Mar 1, 2017 | By Benedict
3D Systems shares fell as much as 12.5% on Tuesday, February 28, after the 3D printing company released its fourth-quarter and full-year financial results. Shares were down 9.9% on the day at close.
While the new 3D printing strategy for 3D Systems is undoubtedly a long-term project, President and CEO Vyomesh Joshi will be aware that financial results need to improve quickly if investors are to refrain from abandoning ship over the course of the coming years. 3D Systems announced its fourth-quarter financial results before trading yesterday, reporting a revenue decrease of 9.5% from a year ago to $165.9 million, with earnings per share at $0.05 ($0.15 when one-time items were pulled out). The market’s initial reaction was negative, with shares falling as much as 12.5% throughout the day.
3D Systems aimed to calm market fears by emphasizing the additive manufacturing industry’s present state of transition. “Continued demand for our production printers and materials reaffirms our belief that our industry is at an inflection point in the transition from prototyping to production,” Joshi said in a press release. “We see tremendous market opportunities for 3D production. With focused innovation and execution, we are delivering solutions for key verticals, use case by use case to drive profitable growth and make 3D production real.”
While the earnings per share of $0.15 was higher than the Wall Street prediction of $0.12, the revenue of $165.9 million fell short of analyst predictions of $176.1 million. 3D Systems says it expects revenue to grow 2% to 8% in 2017, which would put figures at $643 million to $684 million, with an EPS of $0.51 to $0.55 on an adjusted basis. That reassurance, however, did not stop shares dropping soon after the market opening, ending the day down 9.9%.
Despite the disappointing revenue for the quarter, there are some reasons for 3D Systems (and its investors) to be optimistic. The company’s gross profit margin for the quarter improved to 50%, up from 47.7% on the year. The 3D printing giant also generated $18.7 million cash from operations during the quarter, ending the year with $184.9 million cash. This time last year, that figure was at $155.6 million. These improvements may be down to the company’s recent cost-cutting initiatives: operating costs were down over $10 million in the fourth quarter, to $78.8 million.
“We are seeing clear progress in our initiatives to drive operational excellence and establish an appropriate cost structure,” said 3D Systems CFO John McMullen. “We still have a lot of work to do, but we are making improvements in our key processes, infrastructure and operations. We expect continued positive cash generation and improved profitability while we make investments in IT, go to market, and innovation.”
Analyst Needham & Company yesterday reiterated its Hold rating on 3D Systems. It said there are four sell ratings, eight hold ratings, and three buy ratings on the stock.
Posted in 3D Printer Company
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