Why 3D Systems Earnings Plummeted More Than 15%

Source: Thinkstock
3D Systems Corp. (NYSE: DDD) reported third-quarter 2017 results after markets closed Tuesday afternoon. For the quarter the 3D printer maker reported adjusted diluted loss per share of $0.20 and $152.9 million in revenues. In the same period a year ago, 3D Systems reported a loss per share of $0.19 on revenue of $156.4 million. Third-quarter results compare to the Thomson Reuters consensus estimates for earnings per share (EPS) of $0.12 and $162.91 million in revenue.

Revenues were soft as demand for healthcare and industrial customers as well as “strong execution” in the EMEA region was more than offset by softer sales in the Americas and Asia Pacific regions.

The company reported gross margins of 38.3% in the quarter, down from 44.1% in the same period last year. Operating expenses remained essentially flat at $90.9 million.

CEO Vyomesh Joshi said:

While third quarter results did not meet our expectations, we believe actions taken during the quarter both organizationally and operationally better position the company for long term success. During the quarter, we reorganized the go to market team, changing key leadership positions in both the Americas and the Asia Pacific region while shifting to a worldwide go to market structure. We also completed a deep and comprehensive review of our portfolio based on year to date demand, market trends and a solid understanding of where we meet and will continue to meet customers’ expectations.

Consensus fourth-quarter estimates call for EPS of $0.18 on revenues of $176.82 million. For the full year analysts are looking for EPS of $0.44 on revenues of $654.66 million. The company did not provide guidance.

There’s virtually no chance that 3D Systems will meet the full-year estimates and only a slim chance that it will meet fourth quarter estimates. In the announcement the company said:

Management is focused on building the company for long term growth, profitability and success. This includes significant transformational work in solving for legacy issues while at the same time addressing current and go forward execution.

Solving “legacy issues” always costs money and so does “go forward execution.” A bit of focused discussion on these issues would go a long way to making investors feel better.

Shares of 3D Systems traded down by about 17% in Tuesday’s after-hours session at $10.32, below the 52-week range of $11.38 to $23.70. The 12-month consensus price target was $15.40 before results were announced.

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