It has been about a month since the last earnings report for 3D Systems (DDD). Shares have lost about 23.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is 3D Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
3D Systems' Reports Q4 Earnings
3D Systems Corporation delivered non-GAAP earnings of 10 cents per share for fourth-quarter 2018, higher than with 5 cents in the year-ago quarter. The bottom line also beat the Zacks Consensus Estimate of 6 cents.
This 3D printer maker’s revenues logged $180.7 million in the quarter under review, reflecting a year-over-year increase of 2%. However, the top line missed the Zacks Consensus Estimate of $185 million.
The year-over-year improvement was driven by growth in printer unit and printer revenues in both metals and plastics as well as growth in software and healthcare solutions. However, the company’s lower-priced products witness more demand, which in turn, is increasing the volatility in printer mix.
The tough year-over-year comparison and export-compliance charges in the on-demand manufacturing business remain key challenges in the first half of 2019. Further, the price-mix is likely to remain a headwind this year.
However, management is optimistic about the company’s shift in its investment focus to materials innovations and software growth opportunities.
3D Systems’ Healthcare revenues were up 16% to $58.4 million year over year, driven by growth across all categories.
The company’s on-demand manufacturing revenues were up 5% to $27.7 million, aided by growth in a few large orders from industrial customers. However, headwinds related to export compliance and outsourcing changes remain dampeners.
Printer revenues increased 17% and came in at $40.7 million. Meanwhile, printer unit sales skyrocketed 113%, driven by the company’s launch of a printer priced at about $5,000.
Software revenues rose 3% year over year to $26.7 million. Material revenues dipped 2% to $42 million due to a faster-than-expected decline in legacy materials. The company expects revival of materials growth during the second half of 2019.
Geographically, revenues in Americas declined 6% while that of Europe and Asia Pacific increased 11% and 9%, respectively.
In the reported quarter, non-GAAP gross margin contracted 200 basis points on a year-over-year basis to 46.3%. This downside was mainly due to unfavorable sales mix, increased investment to ramp and launch of products plus lower on-demand manufacturing margins, which more than offset the cost-reduction benefits, achieved from the ongoing supply-chain initiatives.
In the quarter under consideration, the company’s non-GAAP operating expenses rose 2% to $75.7 million due to the company’s persistent investment in new product development and launches, go-to-market strategy, IT infrastructure plus operational improvements. Non-GAAP SG&A increased 4% while non-GAAP R&D expense slipped 2% in the quarter under discussion.
Cash Flow and Balance Sheet
3D Systems ended the fourth quarter with cash and cash equivalents of nearly $110 million compared with $92.1 million in the previous quarter.
The company generated $7.7 million of cash in operational activities during the fourth quarter.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
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