A month has gone by since the last earnings report for 3D Systems (
DDD Quick Quote DDD - Free Report) . Shares have lost about 8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is 3D Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
3D Systems’ Q4 Loss Narrower Than Expected, Sales Top
3D Systems reported a fourth-quarter 2022 non-GAAP loss of 6 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The bottom line compared unfavorably with the prior-year quarter’s earnings of 9 cents per share.
In the fourth quarter of 2022, 3D Systems reported revenues of $132.7 million, down 12% from the year-ago quarter, which outpaced the consensus mark of $132.3 million. Excluding the impact of business divestments in 2022 and on a constant currency basis, revenues decreased 7.6% year over year.
3D Systems’ fourth-quarter performance reflected impacts of inflationary pressure, foreign exchange risks and supply chain disruptions, among other ongoing macroeconomic constraints.
Quarter in Detail
In the fourth quarter, product revenues represented 71.4% of the total revenues and decreased 19.4% to $94.7 million. Revenues from Services, which accounted for 28.6% of revenues, climbed 14.1% year over year to $38 million.
Revenues from the Healthcare segment fell 18.5% year over year to $60.7 million. The figure decreased 5.5% from the prior quarter. Excluding the impact of business divestments, the segment’s revenues decreased 16.6% year over year.
The Industrial Division revenues decreased 5.7% year over year to $72 million while it went up by 5.7% sequentially. Excluding the impact of business divestments, the unit’s revenues increased 1.1%. The unit witnessed solid demand for products as well as materials.
During the fourth quarter of 2022, 3D Systems’ non-GAAP gross profit decreased 18.6% year over year to $54.2 million. Consequently, the non-GAAP gross profit margin contracted 320 basis points (bps) to 40.9%. This decrease was because of year-over-year product mix changes, due to divestitures and increased supply chain disruptions.
Non-GAAP operating expenses flared up 18% to $64.1 million. The increase was driven by spending related to future growth, which includes expenses from acquisitions, research and development and corporate infrastructure.
Non-GAAP operating loss was $9.9 million compared with the year-ago operating income of $12.4 million.
Adjusted EBITDA was negative $4.8 million. The margin of negative 3.6% reflected the inflationary impact on input costs and gradual investments for portfolio & business growth.
Balance Sheet Details
The company exited the fourth quarter with cash, cash equivalents and short-term investments of $568.7 million, lower than the prior quarter $609.4 million.
As of Dec 31, 2022, 3D Systems had a total debt of $449.5 million, up from the previous quarter’s $448.9 million.
In 2022, the company utilized $68.4 million of cash from operating activities.
For the full-year 2023, 3D Systems reported revenues of $538 million, indicating a slump of 12.6% year over year. However, excluding the impact of business divestments, annual revenues surged 3.3% year over year. The year-over-year increase in top-line results reflect continued strength in the Industrial segment, growing demand from Healthcare customers, offset by reduced sales to specific dental market customers.
The company reported a non-GAAP loss of 23 cents per share compared with earnings of 45 cents reported a year ago.
Non-GAAP gross margin contracted 270 bps to 39.8%. Non-GAAP operating expenses increased 22.1% to $241.1 million.
Non-GAAP operating loss was $26.9 million in 2022 against operating income of $33.5 million a year ago. Adjusted EBITDA was negative $5.8 million for the full-year 2023. The margin stood at negative 1.1%.
3D Systems expects 2023 revenues to be between $545 million and $575 million.
The company projects non-GAAP gross margin to be 40-42%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
The consensus estimate has shifted 10% due to these changes.
Currently, 3D Systems has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
3D Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.