663  118,527  
Dilutive securities2,626    
Weighted average shares - diluted125,289  118,527  
    
Net income (loss) per share - basic$2.39  $(0.61) 
Net income (loss) per share - diluted$2.34  $(0.61) 

Appendix
3D Systems Corporation
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Nine Months Ended September 30, 2021 and 2020

 Quarter Ended September 30, Nine Months Ended September 30,
(in millions)2021 2020 2021 2020
GAAP Revenue - as reported$156.1   $136.2   $464.8   $384.6  
Non-GAAP Revenue156.1   136.2   464.8   384.6  
GAAP Cost of sales - as reported91.8   77.5   267.2   233.7  
Amortization, stock-based compensation & other   0.1   0.3   0.3  
Legal, acquisition and divestiture related   0.1      0.3  
Cost optimization plan, including severance costs         0.7  
Product end-of-life adjustment0.4         10.9  
Non-GAAP Cost of sales91.4   77.3   266.9   221.5  
GAAP Gross Profit - as reported64.3   58.7   197.6   150.9  
Amortization, stock-based compensation & other   0.1   0.3   0.3  
Legal, acquisition and divestiture related   0.1      0.3  
Cost optimization plan, including severance costs         0.7  
Product end-of-life adjustment0.4         10.9  
Non-GAAP Gross Profit64.7   58.9   197.9   163.1  
GAAP Gross Profit Margin41.2  %   42.5  %  
Non-GAAP Gross Profit Margin41.5  % 43.2  % 42.6  % 42.4  %
GAAP Selling, general and administrative - as reported65.7   59.1   176.8   167.2  
Amortization, stock-based compensation & other16.1   7.1   51.2   29.0  
Legal, acquisition and divestiture related11.4   0.1   13.6   0.4  
Cost optimization plan, including severance costs   11.9   1.6   13.8  
Non-GAAP Selling, general and administrative38.3   40.0   110.5   123.9  
GAAP Research and development - as reported15.8   18.9   50.0   55.1  
Cost optimization plan, including severance costs         0.1  
Non-GAAP Research and development15.8   18.9   50.0   55.0  
Goodwill impairment   48.3      48.3  
GAAP Operating Expenses - as reported81.5   126.2   226.8   270.6  
Amortization, stock-based compensation & other16.1   7.1   51.2   29.0  
Legal, acquisition and divestiture related11.4   0.1   13.6   0.4  
Cost optimization plan, including severance costs   11.9   1.6   14.0  
Goodwill impairment   48.3      48.3  
Non-GAAP Operating expenses54.1   58.8   160.4   178.9  
GAAP Operating Income (loss) - as reported(17.2)  (67.6)  (29.2)  (119.7) 
Amortization, stock-based compensation & other16.1   7.2   51.5   29.3  
Legal, acquisition and divestiture related11.4   0.2   13.6   0.7  
Cost optimization plan, including severance costs   11.9   1.6   14.7  
Product end-of-life adjustment0.4         10.9  
Goodwill impairment   48.3      48.3  
Non-GAAP Operating Income (loss)10.6      37.5   (15.8) 
Depreciation5.6   7.2   18.7   21.7  
Adjusted EBITDA16.3   7.2   56.2   5.9  
GAAP Other Income and expense, net - as reported315.9   (2.4)  354.4   (7.6) 
Legal, acquisition and divestiture related(315.5)  0.2   (354.9)    
Impairment of cost-method investments   1.1      2.2  
Non-GAAP Other Income and expense, net0.3   (1.2)  (0.5)  (5.4) 
GAAP Net Income (loss) - as reported292.7   (72.9)  328.3   (129.8) 
Amortization, stock-based compensation & other16.1   7.2   51.5   29.3  
Legal, acquisition and divestiture related(1)(299.1)  0.4   (336.2)  0.8  
Cost optimization plan, including severance costs   11.9   1.6   14.7  
Impairment of cost-method investments   1.1      2.2  
Product end-of-life adjustment0.4         10.9  
Goodwill impairment   48.3      48.3  
Non-GAAP Net Income (loss)$10.0   $(4.1)  $45.1   $(23.7) 

(1) Legal Acquisition and divestiture includes 5.1 million of income tax provision related to divestitures for the quarter and nine months Ended September 30, 2021.

3D Systems Corporation
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Nine Months Ended September 30, 2021 and 2020

 Quarter Ended
September 30,
 Nine Months Ended September 30,
 2021 2020 2021 2020
GAAP Net income (loss) per share - basic$2.39   $(0.61)  $2.69   $(1.12) 
Adjustments:       
Amortization, stock-based compensation & other0.13   0.06   0.42   0.25  
Legal, acquisition and divestiture related(2.44)     (2.75)  0.01  
Cost optimization plan, including severance costs   0.10   0.01   0.13  
Impairment of cost-method investments   0.01      0.02  
Product end-of-life adjustment         0.09  
Goodwill impairment   0.41      0.42  
Non-GAAP Net income (loss) per share - basic$0.08   $(0.03)  $0.37   $(0.20) 
        
GAAP Net income (loss) per share - diluted$2.34   $(0.61)  $2.63   $(1.12) 
Adjustments:       
Amortization, stock-based compensation & other0.13   0.06   0.41   0.25  
Legal, acquisition and divestiture related(2.39)     (2.69)  0.01  
Cost optimization plan, including severance costs   0.10   0.01   0.13  
Impairment of cost-method investments   0.01      0.02  
Product end-of-life adjustment         0.09  
Goodwill impairment   0.41      0.42  
Non-GAAP Net income (loss) per share - Diluted$0.08   $(0.03)  $0.36   $(0.20) 
        

3D Systems Corporation
Unaudited Reconciliation of Prior Years Revenue Excluding Divestitures (non-GAAP)
2019, 2020 and 2021 by Quarter

 2019
 Quarter Ended
(in millions)March 31 June 30 September 30 December 31
Revenue       
Healthcare$56.7  $63.2  $61.4  $63.3 
Industrial96.6  95.4  94.9  104.9 
Total Revenue$153.3  $158.6  $156.2  $168.2 
        
Revenue From Divestitures:       
Healthcare$11.6  $12.4  $14.1  $15.1 
Industrial29.0  30.2  29.4  29.4 
Total Revenue$40.6  $42.6  $43.5  $44.4 
        
Total Revenue (Excl. Divest.):       
Healthcare$45.1  $50.8  $47.3  $48.2 
Industrial67.5  65.2  65.5  75.6 
Total Revenue (Excl. Divest.):$112.6  $116.0  $112.7  $123.8 
   2020 
  Quarter Ended 
(in millions) March 31 June 30 September 30 December 31 
Revenue         
Healthcare $ 52.3  $ 49.1  $ 59.5  $ 85.5  
Industrial   83.3    63.6    76.7    87.1  
Total Revenue $ 135.6  $ 112.8  $ 136.2  $ 172.7  
                      
Revenue From Divestitures:                     
Healthcare $ 12.2  $ 11.7  $ 11.9  $ 14.6  
Industrial   24.8    21.1    23.6    24.6  
Total Revenue $ 37.0  $ 32.8  $ 35.6  $ 39.3  
                      
Total Revenue (Excl. Divest.):                     
Healthcare $ 40.1  $ 37.4  $ 47.6  $ 70.9  
Industrial   58.6    42.6    53.1    62.5  
Total Revenue (Excl. Divest.): $ 98.6  $ 80.0  $ 100.6  $ 133.4  
   2021 
  Quarter Ended 
(in millions) March 31 June 30 September 30 
Revenue       
Healthcare $ 72.5  $ 82.8  $ 76.4  
Industrial   73.6    79.7    79.7  
Total Revenue $ 146.1  $ 162.6  $ 156.1  
                 
Revenue From Divestitures:                
Healthcare $ 11.0  $ 13.1  $ 7.7  
Industrial   13.8    13.1    11.8  
Total Revenue $ 24.8  $ 26.3  $ 19.4  
                 
Total Revenue (Excl. Divest.):                
Healthcare $ 61.5  $ 69.7  $ 68.7  
Industrial   59.8    66.6    67.9  
Total Revenue (Excl. Divest.): $ 121.3  $ 136.3  $ 136.7  

3D Systems Corporation
Unaudited Gross Profit Margin Adjusted for Divestitures (non-GAAP)
Third Quarter 2020 and 2021

  Quarter Ended September 30, 2021
(in millions) Pre-Divestiture Divested Business Post-Divestiture
Revenue  156.1   19.4   136.7 
COGS  91.4   10.0   81.4 
Gross Profit $64.7  $9.4  $55.3 
Gross Profit Margin  41.4%      40.5%
  Quarter Ended September 30, 2020
(in millions) Pre-Divestiture Divested Business Post-Divestiture
Revenue  136.2   35.6   100.6 
COGS  77.3   16.6   60.7 
Gross Profit $58.9  $19.0  $39.9 
Gross Profit Margin  43.2%      39.7%

 


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