8-K
3D Systems Corp (DDD)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2023
_______________________________
3D SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
_______________________________
| Delaware | 001-34220 | 95-4431352 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
333 Three D Systems Circle
Rock Hill, South Carolina 29730
(Address of Principal Executive Offices) (Zip Code)
(803) 326-3900
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.001 per share | DDD | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition. On May 8, 2023, 3D Systems Corporation (the “Company”) issued a press releases announcing the Company’s financial results for the first quarter ended March 31, 2023 (the “Press Release”). A copy of the Press Release is furnished herewith as Exhibit 99.1 and is incorporated into this Item 2.02 by reference. The information in this Item 2.02 (and in the Press Release) shall not be deemed “filed” with the Securities and Exchange Commission (the “SEC”) for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”). Item 2.05. Costs Associated with Exit or Disposal Activities.
On May 8, 2023, the Company announced the next phase of its multi-faceted restructuring initiative intended to improve operating efficiencies throughout the organization and drive long-term value creation. This phase of the restructuring initiative includes a reduction of headcount by approximately 6% of the Company’s workforce, with the majority of the workforce reduction being made in Corporate and Business support functions that are predominantly located in the US and Europe. The headcount reduction is expected to be completed in the third quarter of 2023. The Company expects this initiative will reduce operating expenses by approximately $4.0 to $6.0 million in 2023 and provide annualized savings of approximately $9.0 million and $11.0 million beginning in 2024. The Company expects to incur cash charges in the range of $3.5 to $4.5 million predominantly related to severance costs. The Company may incur additional charges in 2024 as it finalizes all of the actions to be taken.
Certain of the foregoing statements are not statements of historical or current facts and are therefore 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 SEC, 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 of the date hereof. The Company 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, accept as required by law.
Item 7.01. Regulation FD Disclosure.
On May 8, 2023, the Company issued a press release announcing the Company’s restructuring plan. A copy of this press release is furnished herewith as Exhibit 99.2 and is incorporated into this Item 7.01 by reference.
Included in the Press Release is an announcement that the Company plans to hold a conference call and webcast at 8:30 a.m., Eastern Time, on Tuesday, May 9, 2023, to discuss its first quarter March 31, 2023 financial results and other matters relating to the Company’s plans and operations. A copy of the Press Release, which contains additional information regarding how to access the conference call and webcast and how to listen to a recorded playback of the call after it is completed, is furnished herewith as Exhibit 99.1 and incorporated into this Item 7.01 by reference. The slides to be presented on the webcast are furnished herewith as Exhibit 99.3 and incorporated into this Item 7.01 by reference.
The information in this Item 7.01 (and in the Press Release, Exhibit 99.2 and Exhibit 99.3) shall not be deemed “filed” with the SEC for purposes of the Exchange Act, nor incorporated by reference in any registration statement filed by the Company under the Securities Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Press Release issued by 3D Systems Corporation, dated May 8, 2023. |
|---|---|
| 99.2 | Press Release issued by 3D Systems Corporation, dated May 8, 2023, announcing restructuring plan. |
| 99.3 | Investor information to be presented by 3D Systems Corporation on May 9, 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| 3D SYSTEMS CORPORATION | ||
|---|---|---|
| Date: May 9, 2023 | By: | /s/ Michael Turner |
| Michael Turner | ||
| Executive Vice President and Chief Finance Officer |
EdgarFiling EXHIBIT 99.1
3D Systems Reports First Quarter 2023 Financial Results
ROCK HILL, S.C., May 08, 2023 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE:DDD) announced today its financial results for the first quarter ended March 31, 2023.
First Quarter Financial Results and Recent Business Highlights
(All numbers are unaudited and are presented in thousands, except per share amounts or as otherwise noted)
- Q1 2023 revenue of $121,236 decreased 8.8% compared to Q1 2022 a decrease of 6.5% on a constant currency basis^(1)^
- Revenue performance reflects continued weakness in the dental orthodontics market, partially offset by strong double-digit growth in medical and industrial markets on a constant currency basis
- Net loss of $29,421, diluted loss per share of $0.23, and diluted non-GAAP loss per share^(2)^ of $0.09
- Negative Adjusted EBITDA^(2)^ of $10,094 reflects impacts of lower total sales volume, inflationary impacts on our input costs, and continued investments in future growth
- Confirming annual revenue guidance of $545-$575 million and raising Adjusted EBITDA^(2)^ guidance to greater than $2 million
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except per share data) | 2023 | 2022 | ||||
| Revenue | $ | 121,236 | $ | 133,001 | ||
| Operating (loss) | $ | (33,396 | ) | $ | (23,232 | ) |
| Net (loss) income | $ | (29,421 | ) | $ | (26,799 | ) |
| Basic (loss) income per share | $ | (0.23 | ) | $ | (0.21 | ) |
| Diluted (loss) income per share | $ | (0.23 | ) | $ | (0.21 | ) |
| Non-GAAP measures for year-over-year comparisons:^(2)^ | ||||||
| Non-GAAP gross profit margin | 39.0 | % | 40.6 | % | ||
| Adjusted EBITDA | $ | (10,094 | ) | $ | 1,923 | |
| Non-GAAP diluted (loss) income per share | $ | (0.09 | ) | $ | (0.06 | ) |
^(1)^To assist in the analysis of the company’s revenue trends, the company calculated the impact of foreign exchange on period-over-period revenue growth by applying the foreign exchange rates used to translate 2022 non-US functional currency revenue to 2023 non-US functional currency revenue. ^(2)^See “Presentation of Information in this Press Release” below for a description, and the Appendix for the reconciliation of non-GAAP measurements to the most closely comparable GAAP measure.
Summary Comments on Results
Commenting on first quarter results, Dr. Jeffrey Graves, President and CEO of 3D Systems said, “We are off to a solid start in 2023, and believe we are well-positioned to execute on our full-year revenue and profitability plans for this year. As expected, we saw a return to our historical seasonality performance this year, with first quarter 2023 revenues mirroring the percentage of full year performance we experienced in 2021. At a more detailed level, first quarter revenues were driven in part by continued softness in our dental orthodontic market, which we attribute to reported sluggishness in consumer discretionary spending, in combination with pre-planned customer inventory reduction efforts. We expect these effects to moderate to some extent in the second half of the year. Off-setting this weakness, our other major end-markets remained robust, driven by continued adoption of additive manufacturing in production environments in the US and Europe. These effects were seen in the medical markets, where our personalized health service and increasing focus on point-of-care solutions continues to fuel robust growth rates, in excess of 20%. Industrial markets also remained strong, including commercial rocketry and aerospace propulsion, industrial products, and consumer goods, all of which contributed to strong organic revenue growth rates of over 9%. With the broadest range of additive manufacturing technology in the industry, we continue to invest strongly in R&D to modernize our platforms while remaining committed to delivering on our efficiency and productivity efforts. This balanced approach will enable us to meet our commitment of delivering positive Adjusted EBITDA and free cash flow for the full year of 2023, while supporting the key application developments that will deliver sustained, long-term organic growth in the years ahead.”
Dr. Graves continued, “With regard to our growth initiatives, we are pleased to report exciting progress across many areas of our developing businesses, including our early success with Oqton software for dental laboratories, where adoption and renewal rates are very strong, fueled by efficiency gains that these labs are experiencing with the Oqton platform. In our industrial markets, we made public for the first time our multi-year collaboration with TE Connectivity on electrical connectors, which holds promise to be an extremely important market for our additive manufacturing technology in the years ahead. In the medical arena, our market-leading personalized healthcare solutions, which we are now moving into select point-of-care hospital environments, offered what we feel is a glimpse into the future of customized orthopedic implants, as demonstrated at Salzburg’s University Hospital in February. Finally, in the area of regenerative medicine, as the quarter ended, we were extremely pleased to see our Systemic Bio subsidiary be awarded its first contract from a major pharmaceutical company. This multi-year program will leverage our 3D printed organ-on-a-chip technology to study the effects of new drug therapies in the fight against cancer. We anticipate more contracts with additional pharmaceutical companies to follow later this year. Finally, we are harvesting the gains in efficiency that our operations in-sourcing has provided and continue to look for additional cost synergies in multiple parts of our business. In support of our commitment to generate positive Adjusted EBITDA and free cash flow, we have expanded on our restructuring efforts that we announced a couple months ago to realize even more cost benefits, as announced in a separate release today. As a result, we are increasing our full year 2023 expectation to deliver $2 million or better in Adjusted EBITDA, while maintaining the previously announced outlook for revenue, non-GAAP gross profit margin and breakeven or better free cash flow.”
Dr. Graves concluded, "While no one knows how the winds of the global economy and ongoing geopolitical unrest may blow, with our strong balance sheet, our outlook for positive Adjusted EBITDA and free cash flow performance in 2023, and exciting markets for growth available to us in the years ahead, we are confident in our game plan and more optimistic than ever about our future."
Summary of First Quarter Results
Revenue for the first quarter of 2023 decreased 8.8% to $121,236 compared to the same period last year, and revenue on a constant currency basis decreased 6.5%. The decline of revenue primarily reflects lower sales to certain dental market customers due to macroeconomic factors that are negatively impacting the demand for elective dental procedures, partially offset by continued solid product and service demand across other areas of the business. First quarter 2023 revenue from our non-dental markets increased 12.3% on a constant currency basis compared to first quarter 2022.
Healthcare Solutions revenue decreased 24.3% to $48,725 compared to the same period last year. Healthcare Solutions revenue on a constant currency basis decreased 23.4% year over year due to continued softness in our dental orthodontic market, which was down 46.2% versus the same period last year. Healthcare Solutions revenue from our non-dental markets increased 22.4% on a constant currency basis, versus the same period last year.
Industrial Solutions revenue increased 5.6% to $72,511 compared to the same period last year. Industrial Solutions, revenue on a constant currency basis increased 9.3% year over year.
Gross profit margin in the first quarter of 2023 was 38.8% compared to 40.4% in the same period last year. Non-GAAP gross profit margin was 39.0% compared to 40.6% in the same period last year. Gross profit margin decreased primarily due to input cost inflation and unfavorable product mix.
Net loss attributable to 3D Systems Corporation decreased by $2,622 to a loss of $29,421 in the first quarter of 2023 compared to the same period in the prior year. The decrease in Net loss attributable to 3D Systems Corporation primarily reflects lower total sales volume, inflationary impacts on our input costs, and continued investments in future growth partially offset by an increase in interest income earned on cash and cash equivalents resulting from increased interest rates.
Adjusted EBITDA decreased by $12,017 to a loss of $10,094 in the first quarter of 2023 compared to the same period last year. The decrease in Adjusted EBITDA primarily reflects lower total sales volume, inflationary impacts on our input costs, and continued investments in future growth.
Updating 2023 Outlook
3D Systems is raising its full-year 2023 Adjusted EBITDA financial guidance and confirming its 2023 revenue, non-GAAP gross profit margin and free cash flow financial guidance as follows:
| Full Year 2023 Guidance as of: | ||
|---|---|---|
| February 28, 2023 | May 8, 2023 | |
| Revenue: | $545 - $575 million | $545 - $575 million |
| Non-GAAP Gross Profit Margin: | 40% - 42% | 40% - 42% |
| Adjusted EBITDA: | Break even or better | $2 million or better |
| Free Cash Flow: | Break even or better | Break even or better |
For purposes of the above guidance, free cash flow is defined as Adjusted EBITDA less changes in working capital less capital expenditures.
Financial Liquidity
At March 31, 2023, the company had cash and cash equivalents and short-term investments of $529,925, a decrease of $38,812 since December 31, 2022. The decrease resulted primarily due to cash used in operations of $27,722, capital expenditures of $9,027, and taxes paid related to net share settlement of equity awards of $2,115. At March 31, 2023, the company had total debt net of deferred financing costs of $450,179.
Q1 2023 Conference Call and Webcast
The company will host a conference call and simultaneous webcast to discuss these results on May 9, 2023, which may be accessed as follows:
Date: Tuesday, May 9, 2023 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 its financial results in accordance with GAAP. Management also reviews and reports certain non-GAAP measures, including: non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP diluted income (loss) per share, and Adjusted EBITDA. These non-GAAP measures exclude certain items that management does not view as part of 3D Systems’ core results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort underlying business trends and results. Management believes that the non-GAAP measures provide useful additional insight into underlying business trends and results and provide meaningful information regarding the comparison of period-over-period results. Additionally, management uses the non-GAAP measures for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. 3D Systems’ non-GAAP measures are not calculated in accordance with or as required by GAAP and may not be calculated in the same manner as similarly titled measures used by other companies. These non-GAAP measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.
To calculate the non-GAAP measures, 3D Systems excludes the impact of the following items:
- amortization of intangible assets, a non-cash expense, as 3D Systems’ intangible assets were primarily acquired in connection with business combinations;
- costs incurred in connection with acquisitions and divestitures, such as legal, consulting and advisory fees;
- stock-based compensation expenses, a non-cash expense;
- charges related to restructuring and cost optimization plans, impairment charges, including goodwill, and divestiture gains or losses;
- certain compensation expense related to the 2021 Volumetric acquisition; and
- costs, including legal fees, related to significant or unusual litigation matters.
Amortization of intangibles and acquisition and divestiture-related costs are excluded from non-GAAP measures as the timing and magnitude of business combination transactions are not predictable, can vary significantly from period to period and the purchase price allocated to amortizable intangible assets and the related amortization period are unique to each acquisition. Amortization of intangible assets will recur in future periods until such intangible assets have been fully amortized. While intangible assets contribute to the company’s revenue generation, the amortization of intangible assets does not directly relate to the sale of the company’s products or services. Additionally, intangible assets amortization expense typically fluctuates based on the size and timing of the company’s acquisition activity. Accordingly, the company believes excluding the amortization of intangible assets enhances the company’s and investors’ ability to compare the company’s past financial performance with its current performance and to analyze underlying business performance and trends. Although stock-based compensation is a key incentive offered to certain of our employees, the expense is non-cash in nature, and we continue to evaluate our business performance excluding stock-based compensation; therefore, it is excluded from non-GAAP measures. Stock-based compensation expenses will recur in future periods. Charges related to restructuring and cost optimization plans, impairment charges, including goodwill, divestiture gains or losses, and the costs, including legal fees, related to significant or unusual litigation matters are excluded from non-GAAP measures as the frequency and magnitude of these activities may vary widely from period to period. Additionally, impairment charges, including goodwill, are non-cash. Furthermore, the company believes the costs, including legal fees, related to significant or unusual litigation matters are not indicative of our core business' operations. Finally, 3D Systems excludes contingent consideration recorded as compensation expense related to the 2021 Volumetric acquisition from non-GAAP measures as management evaluates financial performance excluding this expense, which is viewed by management as similar to acquisition consideration.
The matters discussed above are tax effected, as applicable, in calculating non-GAAP diluted income (loss) per share.
Adjusted EBITDA, defined as net income, plus income tax (provision) benefit, interest and other income (expense), net, stock-based compensation expense, amortization of intangible assets, depreciation expense, and other non-GAAP adjustments, all as described above, is used by management to evaluate performance and helps measure financial performance period-over-period.
A reconciliation of GAAP to non-GAAP financial measures is provided in the accompanying schedules.
3D Systems does not provide forward-looking guidance for certain measures on a GAAP basis. The company is unable to provide a quantitative reconciliation of forward-looking non-GAAP gross profit margin, Adjusted EBITDA, and free cash flow to the most directly comparable forward-looking GAAP measures without unreasonable effort because certain items, including litigation costs, acquisition expenses, stock-based compensation expense, intangible assets amortization expense, restructuring expenses, and goodwill impairment charges 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 Solutions 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:<br>Media Contact: | investor.relations@3dsystems.com<br>press@3dsystems.com |
|---|
3D Systems Corporation Unaudited Consolidated Balance Sheets March 31, 2023 and December 31, 2022
| (in thousands, except par value) | December 31, 2022 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 525,898 | $ | 388,134 | ||
| Short-term investments | 4,027 | 180,603 | |||
| Accounts receivable, net of reserves — 2,922 and 3,114 | 94,677 | 93,886 | |||
| Inventories | 147,365 | 137,832 | |||
| Prepaid expenses and other current assets | 38,242 | 33,790 | |||
| Total current assets | 810,209 | 834,245 | |||
| Property and equipment, net | 62,150 | 58,072 | |||
| Intangible assets, net | 88,064 | 90,230 | |||
| Goodwill | 385,754 | 385,312 | |||
| Right-of-use assets | 57,090 | 42,746 | |||
| Deferred income tax asset | 7,214 | 7,038 | |||
| Other assets | 31,813 | 28,970 | |||
| Total assets | 1,442,294 | $ | 1,446,613 | ||
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY | |||||
| Current liabilities: | |||||
| Current lease liabilities | 10,542 | $ | 9,036 | ||
| Accounts payable | 51,415 | 53,826 | |||
| Accrued and other liabilities | 54,159 | 55,571 | |||
| Customer deposits | 6,321 | 6,911 | |||
| Deferred revenue | 31,575 | 26,464 | |||
| Total current liabilities | 154,012 | 151,808 | |||
| Long-term debt, net of deferred financing costs | 450,179 | 449,510 | |||
| Long-term lease liabilities | 55,231 | 41,779 | |||
| Deferred income tax liability | 7,680 | 7,631 | |||
| Other liabilities | 43,744 | 44,181 | |||
| Total liabilities | 710,846 | 694,909 | |||
| Redeemable non-controlling interest | 1,762 | 1,760 | |||
| Stockholders’ equity: | |||||
| Common stock, 0.001 par value, authorized 220,000 shares; shares issued 131,164 and 131,207 as of March 31, 2023 and December 31, 2022, respectively | 131 | 131 | |||
| Additional paid-in capital | 1,553,038 | 1,547,597 | |||
| Accumulated deficit | (773,383 | ) | (743,962 | ) | |
| Accumulated other comprehensive loss | (50,100 | ) | (53,822 | ) | |
| Total stockholders’ equity | 729,686 | 749,944 | |||
| Total liabilities, redeemable non-controlling interest and stockholders’ equity | 1,442,294 | $ | 1,446,613 |
All values are in US Dollars.
3D Systems Corporation Unaudited Consolidated Statements of Operations Three Months Ended March 31, 2023, 2022
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except per share amounts) | 2023 | 2022 | ||||
| Revenue: | ||||||
| Products | $ | 84,388 | $ | 100,551 | ||
| Services | 36,848 | 32,450 | ||||
| Total revenue | 121,236 | 133,001 | ||||
| Cost of sales: | ||||||
| Products | 49,880 | 58,472 | ||||
| Services | 24,258 | 20,734 | ||||
| Total cost of sales | 74,138 | 79,206 | ||||
| Gross profit | 47,098 | 53,795 | ||||
| Operating expenses: | ||||||
| Selling, general and administrative | 58,285 | 55,415 | ||||
| Research and development | 22,209 | 21,612 | ||||
| Total operating expenses | 80,494 | 77,027 | ||||
| (Loss) from operations | (33,396 | ) | (23,232 | ) | ||
| Interest and other income (expense), net | 3,875 | (2,283 | ) | |||
| (Loss) before income taxes | (29,521 | ) | (25,515 | ) | ||
| (Provision) benefit for income taxes | (8 | ) | (1,284 | ) | ||
| Net (loss) before redeemable non-controlling interest | (29,529 | ) | (26,799 | ) | ||
| Less: net (loss) attributable to redeemable non-controlling interest | (108 | ) | — | |||
| Net (loss) attributable to 3D Systems Corporation | $ | (29,421 | ) | $ | (26,799 | ) |
| Net (loss) per common share | ||||||
| Basic | $ | (0.23 | ) | $ | (0.21 | ) |
| Diluted | $ | (0.23 | ) | $ | (0.21 | ) |
| Weighted average shares outstanding: | ||||||
| Basic | 129,158 | 126,728 | ||||
| Diluted | 129,158 | 126,728 |
3D Systems Corporation Unaudited Consolidated Statements of Cash Flows Three Months Ended March 31, 2023 , 2022
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | ||||
| Cash flows from operating activities: | ||||||
| Net (loss) income before redeemable non-controlling interest | $ | (29,529 | ) | $ | (26,799 | ) |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||
| Depreciation, amortization and accretion of debt discount | 9,220 | 9,147 | ||||
| Stock-based compensation | 10,292 | 12,658 | ||||
| Unrealized gain on exchange rate | — | (439 | ) | |||
| Loss on short-term investments | 29 | — | ||||
| Non-cash operating lease expense | 1,903 | 1,709 | ||||
| Provision for inventory obsolescence and revaluation | 2,926 | (517 | ) | |||
| Provision for bad debts | 13 | 1,076 | ||||
| Loss (gain) on the disposition of businesses, property, equipment and other assets | 423 | 137 | ||||
| Benefit for deferred income taxes and reserve adjustments | (259 | ) | 466 | |||
| Asset impairment | — | 40 | ||||
| Changes in operating accounts: | ||||||
| Accounts receivable | (208 | ) | 3,173 | |||
| Inventories | (12,327 | ) | (8,822 | ) | ||
| Prepaid expenses and other current assets | (4,146 | ) | 2,225 | |||
| Accounts payable | (2,947 | ) | 277 | |||
| Deferred revenue and customer deposits | 3,120 | 1,901 | ||||
| Accrued and other liabilities | (6,994 | ) | (8,679 | ) | ||
| All other operating activities | 762 | (2,678 | ) | |||
| Net cash (used in) provided by operating activities | (27,722 | ) | (15,125 | ) | ||
| Cash flows from investing activities: | ||||||
| Purchases of property and equipment | (9,027 | ) | (4,079 | ) | ||
| Purchases of short-term investments | — | (366,005 | ) | |||
| Sales and maturities of short-term investments | 176,856 | 6,170 | ||||
| Acquisitions and other investments, net of cash acquired | — | (9,335 | ) | |||
| Other investing activities | — | 40 | ||||
| Net cash provided by (used in) investing activities | 167,829 | (373,209 | ) | |||
| Cash flows from financing activities: | ||||||
| Purchase of non-controlling interests | — | (2,300 | ) | |||
| Taxes paid related to net-share settlement of equity awards | (2,115 | ) | (10,052 | ) | ||
| Other financing activities | (179 | ) | (166 | ) | ||
| Net cash (used in) provided by financing activities | (2,294 | ) | (12,518 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 114 | 464 | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | 137,927 | (400,388 | ) | |||
| Cash, cash equivalents and restricted cash at the beginning of the year^(a)^ | 391,975 | 789,970 | ||||
| Cash, cash equivalents and restricted cash at the end of the period (a) | $ | 529,902 | $ | 389,582 |
(a) The amounts for cash and cash equivalents shown above include restricted cash of $115 and $114 as of March 31, 2023 and December 31, 2022, respectively, which are included in prepaid expenses and other current assets. In addition, included in cash and cash equivalents above as of March 31, 2023 and December 31, 2022 is $3,889 and $3,727, respectively, of restricted cash, which, is included in other non-current assets. The amounts for cash and cash equivalents shown above include restricted cash of $312 as of March 31, 2022, and December 31, 2021.
Appendix 3D Systems Corporation Unaudited Reconciliations of GAAP to Non-GAAP Measures Three Months Ended March 31, 2023 , 2022
Constant Currency Revenue ^(4)^
| Three Months Ended March 31, | Constant Currency^(1)^ | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | Change | % Change | FX Effect^(2)^ | % Change^(3)^ | |||||
| Healthcare Solutions | $ | 48,725 | $ | 64,345 | ) | (24.3)% | $ | (564 | ) | (23.4)% | |
| Industrial Solutions | 72,511 | 68,656 | 5.6% | (2,496 | ) | 9.3% | |||||
| Total revenue | $ | 121,236 | $ | 133,001 | ) | (8.8)% | $ | (3,060 | ) | (6.5)% |
All values are in US Dollars.
^(1)^ To assist in the analysis of the Company’s revenue trends, the Company estimated the impact of foreign exchange on year-over-year revenue growth by recasting revenue for the three months ended March 31, 2023 by applying the foreign exchange rates used to translate 2022 non-US functional currency revenue to 2023 non-US functional currency revenue. ^(2)^ Represents the estimated impact on "as reported" revenue due to changes in foreign currency exchange rates ^(3)^ Represents the % increase or decrease in revenue excluding the estimated "FX effect" ^(4)^Amounts in table may not foot due to rounding
Gross Profit and Gross Profit Margin ^(1)^
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | ||||||
| Gross Profit | Gross Profit Margin | Gross Profit | Gross Profit Margin | |||||
| GAAP | $ | 47,098 | 38.8 | % | $ | 53,795 | 40.4 | % |
| Amortization expense included in Cost of sales | 136 | 140 | ||||||
| Non-GAAP^(2)^ | $ | 47,235 | 39.0 | % | $ | 53,935 | 40.6 | % |
^(1)^Amounts in table may not foot due to rounding ^(2)^ Calculated as non-GAAP gross profit as a percentage of total revenue.
Net (Loss) Income to Adjusted EBITDA ^(1)^
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | ||||
| Net (loss) income attributable to 3D Systems Corporation | $ | (29,421 | ) | $ | (26,799 | ) |
| Interest (income) expense, net | (3,805 | ) | (165 | ) | ||
| Provision for income taxes | 8 | 1,284 | ||||
| Depreciation expense | 5,312 | 5,818 | ||||
| Amortization expense | 3,239 | 2,678 | ||||
| EBITDA | (24,667 | ) | (17,184 | ) | ||
| Stock-based compensation expense | 10,292 | 12,658 | ||||
| Acquisition and divestiture-related expense | 2,677 | 3,682 | ||||
| Legal expense | 79 | — | ||||
| Restructuring expense | 1,703 | 319 | ||||
| Redeemable non-controlling interest | (108 | ) | — | |||
| Other (income) expense, net | (70 | ) | 2,448 | |||
| Adjusted EBITDA | $ | (10,094 | ) | $ | 1,923 |
^(1)^Amounts in table may not foot due to rounding
Appendix 3D Systems Corporation Unaudited Reconciliations of GAAP to Non-GAAP Measures Three Months Ended March 31, 2023 , 2022
Diluted (Loss) Income per Share ^(1)^
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (in dollars) | 2023 | 2022 | ||||
| Diluted (loss) income per share | $ | (0.23 | ) | $ | (0.21 | ) |
| Stock-based compensation expense | 0.08 | 0.10 | ||||
| Amortization expense | 0.03 | 0.02 | ||||
| Acquisition and divestiture-related expense | 0.02 | 0.03 | ||||
| Restructuring expense | 0.01 | — | ||||
| Non-GAAP diluted (loss) income per share | $ | (0.09 | ) | $ | (0.06 | ) |
^(1)^Amounts in table may not foot due to rounding
EdgarFiling
EXHIBIT 99.2
3D Systems Announces Next Phase of Restructuring Initiative
ROCK HILL, S.C., May 08, 2023 (GLOBE NEWSWIRE) -- 3D Systems (NYSE:DDD) today announced the next phase of its multi-faceted restructuring initiative to improve operating efficiencies throughout the organization and drive long-term value creation. This next evolution of restructuring will reduce headcount by approximately 6%, with the majority of reductions being made in Corporate and Business support functions which are predominantly located in the US and Europe. The company expects this initiative to reduce operating expenses by approximately $4.0 - $6.0 million in 2023 and to provide annualized savings between approximately $9 million to $11 million beginning in 2024. The company expects to incur cash charges in the range of $3.5 - $4.5 million for severance-related costs related to this initiative during 2023. This reduction in operating costs is a result of investments made in improved business processes, rationalization of operations, improved operational efficiencies, and integration of acquisitions completed over the last two years. Having been announced today, the majority of these changes will be fully executed in the current quarter, with the remainder occurring in the second half of the year.
In addition to today’s announcement, the company is providing further detail related to its previously announced initiative in February 2023 to improve manufacturing efficiencies in its European metal printer operations. These changes will include the insourcing of certain metal printer platforms into its Riom, France manufacturing facility, co-locating the manufacturing with the current engineering of these products. This approach should improve cycle time from development to production while improving operating efficiencies. The company is reaffirming the expectation for its European insourcing initiative to reduce operating expenses in 2023 by approximately $2.5 - $3.5 million and provide annualized savings of approximately $5.5 million to $7.0 million beginning in 2024.
Commenting on these initiatives, 3D Systems’ President and CEO, Dr. Jeffrey Graves said, “We are very proud to offer our customers the broadest range of additive manufacturing technologies in the industry, including both metal and polymer hardware systems, an enormous range of value-added materials, and the leading suite of software solutions in the industry, which we bring together through specific customer applications that enable rapid adoption in production environments. Building from this success, our challenge now is to leverage our scale to bring increased operating efficiencies to benefit our customers and shareholders. The actions we have announced over the course of this year are expected to generate a combined savings of approximately $6.5 - $9.5 million in 2023, and $14.5 million to $18.0 million in annualized savings beginning in 2024. These actions reflect our commitment to generating positive adjusted EBITDA this year, which we now expect to be over $2.0M for the full year 2023, with continued momentum in 2024 and beyond. These efforts are an extension of the ongoing work we began in late-2020 to streamline our operational footprint, focus our efforts, and better leverage our rich history in additive manufacturing. We continue to believe that right-sizing our cost structure and delivering positive adjusted EBITDA and free cash flow in 2023 will further improve 3D Systems’ already strong balance sheet and enhance our flexibility to continue investing in the most critical areas of R&D, operations, customer service, and an efficient corporate infrastructure that is required to capitalize on the exciting market opportunities across our Industrial, Healthcare and emerging biologics markets. We believe this focused approach will unlock sustained value creation for our customers, shareholders, and society for years to come.”
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 of 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.
About 3D Systems More than 35 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: investor.relations@3dsystems.com Media Contact: press@3dsystems.com
EdgarFiling
Exhibit 99.3
First Quarter 202 3 Financial Results May 9 , 202 3
2 Welcome and Participants Dr. Jeffrey Graves President & Chief Executive Officer Michael Turner Executive Vice President & Chief Financial Officer Andrew Johnson Executive Vice President, Chief Corporate Development Officer & Chief Legal Officer Mick McCloskey Vice President, Treasury & Investor Relations To participate via phone, please dial: 1 - 201 - 689 - 8345
Certain statements made in this presentation 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 . 3 D 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 Further, we encourage you to review “Risk Factors” in Part 1 of our Annual Report on Form 10 - K and Part II of our Quarterly Reports on Form 10 - Q filed with the SEC as well as other information about us in our filings with the SEC . These are available at www . SEC . gov . 3 Forward Looking Statements
Dr. Jeffrey Graves President & Chief Executive Officer 4
End - to - End Solutions for Major Markets 5 Patient - matched acetabular tri - flange, for complex tumor resection and reconstruction Healthcare Industrial Collaboration with TE Connectivity to jointly develop an AM solution for electrical connectors
Cranial Surgery Success Story 6 University Hospital Salzburg Salzburg, Austria - April 2023 1st clinical implantation of PEEK cranial device printed on a Kumovis printer
Oqton Software for Dental Applications Advanced AI - enabled Manufacturing OS accelerates automation of digital production workflows in dental labs using additive manufacturing to improve efficiencies and reduce cost • Several hundred dental labs now using the Oqton platform to manage their operations • Overwhelmingly positive customer feedback; churn rates ranging from - 20% to - 30% • Production efficiency gains exceeded 50% in first year of implementation • LTV / CAC > 5
Systemic Bio secures its first multi - year contract with top pharmaceutical company for oncology drug discovery and development efforts Progress in Regenerative Medicine h - VIOS 16 Cells on proprietary h - VIOS biomaterial show desired morphology and distribution. 2000 µm scale bar Vasculature perfused with green fluorescent beads Algorithm - generated vasculature design Microscope image of bioprinted scaffold Microscope image of perfused scaffold Industry - leading capacity of sterile scaffold production in new state - of - the - art cleanroom facility 100+ scaffolds/week
Expanding Our Portfolio Organically and Inorganically 9 April 2023 – 3D Systems agrees to acquire Wematter • Gravity Essential, Essential+ and Enterprise line of SLS printers • 20 Material types • Affordable, turnkey, closed - loop solutions that make SLS accessible for smaller environments Wematter SLS SLA 750 Dual • On track for Summer release • 2x speed and 3x throughput improvements • Industry leader in print size, speed, accuracy and resolution • Unmatched finish and mechanical performance
10 Driving Profitability in 2023 and Beyond x Expanded restructuring effort x Managing cost structure to align with uncertain macroeconomic environment x Previous investments in productivity enabling us to harvest more cost efficiencies x Increasing FY 2023 Non - GAAP adjusted EBITDA guidance to reflect impact of restructuring
Michael Turner Chief Financial Officer 11
12 Seasonality and FY’23 Revenue Expectations Historic (2021) Revenue by Quarter* Q4’21 Q3’21 Q2’21 Q1’21 28% 25% 25% 22% Expect quarterly distribution of revenue in 2023 to be similar to 2021 • FY’22 did not follow historical seasonality patterns • Q1’23 in - line with normal seasonality • Reiterating FY’23 guidance for revenue between $545 million - $575 million *Excludes revenue from divestitures
13 First Quarter Revenue Summary ($ in millions except percentages) See Appendix for Reconciliation of Revenue adjusted for constant currency Expect mid - teens revenue growth for FY’23 ex. dental markets on a constant currency basis - 46% +22% +9% 1Q’23 revenue ex. dental markets grew over 12% from prior year on a constant currency basis
14 Gross Profit Margin (Non - GAAP) Q1 2023 vs. Q1 2022 • Input cost inflation • Unfavorable product mix Q1 2023 vs. Q4 2022 • Normal seasonal sales trends impact fixed cost leverage See A ppendix for a reconciliation of N on - GAAP Gross Profit Margin 41% 38% 40% 41% 39% 30% 35% 40% 45% 50% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Non - GAAP GPM Reiterate expectation for FY’23 Non - GAAP GP Margins between 40 - 42%
15 Earnings (non - GAAP) • Adjusted EBITDA decreased to negative $10 million dollars in Q1 2023 compared to Q1 2022 • Net loss of $(29.4) million dollars • Diluted loss per share of $(0.23), and diluted non - GAAP loss per share of $(0.09) • Above results due to: • Lower sales volumes in dental orthodontics market • Inflationary impact on input costs • Continued investments in growth areas Adj. EBITDA Margin % is defined as Non - GAAP Operating Income plus Depreciation divided by Revenue See A ppendix for a reconciliation of Non - GAAP Operating Income and Adjusted EBITDA. See Appendix for reconciliation of GAAP and Non - GAAP Net Loss per share. Q1’23 performance in - line with internal expectations; remain committed to FY’23 EBITDA profitability
16 Strong Balance Sheet • Ended the quarter with $ 530 million dollars of cash and short - term investments on hand • Sufficient cash to support organic growth, including in regenerative medicine • Continued focus on operational execution and integration of recent acquisitions Committed to achieving break even or better free cash flow in FY’23
17 Revising FY 2023 Outlook Guidance Commentary Metric $545 million - $575 million Reiterate Revenue 40% - 42% Reiterate Non - GAAP Gross Margin % $2 million or better INCREASE Non - GAAP Adjusted EBITDA Break even or better Reiterate Free Cash Flow
18 Q&A Session 1 - 201 - 689 - 8345
Dr. Jeffrey Graves President & Chief Executive Officer 19
20 Thank You Find out more at: www.3dsystems.com
©202 2 3D Systems, Inc. | All Rights Reserved. Appendix
22 Presentation of Information 3 D Systems reports its financial results in accordance with GAAP . Management also reviews and reports certain non - GAAP measures, including : non - GAAP revenue excluding divestitures and on a constant currency basis (sometimes referred to as excluding divestitures and FX effects), non - GAAP Gross profit, non - GAAP Gross profit margin, non - GAAP Operating expenses, non - GAAP Operating (loss)/income, non - GAAP Interest and other income/(expense), net, non - GAAP Net income (loss), non - GAAP Basic and Diluted Income (Loss) per Share, adjusted EBITDA and adjusted EBITDA Margin . These non - GAAP measures exclude certain special items that management does not view as part of 3 D Systems’ underlying results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort underlying business trends and results . Management believes that the non - GAAP measures provide useful additional insight into underlying business trends and results and provide a more meaningful comparison of period - over - period results . Additionally, management uses the non - GAAP measures for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets . 3 D Systems’ non - GAAP measures are not calculated in accordance with or as required by GAAP and may not be calculated the same as similarly titled measures used by other companies . These non - GAAP measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP . A reconciliation of GAAP to non - GAAP financial measures is provided in the accompanying schedules in the Appendix . 3 D Systems does not provide forward - looking guidance for certain measures on a GAAP basis . The company is unable to provide a quantitative reconciliation of forward - looking non - GAAP gross profit margins, Adjusted EBITDA and free cash flow to the most directly comparable forward - looking GAAP measures without unreasonable effort because certain items, including litigation costs, acquisition expenses, stock - compensation expense, intangible amortization expense, restructuring expenses, and goodwill impairment, 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 .
Balance Sheets 23
Statement of Operations 24
Statement of Cash Flows 25
Reconciliation of Revenue to Non - GAAP Revenue (in thousands except percentages, unaudited) 26
Gross Profit and Gross Profit Margin Reconciliation (in thousands except percentages, unaudited) 27
Adjust EBITDA reconciliation (in thousands except percentages, unaudited) 28
Earnings per Share Reconciliation (in dollars, unaudited) 29