3D Systems (DDD) Q1 2025 Earnings Call May 13, 2025 08:30 AM ET Company Participants Mick McCloskey - Treasurer & Vice President of Investor RelationsDr. Jeffrey Graves - President and CEOJeffrey Creech - Executive VP & CFOTroy Jensen - Managing DirectorBrian Drab - Co-Group Head–IndustrialsAlek Valero - Equity Research Associate Conference Call Participants Greg Palm - Senior Research Analyst Operator Greetings. Welcome to three d Systems First Quarter twenty twenty five Earnings Call. At this time, all pa ...

3D Systems (DDD) Q1 2025 Earnings Call May 13, 2025 08:30 AM ET Company Participants Mick McCloskey - Treasurer & Vice President of Investor RelationsDr. Jeffrey Graves - President and CEOJeffrey Creech - Executive VP & CFOTroy Jensen - Managing DirectorBrian Drab - Co-Group Head–IndustrialsAlek Valero - Equity Research Associate Conference Call Participants Greg Palm - Senior Research Analyst Operator Greetings. Welcome to three d Systems First Quarter twenty twenty five Earnings Call. At this time, all pa ...

3D Systems (DDD) Q1 2025 Earnings Call May 13, 2025 08:30 AM ET Speaker0 Greetings. Welcome to three d Systems First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Mick McCluskey, VP, Treasurer, Investor Relations. Thank you. You may begin. Speaker1 Hello, and welcome to three d Systems' first ...

May 13, 2025 First Quarter 2025 Financial Results Welcome and Participants Dr. Jeffrey Graves President & Chief Executive Officer Jeffrey Creech Executive Vice President & Chief Financial Officer Mick McCloskey Vice President, Treasury & Investor Relations To participate via phone, please dial: 1-201-689-8345 2 Forward Looking Statements Certain statements made in this presentation that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securit ...

Core Viewpoint - 3D Systems reported a quarterly loss of $0.21 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, indicating a significant earnings surprise of -61.54% [1] Financial Performance - The company posted revenues of $94.54 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.91% and down from $102.91 million year-over-year [2] - Over the last four quarters, 3D Systems has not surpassed consensus EPS estimates and has topped revenue estimates only once [2] Stock Performance - 3D Systems shares have declined approximately 27.7% since the beginning of the year, contrasting with the S&P 500's decline of -3.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.12 on revenues of $108.25 million, and for the current fiscal year, it is -$0.39 on revenues of $427.61 million [7] - The trend of estimate revisions for 3D Systems is mixed, which could change following the recent earnings report [6] Industry Context - The Commercial Printing industry, to which 3D Systems belongs, is currently ranked in the top 22% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Revenue and Profitability - For the three months ended March 31, 2025, revenue decreased by $8.4 million, or 8.1%, to $94.54 million compared to $102.91 million for the same period in 2024[120] - Product revenue declined by $9.3 million, primarily due to lower materials volume in the dental, service bureaus, and jewelry markets, while service revenue increased by $1.0 million[120] - Gross profit decreased by $8.2 million, or 20.1%, to $32.69 million for the three months ended March 31, 2025, compared to $40.92 million for the same period in 2024[122] - The Company reported a loss from operations of $36.76 million for the three months ended March 31, 2025, compared to a loss of $39.86 million for the same period in 2024, reflecting an improvement of $3.1 million[117] - Gross profit fell by $7.3 million, or 30.4%, to $16.7 million for the three months ended March 31, 2025, primarily due to unfavorable price and mix and lower sales volumes[129] Expenses - Selling, general and administrative expenses (SG&A) decreased by $7.5 million, or 13.1%, to $49.77 million for the three months ended March 31, 2025[123] - Research and development expenses (R&D) decreased by $3.8 million, or 16.2%, to $19.68 million for the three months ended March 31, 2025[123] Cash Flow and Liquidity - Cash and cash equivalents decreased by $36.3 million, or 21.2%, to $135.0 million as of March 31, 2025, primarily due to cash used in operations[138] - Cash flow used in operating activities increased by $8.2 million to $33.8 million for the three months ended March 31, 2025, compared to the same period in 2024[142] - The aggregate changes in trade accounts receivable, inventory, and trade accounts payable used $5.9 million of cash during the three months ended March 31, 2025, compared to $11.1 million in the prior year[145] - Operating working capital decreased by $30.6 million, or 10.4%, to $263.9 million as of March 31, 2025, compared to December 31, 2024[136] - Cash held outside the U.S. was $58.2 million, or 43.1% of total cash and cash equivalents, as of March 31, 2025, compared to $63.8 million, or 37.3%, at December 31, 2024[139] Restructuring and Business Changes - The Company expects to incur approximately $12 million to $20 million in pre-tax restructuring costs by the end of the second fiscal quarter of 2026[109] - The Company completed the sale of its Geomagic software business for $119.4 million in cash, with an estimated pre-tax gain of $125.3 million expected in Q2 2025[112] - The 2025 Restructuring Plan aims to deliver sustainable growth and profitability through streamlining infrastructure and business processes[108] Market and Accounting Considerations - Total non-operating income decreased by $24.0 million to $1.4 million for the three months ended March 31, 2025, compared to $25.4 million in the prior year[130] - The remaining goodwill assigned to the Healthcare reporting unit may be subject to impairment if there is a decrease in its estimated fair value or an increase in its carrying value[157] - There have been no material changes to critical accounting estimates as described in the 2024 Annual Report on Form 10-K[158] - No material changes or developments have occurred that would alter the market risk assessment performed as of December 31, 2024[159]

Revenue Performance - Revenue for Q1 2025 decreased by 8% to $94.5 million compared to $102.9 million in Q1 2024, primarily due to lower materials sales[7]. - Total revenue for the three months ended March 31, 2025, was $94.54 million, a decrease of 8.1% from $102.91 million in the same period of 2024[19]. - Product revenue decreased to $54.72 million from $64.05 million, while service revenue increased slightly to $39.82 million from $38.85 million[19]. - Healthcare Solutions revenue decreased by 9% to $41.3 million, while Industrial Solutions revenue decreased by 7% to $53.2 million compared to the prior year[8]. Profitability and Loss - Gross profit margin for Q1 2025 was 34.6%, down from 39.8% in the same period last year, reflecting lower volumes and unfavorable price and mix[9]. - Gross profit for the period was $32.69 million, down 20.1% from $40.92 million year-over-year[19]. - Net loss attributable to 3D Systems increased to $37.0 million in Q1 2025, a $21.0 million increase from the prior year[10]. - The net loss attributable to 3D Systems Corporation was $36.99 million, compared to a net loss of $16.00 million in the same quarter of 2024, representing a 131.2% increase in loss[19]. - Adjusted EBITDA for Q1 2025 was $(23.9) million, worsening from $(20.1) million in Q1 2024[34]. Cost Management - The company is implementing a $20 million cost reduction initiative in 2025 to align with current demand and macroeconomic risks[4]. - Operating expenses totaled $69.45 million, a reduction of 13.9% compared to $80.78 million in the prior year[19]. - Non-GAAP operating expenses were $61.60 million, down from $66.30 million year-over-year[33]. Cash and Liquidity - Cash and cash equivalents totaled $135.0 million as of March 31, 2025, a decrease of $36.3 million since December 31, 2024[12]. - Cash, cash equivalents, and restricted cash at the end of the period were $136.21 million, a decrease from $213.61 million at the end of the same period in 2024[21]. - The company reported a net cash used in operating activities of $33.79 million, compared to $25.55 million in the prior year[21]. - The balance sheet was strengthened by the sale of the Geomagic portfolio, adding over $100 million to cash reserves, totaling approximately $250 million as of April 30, 2025[4]. Guidance and Future Outlook - The company has withdrawn its full-year guidance for 2025 due to anticipated weakness in customer capital investment spending[11]. - 3D Systems does not provide forward-looking guidance for certain measures on a GAAP basis due to the unpredictability of certain costs[31]. Shareholder Metrics - Diluted loss per share (GAAP) for Q1 2025 was $(0.28), compared to $(0.12) in Q1 2024[35]. - Non-GAAP diluted loss per share for Q1 2025 was $(0.21), compared to $(0.17) in Q1 2024[35]. - Stock-based compensation expense for Q1 2025 was $4.2 million, down from $8.2 million in Q1 2024[34]. - Legal and other expenses in Q1 2025 amounted to $1.1 million, compared to $4.2 million in Q1 2024[34]. - Restructuring expenses were recorded at $1.0 million in Q1 2025, with no such expenses in Q1 2024[34]. Other Financial Metrics - Interest income for Q1 2025 was $(0.4) million, a decrease from $(2.1) million in Q1 2024[34]. - Depreciation expense for Q1 2025 was $4.7 million, slightly down from $5.0 million in Q1 2024[34]. - Amortization expense decreased to $1.0 million in Q1 2025 from $2.3 million in Q1 2024[34].

Core Viewpoint - 3D Systems Corporation reported a decline in revenue and increased net loss for Q1 2025, primarily due to delayed capital investments from customers amid macroeconomic uncertainties and tariff concerns [3][4][6]. Financial Performance - Revenue for Q1 2025 was $94.5 million, down 8% from $102.9 million in Q1 2024 [2][6]. - Gross profit decreased to $32.7 million, with a gross profit margin of 34.6%, compared to $40.9 million and 39.8% in the prior year [2][7]. - Operating loss was $36.8 million, slightly improved from a loss of $39.9 million in Q1 2024 [2][6]. - Net loss attributable to 3D Systems increased to $37.0 million from $16.0 million year-over-year [2][7]. - Diluted loss per share was $0.28, compared to $0.12 in the same period last year [2][31]. Segment Performance - Healthcare Solutions revenue decreased by 9% to $41.3 million, while Industrial Solutions revenue fell by 7% to $53.2 million [6][19]. Cost Management Initiatives - The company is on track with a previously announced $50 million cost savings initiative, with an additional $20 million in savings expected in 2025 [4][5]. - Operating expenses were reduced to $69.5 million from $80.8 million year-over-year, reflecting the company's focus on cost efficiency [2][4]. Market Conditions and Outlook - The company withdrew its full-year guidance for 2025 due to anticipated prolonged weakness in customer capital expenditure spending [4][9]. - Despite current challenges, the company believes its strong product portfolio positions it well for future growth when capital spending rebounds [10][4]. Financial Liquidity - As of March 31, 2025, cash and cash equivalents totaled $135.0 million, down from $171.3 million at the end of 2024 [11][15]. - The company strengthened its balance sheet with over $100 million from the sale of the Geomagic portfolio, increasing cash reserves to approximately $250 million [4][5].

Core Insights - 3D Systems is a leader in Digital Dentistry, providing advanced 3D printing solutions for dental applications, enabling efficient delivery of patient-specific devices [1][4] - The company's NextDent materials portfolio addresses over 30 applications, including those for repairing teeth, and is recognized for its quality and aesthetics [2][5] - The U.S. dental market for 3D printing technology is projected to be nearly $1 billion by 2029, with specific segments for 'repair', 'straighten', 'protect', and 'replace' valued at approximately $150 million, $125 million, $150 million, and $600 million respectively [4][5] Company Strategy - 3D Systems focuses on integrating its NextDent materials with various dental 3D printers, enhancing accessibility and adoption of its solutions [3][5] - The company emphasizes research and development to continuously improve its offerings, aiming to meet diverse patient needs and enhance the quality of dental prosthetics [4][6] - The company's Digital Dentistry Solutions have served over one million patients, showcasing the impact of its technology in the dental industry [6] Market Position - 3D Systems has established a comprehensive portfolio of integrated solutions, positioning itself to drive widespread adoption of 3D printing across all dental applications [1][4] - The company has formed strategic partnerships, such as with Saremco Dental AG, to expand its material offerings and enhance its product capabilities [2][4] - The NextDent materials are fully biocompatible and carry necessary regulatory clearances, reinforcing the company's commitment to quality and safety in dental applications [3][5]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for 3D Systems despite lower revenues, with a focus on how actual results will compare to estimates [1][2] Earnings Expectations - 3D Systems is expected to report a quarterly loss of $0.13 per share, reflecting a year-over-year change of +23.5% [3] - Revenues are projected to be $98.39 million, down 4.4% from the same quarter last year [3] Estimate Revisions - The consensus EPS estimate has been revised 3.23% higher in the last 30 days, indicating a positive reassessment by analysts [4] - A positive Earnings ESP of +36% suggests analysts are bullish on the company's earnings prospects [10][11] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8] - The current Zacks Rank for 3D Systems is 3, indicating a likelihood of beating the consensus EPS estimate [11] Historical Performance - In the last reported quarter, 3D Systems was expected to post a loss of $0.11 per share but actually reported a loss of $0.19, resulting in a surprise of -72.73% [12] - The company has not beaten consensus EPS estimates in any of the last four quarters [13] Conclusion - While 3D Systems appears to be a compelling earnings-beat candidate, other factors should also be considered when evaluating the stock ahead of its earnings release [16]