Summary Comments on Results
Commenting on the third quarter results, Dr. Jeffrey Graves, President and CEO of 3D Systems stated, “Our third quarter revenue results reflected increasing headwinds from the current macroeconomic and geopolitical environment. With inflation taking a toll on consumer discretionary spending, and an increasingly conservative stance by our customers on new manufacturing capital investments, we experienced sharp declines in our dental orthodontics business and, more generally, in new production printer sales in the quarter. While we believe these headwinds will continue into 2024, with inflation beginning to show signs of moderation and continuing positive indications of interest in the adoption of additive manufacturing by customers in both our industrial and healthcare markets, we believe these challenges will abate over the short to medium term, returning our company, and the industry in total, to sustained long-term growth.”
Dr. Graves continued, “Given the pressure we are seeing in the near-term on sales, our immediate priority is to reduce operating costs and drive internal efficiencies to support profitability and cash performance, while preserving our key investments in new technology platforms that will support the exciting long-term growth we see in our customers’ expanding applications for additive manufacturing in their production environments. As one of the largest companies in our industry, we have the scale and the financial strength to make the investments required to deliver on these initiatives. As such, in October we announced a restructuring plan that will deliver roughly $50 million of savings by the end of 2024, with the majority being implemented by the end of the first quarter. These efforts will include continued optimization of our manufacturing operations and supply chain, the power of which has already been demonstrated in our third quarter gross margin and EBITDA performance, which reflected progress made over the last year. It will also include workforce reductions, elimination of significant third party spend and the rationalization of geographic locations across the company. With this continued focus on execution, we will emerge from this period stronger than ever, ready to leverage our market leading breadth of metal and polymer technologies, and our world-class application expertise to support our global customer base as they increasingly adopt additive manufacturing in their production environments.”
Dr. Graves concluded, "Looking to the future, while we will continue to monitor opportunities for increased scale that would accompany value-creating consolidation in our industry, we are focused on executing our internal efficiency initiatives while investing for the exciting growth opportunities we see ahead. As we look to 2024, we are on a path to release a record number of new products, including market-leading production printers for both metal and polymer systems, exciting new materials for both industrial and healthcare applications, and advanced software offerings. With these new solutions, brought together through our application experts who provide unique solutions to meet our customers’ production needs, we are very well positioned to deliver exciting growth and sustained profitability as the global headwinds ultimately retreat. And, as we look to the horizon, our progress in Regenerative Medicine offers yet another chapter to our growth story. One that we believe will be truly exceptional.”
Summary of
Third Quarter
Results
Revenue for the third quarter of 2023 decreased 6.4% to $123,791 compared to the same period last year, and revenue on a constant currency basis decreased 8.5%. The decline in revenue primarily reflects lower sales to certain dental orthodontic market customers due to macroeconomic factors that are negatively impacting demand. Revenues in the third quarter 2023 also benefited by approximately $4,500 from progress related to technical milestones in our Regenerative Medicine business.
Healthcare Solutions revenue for the third quarter 2023 decreased 18.3% to $52,429 compared to the same period last year.
Industrial Solutions revenue for the third quarter 2023 increased 4.9% to $71,362 compared to the same period last year.
Gross profit margin for the third quarter 2023 was 44.7% compared to 39.8% in the same period last year. Non-GAAP gross profit margin was 44.8% compared to 39.9% in the same period last year. Gross profit margin increased primarily due to improved operational efficiencies and favorable mix. Gross profit margin also benefited from progress related to technical milestones in our Regenerative Medicine business.
Net loss attributable to 3D Systems Corporation decreased by $25,694 to a loss of $11,704 in the third quarter of 2023 compared to the same period in the prior year. The decrease in net loss attributable to 3D Systems Corporation primarily reflects a reduction in operating expenses, including the reduction in earnout liability associated with a previous acquisition, lower incentive compensation expense and operational efficiencies. The decrease in net loss attributable to 3D Systems Corporation also reflects favorable mix, progress related to technical milestones in our Regenerative Medicine business and an increase in interest income, partially offset by an impairment of intangible assets.
Adjusted EBITDA increased by $5,047 to $4,726 in the third quarter of 2023 compared to the same period last year. Despite the unfavorable impact of lower volumes from the dental orthodontics markets, the increase in Adjusted EBITDA primarily reflects improved operational efficiencies, favorable mix and lower incentive compensation expense. Adjusted EBITDA also benefited from progress related to technical milestones in our Regenerative Medicine business.
Financial Liquidity
At September 30, 2023, the company had cash and cash equivalents and short-term investments of $445,554, a decrease of $123,183 since December 31, 2022. The decrease resulted primarily due to cash used in operations of $71,893, capital expenditures of $20,995, acquisitions and other investments of $29,241, and taxes paid related to net share settlement of equity awards of $4,752. At September 30, 2023, the company had total debt net of deferred financing costs of $451,520.
Q3
2023
Conference Call and Webcast
The company will host a conference call and simultaneous webcast to discuss these results tomorrow, which may be accessed as follows:
Date: November 8, 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.
