Form 8-K 3D SYSTEMS CORP For: Mar 14
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): March 14, 2018
3D SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-34220 | 95-4431352 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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 March 14, 2018, 3D Systems Corporation (the “Company”) issued a press release setting forth the Company’s results of operations for its fourth quarter and year ended December 31, 2017. A copy of the Company’s press release is furnished herewith as Exhibit 99.1 and is incorporated into this Item 2.02 by reference. The information in this Item (and in such press release) shall not be deemed “filed” with the SEC for purposes of the Securities Exchange Act of 1934, as amended nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
Item 7.01. Regulation FD Disclosure.
Included in the press release mentioned above is an announcement that the Company plans to hold a conference call and webcast at 4:30 p.m., Eastern Time, on Wednesday, March 14, 2018, to discuss its fourth quarter and year ended December 31, 2017 financial results and other matters relating to the Company’s plans and operations. A copy of this 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 to this Current Report on Form 8-K and incorporated by reference herein. The slides to be presented on the webcast are furnished herewith as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference. The information contained in this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” with the SEC nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. 99.1 Press Release dated March 14, 2018. 99.2 Webcast slides dated March 14, 2018.
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: March 14, 2018 | By: | /s/ Andrew M. Johnson |
| Andrew M. Johnson | ||
| Executive Vice President, Chief Legal Officer and Secretary | ||
EXHIBIT INDEX
| Exhibit No. | Exhibit Description | |||
| 99.1 | Press Release dated March 14, 2018. | |||
| 99.2 | Webcast slides dated March 14, 2018. |
EXHIBIT 99.1
3D Systems Reports Fourth Quarter and Full Year 2017 Financial Results
ROCK HILL, S.C., March 14, 2018 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE: DDD) announced today its financial results for the fourth quarter and full year ended December 31, 2017.
For the fourth quarter of 2017, the company reported seven percent revenue growth to $177.3 million compared to $165.9 million in the fourth quarter of the previous year. The company reported a fourth quarter GAAP loss of $0.08 per share compared to earnings of $0.05 per share in the prior year, and non-GAAP earnings of $0.05 per share compared to non-GAAP earnings of $0.15 per share in the fourth quarter of 2016.
“We are pleased with the growth in revenue driven by healthcare, materials, software and on demand manufacturing, as well as more balanced regional execution experienced in the fourth quarter,” commented Vyomesh Joshi (VJ), chief executive officer, 3D Systems. “While we still have work to do, we made significant progress last year, and we believe our investments in go-to-market combined with improved processes and better execution have started to show returns and position the company well going forward.”
Demand across categories fueled growth during the fourth quarter, driven by strong execution in EMEA and improved execution in the Americas and Asia. The company reported revenue growth in healthcare, materials, software and on demand manufacturing as well as higher printer unit sales in the fourth quarter.
The company reported gross profit margin of 48.2 percent for the fourth quarter of 2017 compared to 50.0 percent in the fourth quarter of the prior year. Gross profit cost reduction initiatives in 2017 were offset by additional investments in services and on demand manufacturing.
For the fourth quarter of 2017, operating expenses were $91.2 million compared to $78.8 million in the prior year period. SG&A expenses increased 18 percent to $68.2 million, which included continued investment in go-to-market and IT transformation. R&D expenses increased nine percent over the fourth quarter of 2016 to $23.0 million, including continued investments in support of several new products the company unveiled in November 2017, which are planned to be commercially available over the coming months.
”We continued our strategic investments in organizational and operational improvements which we believe are critical for long term success,” commented John McMullen, executive vice president and chief financial officer. “We made progress in many areas this year, from better analytics, processes and operational cadence to IT infrastructure and supply chain optimization. We continue to be focused on the decisions and actions needed to drive appropriate cost structure, while at the same time, positioning the company for long term growth.”
During the quarter, the company generated $8.2 million of cash from operations and ended the quarter with $136.3 million of cash on hand.
For the full year 2017, revenue increased two percent to $646.1 million compared to $633.0 million in 2016. The company reported a GAAP loss of $0.59 per share for the full year 2017 compared to a loss of $0.35 per share in the prior year, and reported a non-GAAP loss of $0.02 per share for the full year 2017 compared to a non-GAAP earnings of $0.46 per share in 2016.
“We made significant progress in 2017 to stabilize and turn around the company, and we put in place the foundation for scalable growth. This is a multi-year transformation process, but we are pleased with the progress we have made thus far to position the company for long-term growth and profitability. We are focused on execution, driving operational efficiencies and bringing our new innovative and disruptive products to market to drive the shift to 3D production,” concluded Joshi.
Q4 2017 Conference Call and Webcast
The company expects to file its Form 10-K for the twelve months ended December 31, 2017 with the Securities and Exchange Commission on March 14, 2018. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Wednesday, March 14, 2018, at 4:30 p.m. Eastern Time.
Date: Wednesday, March 14, 2018
Time: 4:30 p.m. Eastern Time
Listen via Internet: www.3dsystems.com/investor
Participate via telephone:
Within the U.S.: 1-877-407-8291
Outside the U.S.: 1-201-689-8345
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 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.
Presentation of Information in This Press Release
To facilitate a better understanding of the impact that strategic acquisitions, non-recurring charges and certain non-cash expenses had on its financial results, the company reported non-GAAP measures excluding the impact of amortization of intangibles, non-cash interest expense, acquisition and severance expenses, stock-based compensation expense, litigation settlements and charges related to strategic decisions and portfolio realignment. A reconciliation of GAAP to non-GAAP results is provided in the accompanying schedule.
About 3D Systems
3D Systems provides comprehensive 3D products and services, including 3D printers, print materials, on-demand manufacturing services and digital design tools. Its ecosystem supports advanced applications from the product design shop to the factory floor to the operating room. 3D Systems’ precision healthcare capabilities include simulation, Virtual Surgical Planning, and printing of medical and dental devices as well as patient-specific surgical instruments. As the originator of 3D printing and a shaper of future 3D solutions, 3D Systems has spent its 30 year history enabling professionals and companies to optimize their designs, transform their workflows, bring innovative products to market and drive new business models.
More information on the company is available at www.3dsystems.com
Tables Follow
| 3D Systems Corporation | |||||||||
| Unaudited Condensed Consolidated Balance Sheets | |||||||||
| December 31, 2017 and 2016 | |||||||||
| December 31, | December 31, | ||||||||
| (in thousands, except par value) | 2017 | 2016 | |||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 136,344 | $ | 184,947 | |||||
| Accounts receivable, net of reserves — $10,258 (2017) and $12,920 (2016) | 129,879 | 127,114 | |||||||
| Inventories | 103,903 | 103,331 | |||||||
| Insurance proceeds receivable 1 | 50,000 | — | |||||||
| Prepaid expenses and other current assets | 18,296 | 17,558 | |||||||
| Total current assets | 438,422 | 432,950 | |||||||
| Property and equipment, net | 97,521 | 79,978 | |||||||
| Intangible assets, net | 98,783 | 121,501 | |||||||
| Goodwill | 230,882 | 181,230 | |||||||
| Long term deferred income tax asset | 4,020 | 8,123 | |||||||
| Other assets, net | 27,136 | 25,371 | |||||||
| Total assets | $ | 896,764 | $ | 849,153 | |||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current portion of capitalized lease obligations | $ | 644 | $ | 572 | |||||
| Accounts payable | 55,607 | 40,514 | |||||||
| Accrued and other liabilities | 65,899 | 55,187 | |||||||
| Accrued litigation settlement 1 | 50,000 | — | |||||||
| Customer deposits | 5,765 | 5,857 | |||||||
| Deferred revenue | 29,214 | 28,275 | |||||||
| Total current liabilities | 207,129 | 130,405 | |||||||
| Long term portion of capitalized lease obligations | 7,078 | 7,587 | |||||||
| Long term deferred income tax liability | 8,983 | 17,601 | |||||||
| Other liabilities | 48,754 | 57,988 | |||||||
| Total liabilities | 271,944 | 213,581 | |||||||
| Redeemable noncontrolling interests | 8,872 | 8,872 | |||||||
| Commitments and contingencies | |||||||||
| Stockholders’ equity: | |||||||||
| Common stock, $0.001 par value, authorized 220,000 shares; issued 117,025 (2017) and 115,113 (2016) | 115 | 115 | |||||||
| Additional paid-in capital | 1,326,250 | 1,307,428 | |||||||
| Treasury stock, at cost — 2,219 shares (2017) and 1,498 shares (2016) | (8,203 | ) | (2,658 | ) | |||||
| Accumulated deficit | (677,772 | ) | (621,787 | ) | |||||
| Accumulated other comprehensive loss | (21,536 | ) | (53,225 | ) | |||||
| Total 3D Systems Corporation stockholders' equity | 618,854 | 629,873 | |||||||
| Noncontrolling interests | (2,906 | ) | (3,173 | ) | |||||
| Total stockholders’ equity | 615,948 | 626,700 | |||||||
| Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ | 896,764 | $ | 849,153 | |||||
| 1 The Company recorded a current liability and an offsetting insurance proceeds receivable related to an agreed upon $50,000 settlement in connection with the Company's securities litigation. | |||||||||
| 3D Systems Corporation | ||||||||||||||||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||||||||
| Quarter and Full Year Ended December 31, 2017 and 2016 | ||||||||||||||||
| Quarter Ended December 31, | Full Year Ended December 31, | |||||||||||||||
| (in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenue: | ||||||||||||||||
| Products | $ | 102,349 | $ | 99,977 | $ | 379,126 | $ | 380,383 | ||||||||
| Services | 74,915 | 65,960 | 266,943 | 252,582 | ||||||||||||
| Total revenue | 177,264 | 165,937 | 646,069 | 632,965 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| Products | 52,758 | 48,746 | 203,527 | 195,428 | ||||||||||||
| Services | 39,048 | 34,301 | 137,703 | 127,786 | ||||||||||||
| Total cost of sales | 91,806 | 83,047 | 341,230 | 323,214 | ||||||||||||
| Gross profit | 85,458 | 82,890 | 304,839 | 309,751 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 68,195 | 57,767 | 264,185 | 259,776 | ||||||||||||
| Research and development | 22,966 | 21,050 | 94,627 | 88,395 | ||||||||||||
| Total operating expenses | 91,161 | 78,817 | 358,812 | 348,171 | ||||||||||||
| Income (loss) from operations | (5,703 | ) | 4,073 | (53,973 | ) | (38,420 | ) | |||||||||
| Interest and other expense, net | (3,425 | ) | (102 | ) | (3,548 | ) | (1,392 | ) | ||||||||
| Income (loss) before income taxes | (9,128 | ) | 3,971 | (57,521 | ) | (39,812 | ) | |||||||||
| Provision (benefit) for income taxes | 971 | (1,212 | ) | 7,802 | (547 | ) | ||||||||||
| Net income (loss) | (10,099 | ) | 5,183 | (65,323 | ) | (39,265 | ) | |||||||||
| Less: net income (loss) attributable to noncontrolling interests | 35 | (47 | ) | 868 | (846 | ) | ||||||||||
| Net income (loss) attributable to 3D Systems Corporation | $ | (10,134 | ) | $ | 5,230 | $ | (66,191 | ) | $ | (38,419 | ) | |||||
| Net income (loss) per share available to 3D Systems Corporation common stockholders — basic and diluted | $ | (0.08 | ) | $ | 0.05 | $ | (0.59 | ) | $ | (0.35 | ) | |||||
| Other comprehensive income (loss): | ||||||||||||||||
| Pension adjustments, net of taxes | $ | 325 | $ | (956 | ) | $ | 220 | $ | (902 | ) | ||||||
| Gain on liquidation of non-US entity | — | 288 | — | 288 | ||||||||||||
| Foreign currency translation gain (loss) | 5,943 | (18,525 | ) | 31,728 | (12,958 | ) | ||||||||||
| Total other comprehensive income (loss) | 6,268 | (19,193 | ) | 31,948 | (13,572 | ) | ||||||||||
| Less foreign currency translation gain attributable to noncontrolling interests | 98 | 37 | 259 | 105 | ||||||||||||
| Other comprehensive income (loss) attributable to 3D Systems Corporation | 6,170 | (19,230 | ) | 31,689 | (13,677 | ) | ||||||||||
| Comprehensive loss | (3,831 | ) | (14,010 | ) | (33,375 | ) | (52,837 | ) | ||||||||
| Less comprehensive income (loss) attributable to noncontrolling interests | 133 | (10 | ) | 1,127 | (741 | ) | ||||||||||
| Comprehensive loss attributable to 3D Systems Corporation | $ | (3,964 | ) | $ | (14,000 | ) | $ | (34,502 | ) | $ | (52,096 | ) | ||||
| 3D Systems Corporation | ||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||
| Full Year Ended December 31, 2017 and 2016 | ||||||||
| Full Year Ended December 31, | ||||||||
| (In thousands) | 2017 | 2016 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (65,323 | ) | $ | (39,265 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 62,041 | 60,535 | ||||||
| Stock-based compensation | 27,260 | 31,295 | ||||||
| Lower of cost or market adjustment | 12,883 | 11,053 | ||||||
| Impairment of assets | 2,427 | 8,618 | ||||||
| Provision for bad debts | 1,051 | 1,552 | ||||||
| Benefit of deferred income taxes | (5,567 | ) | (6,566 | ) | ||||
| (Gain) loss on the disposition of property and equipment | — | 1,465 | ||||||
| Changes in operating accounts, net of acquisitions: | ||||||||
| Accounts receivable | 3,987 | 26,255 | ||||||
| Inventories | (17,716 | ) | (20,656 | ) | ||||
| Prepaid expenses and other current assets | (49,834 | ) | (3,895 | ) | ||||
| Accounts payable | 12,448 | (4,975 | ) | |||||
| Accrued and other current liabilities | 50,209 | (7,670 | ) | |||||
| All other operating activities | (7,925 | ) | (265 | ) | ||||
| Net cash provided by operating activities | 25,941 | 57,481 | ||||||
| Cash flows from investing activities: | ||||||||
| Cash paid for acquisitions, net of cash assumed | (34,291 | ) | — | |||||
| Purchases of property and equipment | (30,881 | ) | (16,567 | ) | ||||
| Additions to license and patent costs | (1,159 | ) | (1,132 | ) | ||||
| Proceeds from disposition of property and equipment | 273 | 350 | ||||||
| Purchase of noncontrolling interest | (2,250 | ) | (3,533 | ) | ||||
| Other investing activities | (2,351 | ) | (1,000 | ) | ||||
| Net cash used in investing activities | (70,659 | ) | (21,882 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments related to net-share settlement of stock-based compensation | (5,545 | ) | (2,871 | ) | ||||
| Payments on earnout consideration | (3,206 | ) | — | |||||
| Repayment of capital lease obligations | (437 | ) | (1,055 | ) | ||||
| Net cash used in financing activities | (9,188 | ) | (3,926 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 5,303 | (2,369 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (48,603 | ) | 29,304 | |||||
| Cash and cash equivalents at the beginning of the period | 184,947 | 155,643 | ||||||
| Cash and cash equivalents at the end of the period | $ | 136,344 | $ | 184,947 | ||||
| 3D Systems Corporation | ||||||||||||||
| Schedule 1 | ||||||||||||||
| Income (Loss) Per Share | ||||||||||||||
| Quarter and Full Year Ended December 31, 2017 and 2016 | ||||||||||||||
| Quarter Ended December 31, | Full Year Ended December 31, | |||||||||||||
| (in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| Numerator for basic and diluted net income (loss) per share: | ||||||||||||||
| Net income (loss) attributable to 3D Systems Corporation | $ | (10,134 | ) | $ | 5,230 | $ | (66,191 | ) | $ | (38,419 | ) | |||
| Denominator for basic and diluted net loss per share: | ||||||||||||||
| Weighted average shares for basic net earnings per share | 111,817 | 111,174 | 111,554 | 111,189 | ||||||||||
| Add effect of dilutive securities 1 | — | 4,019 | — | — | ||||||||||
| Weighted average shares for diluted net earnings per share | 111,817 | 115,193 | 111,554 | 111,189 | ||||||||||
| Earnings per share: | ||||||||||||||
| Basic earnings (loss) per share | $ | (0.08 | ) | $ | 0.05 | $ | (0.59 | ) | $ | (0.35 | ) | |||
| Diluted earnings (loss) per share | $ | (0.08 | ) | $ | 0.05 | $ | (0.59 | ) | $ | (0.35 | ) | |||
| 1 For periods resulting in a net loss, the effect of dilutive securities, including non-vested stock options, restricted stock awards and RSUs, were excluded from the denominator for the calculation of diluted net loss per share because their inclusion would be anti-dilutive. | ||||||||||||||
| 3D Systems Corporation | ||||||||||||||||
| Schedule 2 | ||||||||||||||||
| Unaudited Reconciliations of GAAP to Non-GAAP Measures | ||||||||||||||||
| Quarter and Full Year Ended December 31, 2017 and 2016 | ||||||||||||||||
| Quarter Ended December 31, | Full Year Ended December 31, | |||||||||||||||
| ($ in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| GAAP Net income (loss) attributable to 3D Systems Corporation | $ | (10.1 | ) | $ | 5.2 | $ | (66.2 | ) | $ | (38.4 | ) | |||||
| Adjustments: | ||||||||||||||||
| Amortization, stock-based compensation & other 1 | 15.1 | 12.7 | 62.9 | 78.3 | ||||||||||||
| Legal and acquisition-related 2 | (1.4 | ) | — | (0.1 | ) | 4.5 | ||||||||||
| Portfolio restructuring 3 | — | — | — | 6.1 | ||||||||||||
| Impairment of cost-method investments 4 | 1.7 | — | 1.7 | — | ||||||||||||
| Tax effect of adjustments 5 | — | (1.2 | ) | — | 0.3 | |||||||||||
| Non-GAAP net income (loss) attributable to 3D Systems Corporation | $ | 5.3 | $ | 16.7 | $ | (1.7 | ) | $ | 50.8 | |||||||
| Non-GAAP net income (loss) per share available to 3D Systems common stock holders - basic and diluted 6 | $ | 0.05 | $ | 0.15 | $ | (0.02 | ) | $ | 0.46 | |||||||
| 1 For the quarter ended December 31, 2017, the adjustment included $0.1 in COGS and $15.0 in SG&A. For the quarter ended December 31, 2016, the adjustment included $0.1 in COGS and $12.6 in SG&A. For the year ended December 31, 2017, the adjustment included $0.4 in COGS and $62.5 in SG&A. For the year ended December 31, 2016, the adjustment included $11.1 in COGS and $67.2 in SG&A. | ||||||||||||||||
| 2 For the quarter ended December 31, 2017, the adjustment included ($1.4) in SG&A. For the year ended December 31, 2017, the adjustment included ($0.3) in SG&A and $0.2 in interest and other expense, net. For the year ended December 31, 2016 the adjustment included $4.5 in SG&A. | ||||||||||||||||
| 3 For the year ended December 31, 2016, the adjustment included $6.1 in R&D. | ||||||||||||||||
| 4 The Company has minority investments of less than 20% ownership in enterprises that benefit from, or are powered by its technology portfolio. The value of each of these investments is assessed periodically, and impairment recorded when required. For the quarter and year ended December 31, 2017, the adjustment included $1.7 in interest and other expense, net. The Company excluded this amount as it is not related to on-going operations, and intends to exclude these impairment amounts from non-GAAP net income going forward. For the quarter and year ended December 31, 2016, the Company recorded a $1.2 impairment, but did not record an adjustment to non-GAAP net income. | ||||||||||||||||
| 5 Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for each quarter ended after March 31, 2016 was calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to valuation allowances in connection with GAAP net losses. The amount in the fourth quarter of 2016 also includes $1.2 related to an adjustment for a prior period. | ||||||||||||||||
| 6 Denominator based on weighted average shares used in the GAAP EPS calculation. | ||||||||||||||||
Investor Contact: Stacey Witten Media Contact: Greg Caldwell
Email: [email protected] Email: [email protected]
EXHIBIT 99.2
Fourth Quarter and Full Year 2017 March 14, 2018
Welcome and Participants • Vyomesh Joshi – President & Chief Executive Officer • John McMullen – Executive Vice President & Chief Financial Officer • Andy Johnson – Executive Vice President & Chief Legal Officer • Stacey Witten – Vice President, Investor Relations To participate via phone, please dial: In the US : 1 - 877 - 407 - 8291 Outside the US: 1 - 201 - 689 - 8345 2
Forward Looking Statements This presentation contains certain statements that are not statements of historical or current facts are forward - looking stateme nts within the meaning of the Private Securities Litigation Reform Act of 1995. Forward - looking statements include statements concerning plans, objectives, goals, strategies, expectations , intentions, projections, developments, future events, performance or products, underlying assumptions, and other statements which are other than statements of historical facts. I n s ome cases, you can identify forward - looking statements by terms such as “believes,” “beliefs,” ''may,'' ''will,'' ''should,'' expects,'' ''intends,'' ''plans,'' ''anticipates,'' ''est ima tes,'' ''predicts,'' ''projects,'' ''potential,'' ''continue,'' and other similar terminology or the negative of these terms. From time to time, we may publish or otherwise make available forward - looking statements of thi s nature. All such forward - looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by the cautionary statements described on t his message including those set forth below. Forward - looking statements are based upon management’s beliefs, assumptions and current expectations concerning future events and trends, usi ng information currently available, and are necessarily subject to uncertainties, many of which are outside our control. In addition, we undertake no obligation to u pda te or revise any forward - looking statements made by us or on our behalf, whether as a result of future developments, subsequent events or circumstances, or otherwise, or to reflect the o ccu rrence or likelihood of unanticipated events, and we disclaim any such obligation. Forward - looking statements are only predictions that relate to future events or our future performance and are subject to known and unknown r isk s, uncertainties, assumptions, and other factors, many of which are beyond our control, that may cause actual results, outcomes, levels of activity, performance, deve lop ments, or achievements to be materially different from any future results, outcomes, levels of activity, performance, developments, or achievements expressed, anticipated, or implied b y t hese forward - looking statements. Although we believe 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 or by which any such performance or resul ts will be achieved. 3D System’s actual results could differ materially from those stated or implied in forward - looking statements. Past performance is not necessarily indicative of future results. We do not undertake any obligation to and do not intend to update any forward - looking statements whether as a result of future developments, subsequent events or circumstances o r otherwise. 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
Vyomesh Joshi (VJ) President & Chief Executive Officer
Building the Foundation 5 • We are in a multi - year transformation, and actions last year centered around building the foundation to enable us to capitalize on the significant opportunity ahead • We focused on building the infrastructure, processes, analytics and organizational structure necessary to take the company forward • We have prioritized the critical needs and actions to stabilize the company and enable our market - based strategy to drive the expansion in 3D production • We believe we have built a foundation for a stronger company and closed the year in a position of strength for the future • Our energy and focus are on execution, improving efficiency and introducing disruptive new products to drive customers’ shift to 3D production
Fourth Quarter Results Overview 6 • Revenue increased 7% to $177.3 million, including revenue growth in healthcare, materials, software and on demand manufacturing as well as increased printer unit sales • Gross Profit Margin was 48.2% • Continued investing in innovation, IT infrastructure, go - to - market and customer satisfaction • GAAP loss of $0.08 per share and non - GAAP earnings of $ 0.05 per share In the fourth quarter of 2017:
John McMullen Executive Vice President & Chief Financial Officer
GAAP Operating Results 8 2017 2016 Y/Y Change 2017 2016 Y/Y Change $ 177.3 $ 165.9 7% $ 646.1 $ 633.0 2% $ 85.5 $ 82.9 3% $ 304.8 $ 309.8 (2%) 48.2% 50.0% -180 bps 47.2% 48.9% -170 bps $ 68.2 $ 57.8 18% $ 264.2 $ 259.8 2% $ 23.0 $ 21.1 9% $ 94.6 $ 88.4 7% $ 91.2 $ 78.8 16% $ 358.8 $ 348.2 3% 51.4% 47.5% 55.5% 55.0% ($5.7) $4.1 (240%) ($54.0) ($38.4) (40%) (3.2%) 2.5% (8.4%) (6.1%) ($10.1) $5.2 (293%) ($66.2) ($38.4) (72%) (5.7%) 3.2% (10.2%) (6.1%) ($0.08) $0.05 (260%) ($0.59) ($0.35) (69%) Operating Expenses Gross Profit Margin Gross Profit SG&A R&D Full YearFourth Quarter Earnings (Loss) Per Share % of Revenue Net Income (Loss) per 3D Systems % of Revenue Revenue ($ in millions, except per share) Operating Income (loss) % of Revenue
Non - GAAP Financial Measures 9 - We use non - GAAP measures to supplement our financial statements presented on a GAAP basis because management believes non - GAAP financial measures are useful to investors in evaluating our operating performance and to facilitate a better understanding o f t he impact that strategic acquisitions, non - recurring charges and certain non - cash expenses had on our financial results . - See appendix for reconciliation of non - GAAP items 2017 2016 Y/Y Change 2017 2016 Y/Y Change Non-GAAP R&D Expense $23.0 $21.1 9% $94.6 $82.3 15% Non-GAAP SG&A Expense $54.6 $45.2 21% $202.0 $187.9 8% Non-GAAP Operating Expenses $77.6 $66.2 17% $296.6 $270.2 10% Non-GAAP Net Income (Loss) $5.3 $16.7 (68%) ($1.7) $50.8 (103%) Non-GAAP Earnings (Loss) per Share $0.05 $0.15 (67%) ($0.02) $0.46 (104%) ($ in millions, except per share amounts) Fourth Quarter Full Year
Revenue Drivers • Healthcare solutions increased 13% to $50.4 million • Materials increased 8% to $42.8 million • Software increased 8% to $26.0 million • On demand manufacturing increased 10 % to $26.5 million • Printers revenue was approximately flat at $34.9 million Q4 2017 compared to Q4 2016: 10
Gross Profit and Margin • GPM was 48.2% in the fourth quarter and 47.2% in full year 2017 • Cost reduction initiatives were offset by additional investments in services and on demand manufacturing in 2017 11 - Q3 2016 GAAP GPM was negatively impacted by charges of $10.7 million related to project and product discontinuations, and Q3 2017 GAAP and non - GAAP GPM was negatively impacted by an inventory adjustment of $12.9 million $ in millions
Operating Expenses 12 • GAAP operating expenses increased 16% in Q4 and 3% for the full year • Non - GAAP operating expenses increased 17% in Q4 and 10% for the full year • SG&A expenses increased primarily from investments in go to market and IT • R&D expenses included investment in plastics, metals, materials and software in support of new products we plan to launch throughout 2018 - See appendix for a reconciliation of non - GAAP operating expenses $ in millions
Cash and Balance Sheet • Generated $8.2 million of cash from operations during Q4 • Generated $25.9 million of cash from operations in full year 2017 • Cash balance of $136.3 million at December 31, 2017 13
Outlook 14 • We are in the midst of a multi - year transformation of the company • We have made significant progress in many areas and completed a lot of foundational work in 2017, but we still have more work to do • We remain focused on continuing to improve our organization and operational efficiency and building the company for long - term growth, profitability and success • We have plans in place to improve P&L leverage and drive down operating costs over the next couple of years • Over the same period, we plan to balance investments with cost reductions, drive profitability, maintain a solid cash position, and ultimately, improve our earnings power
Vyomesh Joshi (VJ) President & Chief Executive Officer
Transformation and Driving Growth 16 • In 2017, we made significant progress to stabilize and turn around the company, addressed many legacy issues and put in place the foundation for scalable growth • We believe 2018 is a corner turn year in a multi - year transformation project • We are focused on execution, driving operational efficiencies and bringing our disruptive and innovative new products to market • We have a strong portfolio of additive manufacturing solutions for the entire digital manufacturing workflow, with a series of new product introductions planned throughout 2018 to further solidify our market leading portfolio
Enhance Market Leading Portfolio 17 • NextDent 5100, a Figure 4 - based 3D printer designed for dental labs, combined with a total of 30 dental materials for a wide range of indications • FabPro 1000, a low - cost , high - productivity, DLP - based 3D printer designed for dental and jewelry production and high functionality, industrial prototyping • ProX SLS 6100 with six production - grade materials to deliver superior part quality with greater efficiency and lower total cost of operation versus our competitors • Figure 4 platform with standalone, modular and fully automated solutions designed to meet various production environment needs across our targeted vertical markets • DMP 8500, a scalable, automated, fully - integrated next generation metals platform to deliver a true end - to - end solution for metal additive manufacturing
Q&A Session In the USA: 1 - 877 - 407 - 8291 Outside the USA: 1 - 201 - 689 - 8345
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Appendix
Revenue Summary by Category 21 $ in millions Q4 2017 Q3 2017 Q4 2016 YOY Change Sequential Change Printers $ 34.9 $ 29.4 $ 35.1 (1%) 19% Software Products $ 14.6 $ 10.6 $ 12.8 14% 38% Other Products $ 10.1 $ 8.2 $ 12.3 (18%) 23% Total Products $ 59.6 $ 48.2 $ 60.2 (1%) 24% Total Materials $ 42.8 $ 39.4 $ 39.7 8% 9% On Demand Manufacturing $ 26.5 $ 27.2 $ 24.2 10% (3%) Software Services $ 11.4 $ 10.7 $ 11.2 2% 7% Other Services $ 37.0 $ 27.4 $ 30.6 9% 35% Total Services $ 74.9 $ 65.3 $ 66.0 13% 15% Total Revenue $ 177.3 $ 152.9 $ 165.9 7% 16% Software $ 26.0 $ 21.3 $ 24.0 8% 22% Healthcare $ 50.4 $ 46.6 $ 44.6 13% 8%
Non - GAAP Reconciliation 22 Q4 and Full Year Non - GAAP Earnings (Loss) Per Share 2017 2016 2017 2016 GAAP Net income (loss) attributable to 3D Systems Corporation ($10.1) $5.2 ($66.2) ($38.4) Adjustments: Amortization, stock-based compensation & other 1 $15.1 $12.7 $62.9 $78.3 Legal and acquisition-related 2 ($1.4) $0.0 ($0.1) $4.5 Portfolio restructuring 3 $0.0 $0.0 $0.0 $6.1 Impairment of cost-method investments 4 $1.7 $0.0 $1.7 $0.0 Tax effect of adjustments 5 $0.0 ($1.2) $0.0 $0.3 Non-GAAP net income (loss) attributable to 3D Systems Corporation $5.3 $16.7 ($1.7) $50.8 Non-GAAP net income (loss) per share available to 3D Systems common stock holders - basic and diluted 6 $0.05 $0.15 ($0.02) $0.46 5 Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for each quarter ended after March 31, 2016 was calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to valuation allowances in connection with GAAP net losses. The amount in the fourth quarter of 2016 also includes $1.2 million related to an adjustment for a prior period. 6 Denominator based on weighted average shares used in the GAAP EPS calculation. ($ in millions, except per share amounts) Fourth Quarter Full Year 1 For the quarter ended December 31, 2017, the adjustment included $0.1 in COGS and $15.0 in SG&A. For the quarter ended December 31, 2016, the adjustment included $0.1 in COGS and $12.6 in SG&A. For the year ended December 31, 2017, the adjustment included $0.4 in COGS and $62.5 in SG&A. For the year ended December 31, 2016, the adjustment included $11.1 in COGS and $67.2 in SG&A. 2 For the quarter ended December 31, 2017, the adjustment included ($1.4) in SG&A. For the year ended December 31, 2017, the adjustment included ($0.3) in SG&A and $0.2 in interest and other expense, net. For the year ended December 31, 2016 the adjustment included $4.5 in SG&A. 3 For the year ended December 31, 2016, the adjustment included $6.1 in R&D. 4 The Company has minority investments of less than 20% ownership in enterprises that benefit from, or are powered by its technology portfolio. The value of each of these investments is assessed periodically, and impairment recorded when required. For the quarter and year ended December 31, 2017, the adjustment included $1.7 in interest and other expense, net. The Company excluded this amount as it is not related to on-going operations, and intends to exclude these impairment amounts from non- GAAP net income going forward. For the quarter and year ended December 31, 2016, the Company recorded a $1.2 million impairment, but did not record an adjustment to non-GAAP net income.
Non - GAAP Reconciliation 23 Q4 and Full Year Gross Profit & Margin 2017 2016 2017 2016 GAAP Gross Profit $85.5 $82.9 $304.8 $309.8 GAAP Gross Profit Margin 48.2% 50.0% 47.2% 48.9% Adjustments: Amortization, stock-based compensation & other $0.1 $0.1 $0.4 $11.1 Legal and acquisition-related 1 $0.0 $0.0 $0.0 $0.0 Non-GAAP Gross Profit $85.6 $83.0 $305.3 $320.9 Non-GAAP Gross Profit Margin 48.3% 50.0% 47.2% 50.7% ($ in millions) Fourth Quarter Full Year
Non - GAAP Reconciliation 24 Q4 and Full Year Non - GAAP Operating Expenses 2017 2016 2017 2016 GAAP R&D Expenses $ 23.0 $ 21.1 $ 94.6 $ 88.4 GAAP SG&A Expenses $ 68.2 $ 57.8 $ 264.2 $ 259.8 GAAP Operating Expenses $91.2 $78.8 $358.8 $348.2 Adjustments to R&D Expenses: Portfolio restructuring $ 0.0 $ 0.0 $ 0.0 $ 6.1 Non-GAAP R&D Expenses $ 23.0 $ 21.1 $ 94.6 $ 82.3 Adjustments to SG&A Expenses: Amortization, stock-based compensation & other $ 15.0 $ 12.6 $ 62.5 $ 67.4 Legal and acquisition-related ($ 1.4) $ 0.0 ($ 0.3) $ 4.5 Total Adjustments to SG&A Expenses $ 13.6 $ 12.6 $ 62.2 $ 71.9 Non-GAAP SG&A Expenses $ 54.6 $ 45.2 $ 202.0 $ 187.9 Non-GAAP Operating Expenses $77.6 $66.2 $296.6 $270.2 ($ in millions, except per share amounts) Fourth Quarter Full Year
Non - GAAP Reconciliation 25 Q3 and Nine Months Non - GAAP Earnings (Loss) Per Share 2017 2016 2017 2016 GAAP Net loss attributable to 3D Systems Corporation ($37.7) ($21.2) ($56.1) ($43.6) Adjustments: Amortization, stock-based compensation & other 1 $15.5 $29.1 $47.7 $65.6 Legal and acquisition-related 2 ($0.4) $1.8 $1.4 $4.5 Portfolio restructuring 3 $0.0 $6.1 $0.0 $6.1 Tax effect of adjustments 4 $0.0 $0.0 $0.0 $1.5 Non-GAAP net income attributable to 3D Systems Corporation ($22.6) $15.8 ($7.0) $34.1 Non-GAAP net income per share available to 3D Systems common stock holders - basic and diluted 5 ($0.20) $0.14 ($0.06) $0.31 5 Denominator based on diluted shares used in the GAAP EPS calculation. ($ in millions, except per share amounts) Third Quarter Nine Months 1 For the quarter ended September 30, 2017, the adjustment included $0.1 in COGS and $15.4 in SG&A. For the quarter ended September 30, 2016, the adjustment included $10.8 in COGS and $18.3 SG&A. For the nine months ended September 30, 2017, the adjustment included $0.3 in COGS and $47.4 in SG&A. For the nine months ended September 30, 2016, the adjustment included $10.9 in COGS and $54.7 in SG&A. 2 For the quarter ended September 30, 2017, the adjustment included ($0.4) in SG&A. For the quarter ended September 30, 2016 the adjustment included $1.8 in SG&A. For the nine months ended September 30, 2017, the adjustment included $1.2 in SG&A and $0.2 in interest and other income, net. For the nine months ended September 30, 2016 the adjustment included $4.5 in SG&A. 4 Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for the quarters ended after March 31, 2016 were calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to valuation allowances in connection with GAAP net losses. 3 For the quarter and nine months ended September 30, 2016, the adjustment included $6.1 in R&D.
Non - GAAP Reconciliation 26 Q3 and Nine Months Gross Profit & Margin 2017 2016 2017 2016 GAAP Gross Profit $58.5 $68.9 $219.4 $226.9 GAAP Gross Profit Margin 38.3% 44.1% 46.8% 48.6% Adjustments: Amortization, stock-based compensation & other $0.1 $10.8 $0.3 $11.0 Legal and acquisition-related 1 $0.0 $0.0 $0.0 $0.0 Non-GAAP Gross Profit $58.6 $79.7 $219.7 $237.9 Non-GAAP Gross Profit Margin 38.3% 51.0% 46.9% 50.9% 1 For the nine months ended September 30, 2016, the adjustment included $20,000 and therefore rounded down. ($ in millions) Third Quarter Nine Months
Non - GAAP Reconciliation 27 Q3 and Nine Months Non - GAAP Operating Expenses 2017 2016 2017 2016 GAAP R&D Expenses $ 24.4 $ 26.1 $ 71.7 $ 67.4 GAAP SG&A Expenses $ 66.5 $ 64.8 $ 196.0 $ 202.0 GAAP Operating Expenses $90.9 $90.9 $267.7 $269.4 Adjustments to R&D Expenses: Portfolio restructuring $ 0.0 $ 6.1 $ 0.0 $ 6.1 Non-GAAP R&D Expenses $ 24.4 $ 20.0 $ 71.7 $ 61.3 Adjustments to SG&A Expenses: Amortization, stock-based compensation & other $ 15.8 $ 18.3 $ 47.4 $ 56.5 Legal and acquisition-related ($ 0.8) $ 1.7 $ 1.2 $ 2.7 Portfolio restructuring $ 0.0 $ 0.0 $ 0.0 $ 0.0 Total Adjustments to SG&A Expenses $ 15.0 $ 20.0 $ 48.6 $ 59.2 Non-GAAP SG&A Expenses $ 51.5 $ 44.8 $ 147.4 $ 142.8 Non-GAAP Operating Expenses $75.9 $64.8 $219.1 $204.1 ($ in millions, except per share amounts) Third Quarter Nine Months
Non - GAAP Reconciliation 28 Q2 and Six Months Non - GAAP Earnings (Loss) Per Share 2017 2016 2017 2016 GAAP Net loss attributable to 3D Systems Corporation ($8.4) ($4.6) ($18.4) ($22.4) Adjustments: Amortization, stock-based compensation & other 1 $ 16.3 $ 16.1 $ 32.3 $ 36.6 Legal and acquisition-related 2 $ 0.7 $ 1.8 $ 1.7 $ 2.7 Tax effect of adjustments 3 - - - $ 1.5 Non-GAAP net income attributable to 3D Systems Corporation $8.6 $13.2 $15.6 $18.4 Non-GAAP net income per share available to 3D Systems common stock holders - basic and diluted 4 $ 0.08 $ 0.12 $ 0.14 $ 0.17 4 Denominator based on diluted shares used in the GAAP EPS calculation. ($ in millions, except per share amounts) Second Quarter Six Months 1 For the quarter ended June 30, 2017, the adjustment included $0.1 in COGS and $16.2 in SG&A. For the quarter ended June 30, 2016, the adjustment included $0.1 in COGS and $16.0 SG&A. For the six months ended June 30, 2017, the adjustment included $0.2 in COGS and $32.1 in SG&A. For the six months ended June 30, 2016, the adjustment included $0.2 in COGS and $36.4 in SG&A. 2 For the quarter ended June 30, 2017, the adjustment included $0.5 in SG&A and $0.2 in interest and other income, net. For the quarter ended June 30, 2016 the adjustment included $1.8 in SG&A. For the six months ended June 30, 2017, the adjustment included $1.5 in SG&A and $0.2 in interest and other income, net. For the six months ended June 30, 2016 the adjustment included $2.7 in SG&A. 3 Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for the quarters ended after March 31, 2016 were calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to valuation allowances in connection with GAAP net losses.
Non - GAAP Reconciliation 29 Q2 and Six Months Non - GAAP Operating Expenses 2017 2016 2017 2016 GAAP R&D Expenses $ 24.4 $ 20.9 $ 47.3 $ 41.2 GAAP SG&A Expenses $ 63.1 $ 63.2 $ 129.5 $ 137.2 GAAP Operating Expenses $87.5 $84.1 $176.8 $178.4 Adjustments 1 : Amortization, stock-based compensation & other $ 16.2 $ 16.0 $ 32.1 $ 36.4 Legal and acquisition-related $ 0.5 $ 1.8 $ 1.5 $ 2.7 Non-GAAP Operating Expenses $70.8 $66.3 $143.2 $139.3 ($ in millions, except per share amounts) Second Quarter Six Months 1 For the quarter and six months ended June 30, 2017, the adjustments only impacted SG&A expenses.
Non - GAAP Reconciliation 30 Q1 Non - GAAP Earnings (Loss) Per Share 2017 2016 GAAP Net loss attributable to 3D Systems Corporation ($10.0) ($17.8) Adjustments: Amortization, stock-based compensation & other 1 $ 16.0 $ 20.5 Legal and acquisition-related 2 $ 1.1 $ 1.0 Tax effect of adjustments 3 - $ 1.5 Non-GAAP net income attributable to 3D Systems Corporation $7.1 $5.2 Non-GAAP net income per share available to 3D Systems common stock holders - basic and diluted 4 $ 0.06 $ 0.05 4 Denominator based on diluted shares used in the GAAP EPS calculation. ($ in millions, except per share amounts) First Quarter 1 For the quarter ended March 31, 2017, the adjustment included $0.1 in COGS and $15.9 in SG&A. For the quarter ended March 31, 2016, the adjustment included $0.1 in COGS and $20.4 SG&A. 2 For the quarter ended March 31, 2017, the adjustment included $1.1 in SG&A. For the quarter ended March 31, 2016 the adjustment included $0.9 in SG&A. 3 Tax effect for the quarter ended March 31, 2016 was calculated quarterly based on the Company's overall tax rate. Tax effect for the quarters ended after March 31, 2016 were calculated based on the Company's quarterly U.S. tax rate of 0%, which is due to valuation allowances in connection with GAAP net losses.
Non - GAAP Reconciliation 31 Q1 Non - GAAP Operating Expenses 2017 2016 GAAP R&D Expenses $ 22.9 $ 20.3 GAAP SG&A Expenses $ 66.4 $ 74.0 GAAP Operating Expenses $89.3 $94.3 Adjustments 1 : Amortization, stock-based compensation & other $ 15.9 $ 20.4 Legal and acquisition-related $ 1.1 $ 1.0 Non-GAAP Operating Expenses $72.3 $72.9 ($ in millions, except per share amounts) First Quarter 1 For the quarter ended March 31, 2017, the adjustments only impacted SG&A expenses.
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