3D Systems(US:DDD)2025-08-11 20:39Part I - Financial Information Item 1. Financial Statements (Unaudited) Unaudited financial statements for Q2 2025 show $104.4 million net income, driven by a $125.7 million gain from the Geomagic divestiture, despite revenue decline and negative operating cash flow Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $116,358 | $171,324 | | Total current assets | $390,122 | $428,830 | | Total assets | $587,844 | $608,846 | | Liabilities & Equity | | | | Total current liabilities | $141,306 | $139,096 | | Long-term debt, net | $122,643 | $211,995 | | Total liabilities | $344,405 | $430,695 | | Total stockholders' equity | $241,246 | $176,193 | Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net income or loss for the three and six months ended June 30, 2025 and 2024 - A significant gain on disposition of $125.7 million in Q2 2025 turned an operating loss into a substantial net income of $104.4 million, compared to a net loss of $27.3 million in the same period last year14 Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $94,838 | $113,252 | $189,378 | $216,157 | | Gross profit | $36,150 | $47,098 | $68,839 | $88,020 | | Loss from operations | ($15,350) | ($26,412) | ($52,113) | ($66,274) | | Gain on disposition | $125,681 | $— | $125,681 | $— | | Net income (loss) attributable to 3D Systems | $104,436 | ($27,258) | $67,450 | ($43,259) | | Diluted EPS | $0.57 | ($0.21) | $0.37 | ($0.33) | Condensed Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($59,630) | ($36,308) | | Net cash provided by (used in) investing activities | $112,931 | ($9,505) | | Net cash used in financing activities | ($97,340) | ($90,380) | | Net decrease in cash | ($38,935) | ($138,825) | - Investing activities provided $112.9 million in cash, primarily from the $119.4 million in proceeds from the sale of assets and businesses, which offset cash used in operations and financing20 Notes to the Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, including significant transactions and accounting policies - On April 1, 2025, the company completed the sale of its Geomagic software business for $119.4 million in cash, recording a pre-tax gain of $125.7 million50 - In June 2025, the company issued $92.0 million of 5.875% convertible senior secured notes due 2030 and used the proceeds, along with cash on hand, to repurchase $179.7 million of its 0% convertible senior notes due 2026, resulting in a gain on debt extinguishment of $8.2 million6070 - The company initiated a new restructuring plan in 2025, expecting to incur $11 million to $20 million in pre-tax charges, primarily for employee severance, to deliver cost savings and improve cash flows114116 - The company is subject to several legal matters, including an ongoing SEC investigation, a dispute with former owners of Volumetric regarding earnout payments, and a new securities class action lawsuit filed in June 20259799106 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 revenue decline of 16.3% due to lower sales and divestiture, with operating loss narrowing from cost reductions, and liquidity impacted by cash flow and the Geomagic sale Results of Operations Analyzes the company's financial performance, including revenue, gross profit, and operating expenses, for the periods presented Revenue Change Analysis - Q2 2025 vs Q2 2024 (in thousands) | Category | Change (in thousands) | % Change | | :--- | :--- | :--- | | Total Revenue | ($18,414) | (16.3)% | | Products Revenue | ($17,932) | (25.0)% | | Services Revenue | ($482) | (1.1)% | - The decrease in revenue was primarily driven by a 24.8% decline in product sales volume, particularly in materials for dental, service bureaus, and jewelry markets, along with the impact of the Geomagic divestiture137 - SG&A expenses decreased by $17.4 million (33.7%) YoY in Q2 2025, mainly due to a $16.3 million reduction in compensation and benefits expense resulting from restructuring actions and lower incentive compensation143146 - R&D expenses decreased by $4.7 million (21.1%) YoY in Q2 2025, primarily due to improved operating efficiency and cost reductions from restructuring activities144 Segment Results Provides a breakdown of financial performance by the company's key operating segments, Healthcare Solutions and Industrial Solutions Segment Performance - Q2 2025 vs Q2 2024 (in thousands) | Segment | Revenue Q2 2025 (in thousands) | Revenue Q2 2024 (in thousands) | % Change | Gross Profit Q2 2025 (in thousands) | Gross Profit Q2 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Healthcare Solutions | $45,020 | $48,900 | (7.9)% | $20,382 | $22,435 | (9.2)% | | Industrial Solutions | $49,818 | $64,352 | (22.6)% | $15,768 | $24,663 | (36.1)% | - Healthcare Solutions revenue declined primarily due to lower materials sales in the dental market, including reduced volume with a key customer147 - Industrial Solutions revenue and gross profit decreased significantly due to the impact of the Geomagic divestiture, lower materials sales to service bureaus and jewelry markets, and unfavorable price/mix150152 Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations, including cash position, debt, and capital expenditures - Cash and cash equivalents decreased by $55.0 million since December 31, 2024, to a total of $116.4 million at June 30, 2025164 - The cash decrease was driven by $59.6 million used in operations, $97.3 million used in financing (including debt and stock repurchases), partially offset by $119.4 million in proceeds from the Geomagic sale164 - Material cash requirements include $126.7 million in outstanding long-term debt, $19.8 million in purchase commitments, and $95.2 million in lease obligations176177178 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk exposures, including interest rate and foreign currency risks, were reported for the six months ended June 30, 2025 - There were no material changes to the market risk assessment performed as of December 31, 2024190 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of June 30, 2025, due to previously identified material weaknesses, with a remediation plan actively in progress - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to the material weaknesses discussed in the 2024 Annual Report on Form 10-K191 - A remediation plan is in progress to address the identified material weaknesses, including increased training, enhanced documentation, and talent enhancements192 Part II - Other Information Item 1. Legal Proceedings Legal proceedings, including an SEC investigation, Volumetric earnout dispute, and a new securities class action, are incorporated by reference from Note 12 - Information regarding legal proceedings is incorporated by reference from Note 12 to the condensed consolidated financial statements195 Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported for the three months ended June 30, 2025 - There were no material changes during the three months ended June 30, 2025 to the risk factors previously reported196 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 8.16 million shares of common stock, including 8.0 million shares in June at $1.87 per share, as part of financing transactions - On June 24, 2025, the company repurchased 8.0 million shares of its common stock at a price of $1.87 per share in privately negotiated transactions199 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 154,194 | $2.03 | | May 2025 | 2,387 | $1.69 | | June 2025 | 8,001,631 | $1.87 | | Total | 8,158,212 | $1.87 | Item 5. Other Information The Board rejected Audit Committee Chair Ms. Drayton's resignation, citing her crucial financial expertise for overseeing remediation of internal control weaknesses - The Board of Directors rejected the contingent resignation of Audit Committee Chair Ms. Drayton, determining that her continued service is in the best interests of the company and its stockholders, particularly for overseeing the remediation of internal control weaknesses203