3D Systems released their annual financial report and I’m having a hard time seeing many positive elements in it.
The annual report represents a formal declaration of the company’s financial outcome from operations during the 2019. It is always interesting to observe trends in their numbers to understand what’s happening.
At the highest level, most statistics seem to be down. Revenue is down from US$687M in 2018 to US$629M in 2019 (a drop of 8.5%), with drops in each of products, materials and services segments.
The company’s gross profit also dropped from US$324M to US$278M (a drop of 14%). However, when combined with all expenses, the company lost US$57M in 2019, an increase of 32% on the negative side. Working capital dropped to US$210M.
3D Systems says the poor results:
“reflect a decrease in printers revenue due to the ordering patterns of a large enterprise customer and the exit of our entertainment business, as well as macroeconomic slowdown in manufacturing activity.”
These all sound terribly negative, but perhaps there is some sunshine in the details? I took a deeper look at their Form 10K submission.
In spite of the losses, 3D Systems is still a huge company with dozens of products in many areas of 3D printing and related services. The company said their equipment produced “nearly 200 million production parts” for their clients in 2019, and that surely must be one of the highest counts in the industry.
During 2019, the company launched a number of new products and improvements, with perhaps the Figure 4 system being the most notable. They also launched several new materials, some of which we saw live at Formnext. Numerous improvements to their software tools were also implemented during 2019.
3D Systems was able to cut operating expenses by 8.8%, continuing the pattern they established when they hired current (but soon to retire) CEO Vyomesh Joshi. However, the expense cutting was unable to match the drop in revenue, hence the increased overall loss.
One interesting statistic is that 3D Systems now says that healthcare operations represents some 34.2% of their revenue, more than one-third of their cash. This seems in line with my suspicion that they are gradually transforming into a healthcare company.
I think the results presented by 3D Systems are not surprising. To truly make changes in their financials, they’re going to have to make some yet-to-come strategic moves, and I had some ideas of what they could consider.
It’s very likely this annual report is the last to be issued under current CEO Joshi. Their 2020 annual report will be issued by an as-yet unannounced new CEO, and hopefully the results will be more positive.
Via 3D Systems