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3D Systems' (DDD) Q3 Earnings & Revenues Top Estimates, Up Y/Y

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3D Systems (DDD - Free Report) delivered strong third-quarter 2021 results, wherein both earnings and revenues not only surpassed the respective Zacks Consensus Estimate but also improved significantly year over year.

The company reported non-GAAP earnings of 8 cents per share beating the Zacks Consensus Estimate of 5 cents per share. The bottom line compared favorably with the year-ago quarter’s loss of 3 cents per share. Strong bottom-line performance was primarily driven by higher revenues and cost savings achieved from restructuring initiatives.

In the third quarter of 2021, the company reported revenues of $156.1 million, up 14.6% from the year-ago quarter but down 4% from the previous quarter. Excluding the impact of business divestments in 2020 and 2021, revenues surged 35.9% year over year.

The top line outpaced the consensus mark of $146.3 million. The year-over-year increase in top-line results reflect continued strength in the Industrial segment, growing demand from Healthcare customers and acceleration beyond pre-pandemic performance levels.

Product revenues, representing 69.8% of the total revenues, were $108.9 million, up 39.1% year over year. Meanwhile, revenues from Services, which accounted for 30.2% of revenues, plunged 18% year over year to $47.2 million.

3D Systems Corporation Price, Consensus and EPS Surprise 3D Systems Corporation Price, Consensus and EPS Surprise

3D Systems Corporation price-consensus-eps-surprise-chart | 3D Systems Corporation Quote

Quarterly Details

In the third quarter, revenues from the Healthcare segment increased 28.3% year over year to $76.4 million but slumped 7.7% from the prior quarter. Excluding the impact of business divestments in 2020 and 2021, the segment’s revenues increased 44.5% year over year. Double-digit growth in medical applications and strong demand for dental materials contributed to the growth.

The industrial division revenues increased 4% year over year to $79.7 million, while remaining flat sequentially. Excluding the impact of business divestments in 2020 and 2021, the unit’s revenues increased 28.1%. The company witnessed solid demand for products as well as materials.

Operating Details

During the third quarter of 2021, 3D Systems’ non-GAAP gross profit increased 9.8% year over year to $64.7 million. However, non-GAAP gross profit margin contracted 170 basis points (bps) to 41.5%. Also, gross margin contracted 620 bps sequentially due to non-recurring write-downs related to equipment and inventory.

Non-GAAP operating expenses were $54.1 million, down 8% from the year-earlier quarter. This decline in non-GAAP operating expenses resulted from savings achieved from cost restructuring activities, offset by spending in targeted areas for future growth.

Balance Sheet Details

The global leader in additive manufacturing solutions closed the third quarter with cash and cash equivalents of $502.8 million, significantly higher from the prior quarter’s $131.8 million. As of Sep 30, 2021, the company held no debt, indicating a strong balance sheet for strategic investments.

3D Systems had an unused revolving credit facility worth $100 million, with full availability at present. It generated $20.7 million of cash from operating activities during the third quarter. During the first nine months of 2021, the company used $62.7 million of operating cash flow.

Zacks Rank & Key Picks

3D Systems currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer and technology sector are Salesforce (CRM - Free Report) , Advanced Micro Devices (AMD - Free Report) and Adobe (ADBE - Free Report) . While Salesforce sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and Adobe carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Salesforce, Advanced Micro Devices and Adobe are currently pegged at 16.8%, 46.2% and 19.1%, respectively.