Form 8-K 3D SYSTEMS CORP For: Aug 07
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): August 7, 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 August 7, 2018, 3D Systems Corporation (the “Company”) issued a press release setting forth the Company’s results of operations for its second quarter and first six months ended June 30, 2018. 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 Securities and Exchange Commission (“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, August 7, 2018, to discuss its second quarter and first six months ended June 30, 2018 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 From 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.
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: August 7, 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 August 7, 2018. | |||
| 99.2 | Webcast slides dated August 7, 2018. |
Exhibit 99.1
3D Systems Reports Second Quarter 2018 Financial Results
ROCK HILL, S.C., Aug. 07, 2018 (GLOBE NEWSWIRE) -- 3D Systems Corporation (NYSE: DDD) announced today its financial results for the second quarter ended June 30, 2018.
For the second quarter of 2018, the company reported 11 percent revenue growth to $176.6 million compared to $159.5 million in the second quarter of the previous year. The company reported a GAAP loss of $0.08 per share in the second quarter of 2018 and 2017, and non-GAAP earnings of $0.06 per share in the second quarter of 2018 compared to non-GAAP earnings of $0.08 per share in the second quarter of 2017.
"We are pleased with our results for the second quarter, which were driven by strong revenue growth, including growth in both printer revenue and units as we continue to improve execution and are seeing the early returns on our investments in both innovation and go-to-market," commented Vyomesh Joshi (VJ) chief executive officer, 3D Systems.
The company reported 41 percent higher printer revenue on 37 percent higher printer unit sales, 26 percent growth in healthcare solutions, and growth in materials and on demand manufacturing.
The company reported GAAP gross profit margin of 48.8 percent for the second quarter of 2018 compared to 50.6 percent in the second quarter of the prior year. The impact of mix of sales and investment in services and on demand manufacturing offset cost improvements from ongoing supply chain cost reduction initiatives.
For the second quarter of 2018, GAAP operating expenses were $93.9 million compared to $87.5 million in the prior year period. SG&A expenses increased 13 percent to $71.2 million, which included continued investment in go-to-market, IT transformation and higher legal fees. R&D expenses decreased 7 percent from the second quarter of the prior year to $22.7 million as the company began to ship the previously announced new products. The company expects to continue to roll out new products as planned throughout 2018.
”We are very pleased with the progress we are seeing in the first half of 2018 from both our investments and the hard work by our employees,” commented John McMullen, executive vice president and chief financial officer. “We continue to make the investments we believe are critical for success while at the same time improving our cost structure over the long term.”
During the quarter, the company generated $10.7 million of cash in operations and ended the quarter with $119.3 million of unrestricted cash on hand.
“In addition to our performance in the second quarter, we are also very pleased to be partnering with Georg Fischer, a highly regarded leader in machining solutions, to create new integrated solutions and expand our global network and market opportunity. With our product rollouts in 2018, we believe our portfolio is second to none in regards to breadth and competitiveness, and we continue to be keenly focused on execution and operational efficiency to drive long-term growth and profitability,” concluded Joshi.
Q2 2018 Conference Call and Webcast
The company expects to file its Form 10-Q for the quarter ended June 30, 2018 with the Securities and Exchange Commission on August 7, 2018. 3D Systems plans to hold a conference call and simultaneous webcast to discuss these results on Tuesday, August 7, 2018, at 4:30 p.m. Eastern Time.
Date: Tuesday, August 7, 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
June 30, 2018 and December 31, 2017
| (in thousands, except par value) | June 30, 2018 | December 31, 2017 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 119,313 | $ | 136,344 | |||
| Accounts receivable, net of reserves — $10,049 (2018) and $10,258 (2017) | 130,870 | 129,879 | |||||
| Inventories | 114,493 | 103,903 | |||||
| Insurance proceeds receivable | 50,000 | 50,000 | |||||
| Prepaid expenses and other current assets | 25,428 | 18,296 | |||||
| Total current assets | 440,104 | 438,422 | |||||
| Property and equipment, net | 104,679 | 97,521 | |||||
| Intangible assets, net | 82,141 | 98,783 | |||||
| Goodwill | 224,955 | 230,882 | |||||
| Deferred income tax asset | 7,216 | 4,020 | |||||
| Other assets, net | 26,217 | 27,136 | |||||
| Total assets | $ | 885,312 | $ | 896,764 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Current portion of capitalized lease obligations | $ | 646 | $ | 644 | |||
| Accounts payable | 58,019 | 55,607 | |||||
| Accrued and other liabilities | 72,400 | 65,899 | |||||
| Accrued litigation settlement | 50,000 | 50,000 | |||||
| Customer deposits | 5,903 | 5,765 | |||||
| Deferred revenue | 38,617 | 29,214 | |||||
| Total current liabilities | 225,585 | 207,129 | |||||
| Long term portion of capitalized lease obligations | 6,732 | 7,078 | |||||
| Deferred income tax liability | 9,892 | 8,983 | |||||
| Other liabilities | 46,398 | 48,754 | |||||
| Total liabilities | 288,607 | 271,944 | |||||
| Redeemable noncontrolling interests | 8,872 | 8,872 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Common stock, $0.001 par value, authorized 220,000 shares; issued 117,249 (2018) and 117,025 (2017) | 116 | 115 | |||||
| Additional paid-in capital | 1,339,984 | 1,326,250 | |||||
| Treasury stock, at cost — 2,503 shares (2018) and 2,219 shares (2017) | (10,007 | ) | (8,203 | ) | |||
| Accumulated deficit | (707,015 | ) | (677,772 | ) | |||
| Accumulated other comprehensive loss | (32,878 | ) | (21,536 | ) | |||
| Total 3D Systems Corporation stockholders' equity | 590,200 | 618,854 | |||||
| Noncontrolling interests | (2,367 | ) | (2,906 | ) | |||
| Total stockholders’ equity | 587,833 | 615,948 | |||||
| Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ | 885,312 | $ | 896,764 | |||
3D Systems Corporation
Unaudited Condensed Consolidated Statements of Operations
Quarter and Six Months Ended June 30, 2018 and 2017
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Revenue: | |||||||||||||||
| Products | $ | 110,785 | $ | 97,579 | $ | 216,231 | $ | 195,518 | |||||||
| Services | 65,783 | 61,888 | 126,206 | 120,380 | |||||||||||
| Total revenue | 176,568 | 159,467 | 342,437 | 315,898 | |||||||||||
| Cost of sales: | |||||||||||||||
| Products | 57,500 | 49,840 | 113,618 | 97,948 | |||||||||||
| Services | 32,906 | 28,954 | 64,788 | 57,091 | |||||||||||
| Total cost of sales | 90,406 | 78,794 | 178,406 | 155,039 | |||||||||||
| Gross profit | 86,162 | 80,673 | 164,031 | 160,859 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 71,172 | 63,088 | 140,625 | 129,493 | |||||||||||
| Research and development | 22,712 | 24,449 | 48,594 | 47,301 | |||||||||||
| Total operating expenses | 93,884 | 87,537 | 189,219 | 176,794 | |||||||||||
| Loss from operations | (7,722 | ) | (6,864 | ) | (25,188 | ) | (15,935 | ) | |||||||
| Interest and other (expense) income, net | 1,661 | 933 | 108 | 1,134 | |||||||||||
| Loss before income taxes | (6,061 | ) | (5,931 | ) | (25,080 | ) | (14,801 | ) | |||||||
| Provision for income taxes | 2,539 | 2,067 | 4,493 | 3,108 | |||||||||||
| Net loss | (8,600 | ) | (7,998 | ) | (29,573 | ) | (17,909 | ) | |||||||
| Less: net income attributable to noncontrolling interests | 262 | 418 | 246 | 478 | |||||||||||
| Net loss attributable to 3D Systems Corporation | $ | (8,862 | ) | $ | (8,416 | ) | $ | (29,819 | ) | $ | (18,387 | ) | |||
| Net loss per share available to 3D Systems Corporation common stockholders - basic and diluted | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.27 | ) | $ | (0.17 | ) | |||
3D Systems Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2018 and 2017
| Six Months Ended June 30, | |||||||
| (in thousands) | 2018 | 2017 | |||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (29,573 | ) | $ | (17,909 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 29,948 | 30,575 | |||||
| Stock-based compensation | 13,734 | 14,450 | |||||
| Impairment of assets | 1,411 | — | |||||
| Provision for bad debts | 1,356 | 166 | |||||
| Provision for deferred income taxes | (2,287 | ) | (1,580 | ) | |||
| Changes in operating accounts, net of acquisitions: | |||||||
| Accounts receivable | (3,384 | ) | 5,549 | ||||
| Inventories | (14,937 | ) | (9,766 | ) | |||
| Prepaid expenses and other current assets | (6,739 | ) | (2,345 | ) | |||
| Accounts payable | 2,762 | 4,343 | |||||
| Accrued and other current liabilities | 19,208 | (6,727 | ) | ||||
| All other operating activities | (2,328 | ) | 1,823 | ||||
| Net cash provided by operating activities | 9,171 | 18,579 | |||||
| Cash flows from investing activities: | |||||||
| Cash paid for acquisitions, net of cash assumed | — | (34,291 | ) | ||||
| Purchases of property and equipment | (18,095 | ) | (11,243 | ) | |||
| Additions to license and patent costs | (523 | ) | (571 | ) | |||
| Other investing activities | — | (1,650 | ) | ||||
| Proceeds from disposition of property and equipment | 9 | 271 | |||||
| Net cash used in investing activities | (18,609 | ) | (47,484 | ) | |||
| Cash flows from financing activities: | |||||||
| Payments on earnout consideration | (2,675 | ) | (3,206 | ) | |||
| Payments related to net-share settlement of stock-based compensation | (1,804 | ) | (1,970 | ) | |||
| Repayment of capital lease obligations | (344 | ) | (290 | ) | |||
| Net cash used in financing activities | (4,823 | ) | (5,466 | ) | |||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,502 | ) | 3,602 | ||||
| Net decrease in cash, cash equivalents and restricted cash | (16,763 | ) | (30,769 | ) | |||
| Cash, cash equivalents and restricted cash at the beginning of the period (a) | 136,831 | 185,248 | |||||
| Cash, cash equivalents and restricted cash at the end of the period (a) | $ | 120,068 | $ | 154,479 | |||
- The amounts for cash and cash equivalents shown above include restricted cash of $755 and $488 as of June 30, 2018 and 2017, respectively, and $487 and $301 as of December 31, 2017, and 2016, respectively, which were included in other assets, net in the condensed consolidated balance sheets.
3D Systems Corporation
Schedule 1
Loss Per Share
Quarter and Six Months Ended June 30, 2018 and 2017
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Numerator for basic and diluted net loss per share: | |||||||||||||||
| Net loss attributable to 3D Systems Corporation | $ | (8,862 | ) | $ | (8,416 | ) | $ | (29,819 | ) | $ | (18,387 | ) | |||
| Denominator for basic and diluted net loss per share: | |||||||||||||||
| Weighted average shares | 111,920 | 111,398 | 111,870 | 111,350 | |||||||||||
| Net loss per share - basic and diluted | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.27 | ) | $ | (0.17 | ) | |||
3D Systems Corporation
Schedule 2
Unaudited Reconciliations of GAAP to Non-GAAP Measures
Quarter and Six Months Ended June 30, 2018 and 2017
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| GAAP net loss attributable to 3D Systems Corporation | $ | (8.9 | ) | $ | (8.4 | ) | $ | (29.8 | ) | $ | (18.4 | ) | |||
| Adjustments: | |||||||||||||||
| Amortization, stock-based compensation & other 1 | 14.5 | 16.3 | 29.6 | 32.3 | |||||||||||
| Legal and acquisition-related 2 | (0.4 | ) | 0.7 | — | 1.7 | ||||||||||
| Cost optimization plan 3 | 1.0 | — | 1.6 | — | |||||||||||
| Impairment of cost-method investments 4 | — | — | 1.4 | — | |||||||||||
| Non-GAAP net income (loss) attributable to 3D Systems Corporation | $ | 6.2 | $ | 8.6 | $ | 2.8 | $ | 15.6 | |||||||
| Non-GAAP net income (loss) per share available to 3D Systems common stock holders - basic and diluted 5 | $ | 0.06 | $ | 0.08 | $ | 0.02 | $ | 0.14 | |||||||
| 1 For the quarter ended June 30, 2018, the adjustment included $0.1 in COGS and $14.4 in SG&A. For the quarter ended June 30, 2017, the adjustment included $0.1 in COGS and $16.2 in SG&A. For the six months ended June 30, 2018, the adjustment included $0.2 in COGS and $29.4 in SG&A. For the six months ended June 30, 2017, the adjustment included $0.2 in COGS and $32.1 in SG&A. | |||||||||||||||
| 2 For the quarter ended June 30, 2018, the adjustment included ($0.4) in SG&A. 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 six months ended June 30, 2017, the adjustment included $1.5 in SG&A and $0.2 in interest and other income, net. | |||||||||||||||
| 3 For the quarter ended June 30, 2018, the adjustment included $0.2 in COGS, $0.7 in SG&A and $0.1 in R&D. For the six months ended June 30, 2018, the adjustment included $0.3 in COGS, $1.1 in SG&A, and approximately $0.2 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 six months ended June 30, 2018, the adjustment included zero and $1.4, respectively, 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. | |||||||||||||||
| 5 Denominator based on weighted average shares used in the GAAP EPS calculation. | |||||||||||||||
Exhibit 99.2
Second Quarter 2018 August 7, 2018
Welcome and Participants ⦁ Vyomesh Joshi ⦁ President & Chief Executive Officer ⦁ John McMullen ⦁ Executive Vice President & Chief Financial Officer ⦁ Patrick Rogers ⦁ Assistant General Counsel ⦁ Stacey Witten ⦁ Vice President, IR and FP&A 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 an d trends, using 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 risks, 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 repo rts 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
Execution and Progress 5 • We believe we are turning the corner in the transformation of the company and are seeing early returns on our investments • We have made significant progress to drive growth and improve execution worldwide • We improved Net Promoter Score (NPS) another 10 points, increased customer satisfaction scores and improved customer loyalty measures • Our go - to - market strategy is more effective with better sales motions and enhanced sales tools based on meeting customer needs • We have the broadest portfolio in the industry and multiple sales channels to meet the needs of a wide range of customers and the broad market opportunity
New Product Update 6 • In Q2, we began shipping the FabPro 1000, industrial desktop printer and the ProX SLS 6100 with the widest range of materials • In Q2, we also began shipping the MJP 2500 IC, designed for investment casting and foundry applications, within the U.S. with plans for global roll out later this year • Last week, shipped the award winning Next Dent 5100 and related wide range of dental materials • Beginning to ship Figure 4 stand - alone printer, which delivers faster time to part than competitive systems • The previously discussed Fortune 50 beta user for a large scale production Figure 4 system converted to a sale in Q2 2018 • Throughout the remainder of 2018, we expect to start shipping modular Figure 4 systems, as well as the DMP 350 and large frame DMP 500 systems
Second Quarter Results Overview 7 • Revenue increased 11% to $176.6 million • Strong growth printer revenue growth of 41% on 37% unit growth • Growth in printers revenue and units, materials, on demand manufacturing and healthcare solutions • GAAP gross profit margin of 48.8% and non - GAAP gross profit margin of 48.9% • Continuing to make investments we believe are critical for success while at the same time improving cost structure over the long term • GAAP loss of $0.08 per share and non - GAAP earnings of $0.06 per share In the second quarter of 2018:
John McMullen Executive Vice President & Chief Financial Officer
GAAP Operating Results 9 Second Quarter Six Months Ended (in millions, except per share amounts) 2018 2017 Y/Y Change 2018 2017 Y/Y Change Revenue $ 176.6 $ 159.5 11% $ 342.4 $ 315.9 8% Gross Profit 86.2 80.7 7% $ 164.0 $ 160.9 2% Gross Profit Margin 48.8 % 50.6 % (179) bps 47.9 % 50.9 % (302) bps SG&A 71.2 63.1 13% $ 140.6 $ 129.5 9% R&D 22.7 24.4 (7)% $ 48.6 $ 47.3 3% Operating Expenses 93.9 87.5 7% $ 189.2 $ 176.8 7% % of Revenue 53.2 % 54.9 % 55.3 % 56.0 % Operating Loss (7.7 ) (6.9 ) (13)% $ (25.2 ) $ (15.9 ) (58)% % of Revenue (4.4 )% (4.3 )% (7.4 )% (5.0 )% Net Loss per 3D Systems $ (8.9 ) $ (8.4 ) (5)% $ (29.8 ) $ (18.4 ) (62)% % of Revenue (5.0 )% (5.3 )% (8.7 )% (5.8 )% Loss Per Share $ (0.08 ) $ (0.08 ) — % (0.27 ) (0.17 ) (59)%
Non - GAAP Financial Measures 10 • 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 understand ing of the 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 Second Quarter Six Months Ended (in millions, except per share amounts) 2018 2017 Y/Y Change 2018 2017 Y/Y Change Non - GAAP R&D Expense $ 22.5 $ 24.4 (8)% $ 48.4 $ 47.3 2% Non - GAAP SG&A Expense 56.5 46.4 22% 110.1 95.9 15% Non - GAAP Operating Expenses $ 79.0 $ 70.8 12% $ 158.5 $ 143.2 11% Non - GAAP Net income (loss) attributable to 3D Systems Corporation $ 6.2 $ 8.6 (27)% $ 2.8 $ 15.6 (82)% Non - GAAP Net income (loss) per share available to 3D Systems Corporation common stockholders - basic and diluted $ 0.06 $ 0.08 (28)% $ 0.02 $ 0.14 (86)%
Revenue Drivers Printers revenue increased 41% to $39.2 million Materials revenue increased 3% to $45.0 million Healthcare solutions increased 26% to $61.4 million On demand manufacturing increased 6% to $27.4 million Software was approximately flat at $24.1 million Q2 2018 compared to Q2 2017: 11
Gross Profit and Margin • GAAP GPM was 48.8% and non - GAAP GPM was 48.9% in Q2 2018 • We continue to drive supply chain optimization, manufacturing efficiencies and process improvements 12
Operating Expenses 13 • GAAP operating expenses increased 7% and non - GAAP operating expenses increased 12% compared to the first quarter of the prior year • SG&A expenses increased from investments in go - to - market and IT infrastructure and higher legal expenses • R&D expenses decreased as we began to launch our new products which are planned to continue to roll out throughout 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 See appendix for a reconciliation of non - GAAP operating expenses Q2 2018
Vyomesh Joshi (VJ) President & Chief Executive Officer
Redefining Manufacturing 15 • Partnership with Georg Fischer machining solutions, one of the world's leading providers in precision machining. • Immediately expands our global network and market opportunity • We are excited to be working with a partner of the caliber of GF Machining Solutions to redefine manufacturing and the factory of the future. • Together, we plan to offer an integrated additive and subtractive solution with automation and post processing to provide seamless workflows for advanced manufacturing while reducing total cost of operation • We plan to debut our first combined solution at IMTS in Chicago the week of September 10, 2018
Conclusion 16 • We are pleased with our results this quarter and the progress we have made to transform the company and improve execution to leverage our unmatched offering of additive solutions for the entire digital manufacturing workflow. • We are very excited about our enhanced and complete end - to - end portfolio, ongoing innovation and significant market opportunities, while continuing to be keenly focused on execution and operational efficiency to drive long - term growth and profitability.
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 20 (in millions) Q2 2018 Q1 2018 Q2 2017 Sequential Change YOY Change Printers $ 39.2 $ 39.1 $ 27.7 — % 41% Software Products 12.9 12.3 12.8 5% 1% Other Products 13.7 11.2 13.2 22% 4% Total Products 65.7 62.6 53.7 5% 22% Total Materials 45.0 42.5 43.9 6% 3% On Demand Manufacturing 27.4 25.7 25.8 7% 6% Software Services 11.2 10.8 11.2 4% — % Other Services 27.2 24.3 24.9 12% 9% Total Services 65.8 60.8 61.9 8% 6% Total Revenue $ 176.6 $ 165.9 $ 159.5 6% 11% Software $ 24.1 $ 23.1 $ 24.0 4% — % Healthcare $ 61.4 $ 52.4 $ 48.5 17% 26% Second Quarter 2018 Comparative Analysis
Non - GAAP Reconciliation 21 Second Quarter Non - GAAP Earnings (Loss) per Share Quarter Ended June 30, Six Months Ended June 30, (in millions, except per share amounts) 2018 2017 2018 2017 GAAP Net loss attributable to 3D Systems Corporation $ (8.9 ) $ (8.4 ) $ (29.8 ) $ (18.4 ) Adjustments: Amortization, stock - based compensation & other 1 14.5 16.3 29.6 32.3 Legal and acquisition - related 2 (0.4 ) 0.7 — 1.7 Cost optimization plan 3 1.0 — 1.6 — Impairment of cost - method investments 4 — — 1.4 — Non - GAAP net income attributable to 3D Systems Corporation $ 6.2 $ 8.6 $ 2.8 $ 15.6 Non - GAAP net income per share available to 3D Systems common stock holders - basic and diluted 5 $ 0.06 $ 0.08 $ 0.02 $ 0.14 1 For the quarter ended June 30, 2018, the adjustment included $0.1 in COGS and $14.4 in SG&A. For the quarter ended June 30, 20 17, the adjustment included $0.1 in COGS and $16.2 in SG&A. For the six months ended June 30, 2018, the adjustment included $0.2 in COGS and $29.4 in SG&A. For the si x m onths ended June 30, 2017, the adjustment included $0.2 in COGS and $32.1 in SG&A. 2 For the quarter ended June 30, 2018, the adjustment included ($0.4) in SG&A. For the quarter ended June 30, 2017, the adjus tme nt included $0.5 in SG&A and $0.2 in interest and other income, net. For the six months ended June 30, 2017, the adjustment included $1.5 in SG&A and $0.2 in interest and oth er income, net. 3 For the quarter ended June 30, 2018, the adjustment included $0.2 in COGS, $0.7 in SG&A and $0.1 in R&D. For the six months en ded June 30, 2018, the adjustment included $0.3 in COGS, $1.1 in SG&A, and approximately $0.2 in R&D. 4 The Company has minority investments of less than 20% ownership in enterprises that benefit from, or are powered by its tec hno logy portfolio. The value of each of these investments is assessed periodically, and impairment recorded when required. For the quarter and six months ended June 30, 20 18, the adjustment included zero and $1.4, respectively, 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. 5 Denominator based on weighted average shares used in the GAAP EPS calculation. - table may not foot due to rounding
Non - GAAP Reconciliation 22 Second Quarter Non - GAAP Gross Profit & Margin Second Quarter Six Months Ended (in millions) 2018 2017 2018 2017 GAAP Gross Profit $ 86.2 $ 80.7 $ 164.0 $ 160.9 GAAP Gross Profit Margin 48.8 % 50.6 % 47.9 % 50.9 % Adjustments: Amortization, stock - based compensation & other $ 0.1 $ 0.1 $ 0.2 $ — Cost optimization plan $ 0.2 $ — $ 0.3 $ — Non - GAAP Gross Profit $ 86.4 $ 80.8 $ 164.5 $ 160.9 Non - GAAP Gross Profit Margin 48.9 % 50.6 % 48.0 % 50.9 % - table may not foot due to rounding
Non - GAAP Reconciliation 23 Second Quarter Non - GAAP Operating Expenses Second Quarter Six Months Ended (in millions) 2018 2017 2018 2017 GAAP R&D Expenses $ 22.7 $ 24.4 $ 48.6 $ 47.3 GAAP SG&A Expenses 71.2 63.1 140.6 129.5 GAAP Operating Expenses $ 93.9 $ 87.5 $ 189.2 $ 176.8 Adjustments to R&D Expenses: Cost optimization plan 0.2 — 0.2 — Non - GAAP R&D Expenses $ 22.5 $ 24.4 $ 48.4 $ 47.3 Adjustments to SG&A Expenses: Amortization, stock - based compensation & other 14.3 16.2 29.4 32.1 Legal and acquisition - related (0.4 ) 0.5 — 1.5 Cost optimization plan 0.7 — 1.1 — Total Adjustments to SG&A Expenses 14.7 16.7 30.5 33.6 Non - GAAP SG&A Expenses $ 56.5 $ 46.4 $ 110.1 $ 95.9 Non - GAAP Operating Expenses $ 79.0 $ 70.8 $ 158.5 $ 143.2 - table may not foot due to rounding
Non - GAAP Reconciliation 24 First Quarter Non - GAAP Gross Profit and Margin First Quarter (in millions) 2018 2017 GAAP Gross Profit $ 77.9 $ 80.2 GAAP Gross Profit Margin 46.9 % 51.3 % Adjustments: Amortization, stock - based compensation & other 0.1 0.1 Cost optimization plan 0.2 — Non - GAAP Gross Profit $ 78.1 $ 80.3 Non - GAAP Gross Profit Margin 47.1 % 51.3 % - table may not foot due to rounding
Non - GAAP Reconciliation 25 First Quarter Non - GAAP Operating Expenses First Quarter (in millions) 2018 2017 GAAP R&D Expenses $ 25.9 $ 22.9 GAAP SG&A Expenses 69.5 66.4 GAAP Operating Expenses 95.4 89.3 Adjustments to R&D Expenses: Cost optimization plan 1 — — Non - GAAP R&D Expenses 25.9 22.9 Adjustments to SG&A Expenses: Amortization, stock - based compensation & other 15.1 15.9 Legal and acquisition - related 0.4 1.1 Cost optimization plan 0.3 — Total Adjustments to SG&A Expenses 15.9 16.9 Non - GAAP SG&A Expenses 53.6 49.5 Non - GAAP Operating Expenses $ 79.5 $ 72.3 1 For the quarter ended March 31, 2018, the adjustment included approximately $32 thousand in R&D and therefore rounded down. - table may not foot due to rounding
Non - GAAP Reconciliation 26 Full Year 2017 Non - GAAP Gross Profit & Margin 2017 Quarter Ended Year Ended (in millions) March 31 June 30 September 30 December 31 December 31 GAAP Gross Profit $ 80.2 $ 80.7 $ 58.5 $ 85.5 $ 304.8 GAAP Gross Profit Margin 51.3 % 50.6 % 38.3 % 48.2 % 47.2 % Adjustments: Amortization, stock - based compensation & other 0.1 0.1 0.1 0.1 0.4 Legal and acquisition - related 1 — — — — — Non - GAAP Gross Profit $ 80.3 $ 80.8 $ 58.6 $ 85.6 $ 305.3 Non - GAAP Gross Profit Margin 51.3 % 50.7 % 38.3 % 48.3 % 47.2 % 1 For the quarter ended June 30, 2017, the adjustment included approximately $21 thousand and therefore rounded down. - table may not foot due to rounding
Non - GAAP Reconciliation 27 Full Year 2017 Non - GAAP Operating Expenses 2017 Quarter Ended Year Ended (in millions) March 31 June 30 September 30 December 31 December 31 GAAP R&D Expenses $ 22.9 $ 24.4 $ 24.4 $ 23.0 $ 94.6 GAAP SG&A Expenses 66.4 63.1 66.5 68.2 264.2 GAAP Operating Expenses 89.3 87.5 90.9 91.2 358.8 Non - GAAP R&D Expenses 22.9 24.4 24.4 23.0 94.6 Adjustments to SG&A Expenses: Amortization, stock - based compensation & other 15.9 16.2 15.8 15.0 62.5 Legal and acquisition - related 1.1 0.5 (0.8 ) (1.4 ) (0.3 ) Total Adjustments to SG&A Expenses 17.0 16.7 15.0 13.6 62.2 Non - GAAP SG&A Expenses 49.4 46.4 51.5 54.6 202.0 Non - GAAP Operating Expenses $ 72.3 $ 70.8 $ 75.9 $ 77.6 $ 296.6 - table may not foot due to rounding
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