3D Systems Corporation announced higher-than-expected third-quarter 2020 financial results on November 5, 2020, right on the heels of announcing the sale of two business lines. Analysts had predicted that the company would post negative earnings per share (EPS), with low-end revenues. The firm announced more EPS and revenue. This earnings season is the first for CEO Jeffrey Graves and CFO Jagtar Narula. It also marks the end of a quarter in which the company began to restructure with a focus on healthcare and industrial sectors. The company’s investor briefing for the third quarter stressed this change while pointing up additive manufacturing’s massive potential in the coming years.
The company’s results represent a marked improvement from the worst of the COVID economic downturn, while still posting decreases from last year’s quarterly financial position. Q3 GAAP revenues stood at $135.1 million; 2019’s Q3 revenues were $155.3 million, but 2020’s second-quarter revenues were $112.1 million. Q3 similarly posted a $0.61 loss per share compared to a loss of $0.15 per share at the same time in 2019. This large number, however, accounts for a $0.41 per share pre-tax non-cash goodwill impairment charge. The company posted a non-GAAP loss per share of $0.03. This number is up from the same time in 2019, where the company reported a $0.04 loss per share. Q2 2020 notched a $0.13 loss per share.
Analyst expectations from the third quarter estimated significantly fewer earnings and revenues. The average EPS estimate was a loss of $0.08 per share. Revenues were projected to be $113.98 million. 3D Systems beat these numbers by $0.05 per share and $21.12 million above analyst expectations for revenue.
The company attributes its relative success to steady growth in demand following the pandemic trough.
Restructuring at the company no doubt also helps its revenue stream, notably the loss of twenty percent of the company’s workforce.
The company’s ambitions under the new CEO and CFO are clear after it agreed to sell Cimatron Limited. This subsidiary will go to Battery Ventures. 3D Systems will receive $65 million in exchange, subject to any closing adjustments. The sale reflects 3D’s streamlining its offering: Cimatron operated integrated CAD/CAM software and CNC programming software businesses. The company’s renewed focus on additive manufacturing leaves little room for these lines. The sale is expected to close during the fourth quarter of 2020.
Commenting on the quarter, CEO, Dr. Jeffrey Graves, said, “While the challenges of the pandemic persist, we were pleased to deliver strong sequential quarterly growth in both our Healthcare and Industrial businesses of approximately 20%, as markets incrementally opened around the world. While volatility continues, we anticipate these trends continuing as we move forward through our fourth quarter. With our restructuring efforts on track to deliver our targeted $60 million in savings on a run-rate basis by year-end, we are pleased with our progress in the quarter and believe we will exit the year a much more efficient, highly focused additive manufacturing company that is well-positioned as a market leader in this exciting industry.”
Dr. Graves continued, “From a balance sheet perspective, we have made substantial progress in our divestiture of non-core assets, and, earlier this week, we’re pleased to announce an agreement on the sale of our Cimatron and GibbsCAM software businesses, the focus of which is subtractive manufacturing technology. This sale, which we expect will close in the coming weeks, will strengthen our balance sheet and help ensure our ability to execute our planned restructuring activities while maintaining critical investments for growth in our core businesses. We continue to pursue further divestitures of non-core assets to occur in the months ahead.”