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Sale of Cimatron and Q4 financials send 3D Systems stock skyrocketing at 84% higher [updating]

This morning 3D Systems (NYSE:DDD) reported the completion of the sale of its Cimatron and GibbsCAM software businesses to a subsidiary of ST Acquisition Co, resulting in purchase price proceeds of approximately $64.2 million. Using a portion of the proceeds from the sale, the company paid off approximately $21 million of outstanding balances under its senior secured term loan facility. With the paydown of the term loan, the company is now free of any outstanding debt but continues to have availability under its senior secured revolving credit facility, which remains fully undrawn at this point. The company also terminated the previously announced at-the-market equity program (“ATM Program”), under which no shares of common stock were sold during the fourth quarter of 2020. This, combined with better than expected financial results, sent the 3D Systems stock skyrocketing at +84.5% and counting today.

3D Systems is providing preliminary financial data for the quarter ended December 31, 2020. The company expects revenue for the fourth quarter of 2020 will be in the range of $170 million to $176 million and fourth quarter non-GAAP operating income in the range of $11 million to $19 million(1). The GAAP operating (loss) income for the fourth quarter is expected to be in the range of $(8.6) million to $0.5 million. This non-GAAP operating income range compares favorably to the non-GAAP operating income of $5.6M reported in Q4 2019 and $0.0M reported in Q3 2020. The GAAP operating loss for Q4 2019 was $(4.7) million and for Q3 2020 was $(67.6) million.

Dr. Jeffrey Graves, President and CEO of 3D Systems, said: “In the summer of 2020, we laid out a four-stage plan to deliver increased value to our customers and shareholders. This plan included: reorganization into two business units, Healthcare and Industrial Solutions; restructuring of our operations to gain efficiencies; divesting of non-core assets; and investing for accelerated, profitable organic growth. We are pleased to now see significant progress from these efforts, as reflected in accelerated top-line growth and rapidly strengthening operating margins. Our Team’s ability to deliver over 20% consecutive-quarter revenue growth in both business units, while executing large scale restructuring, was particularly gratifying to see. This was even more impressive when viewed with a backdrop of continuing headwinds from the COVID virus, which impacted our operations and those of our customers. Having surpassed our prior year, pre-COVID revenue performance in Q4, and with a continued strong focus on operational execution, we are excited about the trajectory we are on as we enter the new year.”

Dr. Graves continued, “The divestiture of Cimatron and GibbsCAM, which were businesses focused on subtractive technologies, was an important step in our plans to refocus our company on our core mission – ‘to be the leader in enabling additive manufacturing solutions for applications in growing markets that demand high reliability products.’ These divestitures strengthened our balance sheet, enabling us to both pay off our debt and terminate the ATM Program much earlier than originally planned.”

Dr. Graves concluded, “With the benefits of our organizational alignment, our technology and application leadership, and our relentless focus on operational execution, we are more optimistic than ever about the exciting future we see ahead in 2021 and beyond.”

The company has not yet completed its financial and operating closing procedures for the fourth quarter and full-year 2020, including but not limited to, review of various estimation accounts, recording of the divestitures completed late in the fourth quarter, completion and review of reconciliations, and various other year-end closing procedures. Additionally, the preliminary financial data above has not been subject to audit, review or other procedures by the company’s independent registered public accounting firm. As a result, actual results may differ materially from the preliminary results shown above and will not be publicly available until the company reports its fourth-quarter and full-year 2020 results in late February 2021.

Other 3D printing companies are also performing well lately, including Nano Dimension and the recently listed Desktop Metal. 3dpbm provides constant updates on the performances of most 3D printing companies in our stock portfolio on the dedicated 3D Printing Stocks Watch page. It should be noted that in spite of today’s jump, 3D Systems stock is still more than 70% lower than the peak reached in 2013 when, for a very short time, it traded above $90.

Full disclosure: the author of this article is quite happy to own 3D Systems stocks today

 

Davide Sher

Since 2002, Davide has built up extensive experience as a technology journalist, market analyst and consultant for the additive manufacturing industry. Born in Milan, Italy, he spent 12 years in the United States, where he completed his studies at SUNY USB. As a journalist covering the tech and videogame industry for over 10 years, he began covering the AM industry in 2013, first as an international journalist and subsequently as a market analyst, focusing on the additive manufacturing industry and relative vertical markets. In 2016 he co-founded London-based 3dpbm. Today the company publishes the leading news and insights websites 3D Printing Media Network and Replicatore, as well as 3D Printing Business Directory, the largest global directory of companies in the additive manufacturing industry.

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