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3D Systems (DDD) Q1 Earnings Lag Estimates, Guidance Stable
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3D Systems Corporation’s (DDD - Free Report) earnings streak came to an end in first-quarter 2017, after three back-to-back quarters of impressive beats. The company reported adjusted earnings (including share-based compensation expense) of 2 cents per share for the quarter, which was way below the Zacks Consensus Estimate of 7 cents.
However, non-GAAP earnings came in at 6 cents per share, up 20% from the prior-year quarter figure of 5 cents. Modest top-line growth as well as a fall in operating expenses proved conducive to earnings growth.
Inside the Headlines
The 3D printer maker reported revenues of $156.4 million, reflecting a year-over-year increase of 2.5%. Stellar demand for the company’s healthcare solutions, along with steady demand for the software offerings drove the top-line performance. Revenues came in line with the Zacks Consensus Estimate of $156 million.
3D Systems’ Healthcare revenues were up 29% to $43 million year over year, primarily attributable to high demand for printers and materials from medical and dental customers. Also, Materials revenue rose 11% to $43 million, thanks to strong production orders and robust contribution from the previously acquired Vertex-Global. Software revenues totaled $20 million, flat on a year-over-year basis. The company’s Printer revenues were down 4% to $31 million.
In the quarter, gross margin expanded 50 basis points on a year-over-year basis to 51.8%, mainly driven by cost savings accrued from supply-chain betterment initiatives and manufacturing improvements.
In addition, the company’s operating expenses decreased (down 5.3%) to $89.3 million, as SG&A (down 10.3%) expenses fell significantly, stemmed by the company’s successful productivity improvement efforts. However, R&D expense (down 12.8%) was up year over year, mainly on account of a rise in focused investments in production application solutions, including Figure 4 and materials.
3D Systems Corporation Price, Consensus and EPS Surprise
During the reported quarter, 3D Systems rolled out a next-generation additive manufacturing platform, based on the company’s Figure 4 technology and NextDent materials. The company believes that the new platform will bring down cost of operations, reduce fabrication times and produce far less material waste.
Also, the company expanded its MultiJet Wax family by rolling out new models — ProJet MJP 2500W and VisiJet M2 CAST RealWax material — for use in jewelry and industrial casting. Further, it extended its 3D Sprint software across the MultiJet printer family. In addition, 3D Systems introduced four LaserForm metal materials for metal-part production in healthcare, aerospace, dental and other applications.
Also, subsequent to the quarter end, 3D Systems and United Therapeutics joined forces to develop solid-organ scaffolds for human transplants. The multi-year collaboration will integrate 3D Systems’ profound healthcare printing and precision expertise with the regenerative medicine and organ manufacturing capabilities of United Therapeutics Corporation.
Cash Flow and Balance Sheet
3D Systems ended the quarter with cash and cash equivalents of $161.7 million, down significantly from $184.9 million a year back. At the end of Mar 31, 2017, net cash generated from operating activities came in at $19.4 million, marginally up from the year-ago figure of $18.1 million.
Guidance
Concurrent with the first-quarter 2017 earnings release, the company reiterated its guidance for full-year 2017. 3D Systems anticipates revenues in the range of $643–$684 million, which would reflect year-over-year growth of 2–8% in 2017. In addition, GAAP earnings per share, as guided in the previous quarter, are likely to lie in the range of 2–6 cents per share, while non-GAAP earnings are expected to come between 51 cents per share and 55 cents per share.
To Conclude
3D Systems’ year-over-year top- and bottom-line improvements during first-quarter 2017 are attributable to a host of factors, including solid momentum of healthcare offerings, robust demand for our production printers and materials, and higher efficiency in “demand manufacturing services”. We believe the acquisition of Vertex-Global Holding B.V will unlock multiple opportunities for the billion-dollar digital dentistry space.
Also, the company’s efforts to streamline its cost structure by focusing on IT infrastructure, go-to-market and innovation are expected to stoke growth. This is driving improvements in its key processes, infrastructure and operations. In addition, the company remains bullish about the prospects of Figure 4 technology — the ultra-fast, modular Stereolithography system — designed for the production of plastic parts on the factory floor.
Despite these positives, 3D Systems’ broader market concerns have thwarted growth of the premium 3D printing company. The industry is battling a widespread decline in demand for enterprise 3D printers over the past two years. Other headwinds, including economic slowdown, inflation, currency fluctuations and commodity prices vagaries, also marred the performance of most players in the industry.
Stocks to Consider
3D Systems presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader sector include Motorola Solutions, Inc. (MSI - Free Report) , PCTEL, Inc. and NCR Corporation . While PC-Tel and Motorola sport a Zacks Rank #1 (Strong Buy), NCR Corp. holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PC-Tel generated three massive beats in the trailing four quarters, for a remarkable average positive surprise of 125%.
Motorola has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.
NCR also has an excellent earnings surprise history, with an average beat of 11.0% for the trailing four quarters, beating estimates all through.
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3D Systems (DDD) Q1 Earnings Lag Estimates, Guidance Stable
3D Systems Corporation’s (DDD - Free Report) earnings streak came to an end in first-quarter 2017, after three back-to-back quarters of impressive beats. The company reported adjusted earnings (including share-based compensation expense) of 2 cents per share for the quarter, which was way below the Zacks Consensus Estimate of 7 cents.
However, non-GAAP earnings came in at 6 cents per share, up 20% from the prior-year quarter figure of 5 cents. Modest top-line growth as well as a fall in operating expenses proved conducive to earnings growth.
Inside the Headlines
The 3D printer maker reported revenues of $156.4 million, reflecting a year-over-year increase of 2.5%. Stellar demand for the company’s healthcare solutions, along with steady demand for the software offerings drove the top-line performance. Revenues came in line with the Zacks Consensus Estimate of $156 million.
3D Systems’ Healthcare revenues were up 29% to $43 million year over year, primarily attributable to high demand for printers and materials from medical and dental customers. Also, Materials revenue rose 11% to $43 million, thanks to strong production orders and robust contribution from the previously acquired Vertex-Global. Software revenues totaled $20 million, flat on a year-over-year basis. The company’s Printer revenues were down 4% to $31 million.
In the quarter, gross margin expanded 50 basis points on a year-over-year basis to 51.8%, mainly driven by cost savings accrued from supply-chain betterment initiatives and manufacturing improvements.
In addition, the company’s operating expenses decreased (down 5.3%) to $89.3 million, as SG&A (down 10.3%) expenses fell significantly, stemmed by the company’s successful productivity improvement efforts. However, R&D expense (down 12.8%) was up year over year, mainly on account of a rise in focused investments in production application solutions, including Figure 4 and materials.
3D Systems Corporation Price, Consensus and EPS Surprise
3D Systems Corporation Price, Consensus and EPS Surprise | 3D Systems Corporation Quote
Notable Developments
During the reported quarter, 3D Systems rolled out a next-generation additive manufacturing platform, based on the company’s Figure 4 technology and NextDent materials. The company believes that the new platform will bring down cost of operations, reduce fabrication times and produce far less material waste.
Also, the company expanded its MultiJet Wax family by rolling out new models — ProJet MJP 2500W and VisiJet M2 CAST RealWax material — for use in jewelry and industrial casting. Further, it extended its 3D Sprint software across the MultiJet printer family. In addition, 3D Systems introduced four LaserForm metal materials for metal-part production in healthcare, aerospace, dental and other applications.
Also, subsequent to the quarter end, 3D Systems and United Therapeutics joined forces to develop solid-organ scaffolds for human transplants. The multi-year collaboration will integrate 3D Systems’ profound healthcare printing and precision expertise with the regenerative medicine and organ manufacturing capabilities of United Therapeutics Corporation.
Cash Flow and Balance Sheet
3D Systems ended the quarter with cash and cash equivalents of $161.7 million, down significantly from $184.9 million a year back. At the end of Mar 31, 2017, net cash generated from operating activities came in at $19.4 million, marginally up from the year-ago figure of $18.1 million.
Guidance
Concurrent with the first-quarter 2017 earnings release, the company reiterated its guidance for full-year 2017. 3D Systems anticipates revenues in the range of $643–$684 million, which would reflect year-over-year growth of 2–8% in 2017. In addition, GAAP earnings per share, as guided in the previous quarter, are likely to lie in the range of 2–6 cents per share, while non-GAAP earnings are expected to come between 51 cents per share and 55 cents per share.
To Conclude
3D Systems’ year-over-year top- and bottom-line improvements during first-quarter 2017 are attributable to a host of factors, including solid momentum of healthcare offerings, robust demand for our production printers and materials, and higher efficiency in “demand manufacturing services”. We believe the acquisition of Vertex-Global Holding B.V will unlock multiple opportunities for the billion-dollar digital dentistry space.
Also, the company’s efforts to streamline its cost structure by focusing on IT infrastructure, go-to-market and innovation are expected to stoke growth. This is driving improvements in its key processes, infrastructure and operations. In addition, the company remains bullish about the prospects of Figure 4 technology — the ultra-fast, modular Stereolithography system — designed for the production of plastic parts on the factory floor.
Despite these positives, 3D Systems’ broader market concerns have thwarted growth of the premium 3D printing company. The industry is battling a widespread decline in demand for enterprise 3D printers over the past two years. Other headwinds, including economic slowdown, inflation, currency fluctuations and commodity prices vagaries, also marred the performance of most players in the industry.
Stocks to Consider
3D Systems presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader sector include Motorola Solutions, Inc. (MSI - Free Report) , PCTEL, Inc. and NCR Corporation . While PC-Tel and Motorola sport a Zacks Rank #1 (Strong Buy), NCR Corp. holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PC-Tel generated three massive beats in the trailing four quarters, for a remarkable average positive surprise of 125%.
Motorola has a striking earnings surprise history for the last four quarters, having beaten estimates all through, for an impressive average beat of 16.4%.
NCR also has an excellent earnings surprise history, with an average beat of 11.0% for the trailing four quarters, beating estimates all through.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>