Summary Comments on Results

Commenting on the results, President and Chief Executive Officer, Dr. Jeffrey Graves said, “In our second quarter last year we were in the rapidly-tightening grip of the COVID pandemic, with virtually no visibility into the magnitude or duration of the impact on our Company.   It was into this tumultuous environment that we launched our four-phase transformation plan: reorganize into Healthcare and Industrial business units, restructure to gain operating efficiencies, divest non-core assets and then invest for the future.   Today, after perhaps the most challenging 12 months that any of us has experienced, our world has changed for the better in several ways.   Not only is the global economy rebounding, but additive manufacturing is being implemented at an increasing rate in production as companies seek a more capable and flexible supply chain for critical components.   Our focus, and our performance over this past year, has validated our core purpose statement: To be leaders in enabling additive manufacturing solutions for applications in growing markets that demand high-reliability products.”

Dr. Graves continued, “Our second quarter performance reflected continued positive momentum, with results that greatly surpassed those of a year ago from both a revenue and profitability perspective.   Perhaps even more importantly, we also saw double-digit revenue growth on a consecutive quarter basis, an important indicator of the momentum we are now experiencing.   Further evidence of our momentum is our results versus our 2019 pre-COVID second quarter performance. We were pleased to deliver over 11% organic revenue growth against the second quarter 2019 results, which in this case means exclusive of businesses we have divested, along with a dramatic improvement in profitability.    From a cash perspective, we again were pleased with our performance in the quarter, having generated $13.5 million in cash from operations.   We believe this performance is the result of our exclusive focus on additive manufacturing, bringing together our printers, materials and software technologies to solve specific key customer applications that drive market adoption in both Healthcare and specific Industrial markets such as semiconductors, space systems, and advanced transportation systems.”  

Dr. Graves further commented, “From a divestment standpoint, we have announced the sale of both our On-Demand Parts business, which focused on the rapid production of components using a multitude of digital manufacturing methods, and Simbionix, a medical simulation business.   We are pleased to confirm that these transactions complete our efforts to exit non-core businesses, enabling our entire focus and investment priority to be on additive manufacturing moving forward.   Once completed, we believe the sale of these assets, combined with our cash generation from operations will leave us with a very strong balance sheet, with roughly $500 million in cash and no debt. We believe our consistent performance, and our balance sheet, positions us well for future investment in our core business.”

Dr. Graves summarized, “We are excited about the tremendous progress we have made this past year, reinforcing our foundation in additive manufacturing and positioning ourselves for a very exciting future.   From a strategic standpoint, as one of the largest companies in our industry, we have both the scale and the breadth of technologies, encompassing both polymers and metals, that our customers require for their success. We believe the magic for our company, and one that is increasingly evident in our results each quarter, is the intense organizational and operational focus we now have on delivering specific, market-leading customer applications, across both our Healthcare and Industrial businesses.    Using this approach, we are successfully bringing together the hardware, materials and software technologies that our customers need for the successful adoption of additive manufacturing.   This is translating each quarter into exciting growth and profitability, creating value for all of our stakeholders.”   

Summary of Second Quarter Results

Revenue for the second quarter of 2021 increased 44.1% compared to the same period last year and increased 59.3% when excluding businesses divested in 2020 and 2021. Revenue increased 11.3% compared to last quarter.   The results reflect continued strength in Healthcare and an increase in demand from Industrial customers as compared to last quarter. Revenue from Healthcare increased 68.6% to $82.8 million, compared to the same period last year, and increased 14.2% compared to last quarter. This increase from last quarter included double digit growth in medical applications, as well as strong demand for dental materials. Compared to the same period last year, Industrial sales increased 25.3% to $79.7 million, and increased 49.6% when excluding businesses divested in 2020 and 2021. Compared to last quarter, Industrial sales increased 8.3% with solid demand in both products and materials.

Gross profit margin in the second quarter of 2021 was 42.4% compared to 31.2% in the same period last year. Non-GAAP gross profit margin was 42.4% compared to 41.0% in the same period last year. Compared to last quarter, gross profit margin decreased approximately 140 basis points primarily as a result of non-recurring write downs related to equipment and inventory.

Operating expenses increased 14.5% to $79.1 million in the second quarter of 2021, compared to the same period a year ago, primarily as a result of expenses related to stock compensation including bonuses. On a non-GAAP basis, operating expenses were $55.2 million, a 3.3% decrease from the second quarter of the prior year. The lower non-GAAP operating expenses reflect savings achieved from cost restructuring activities, offset by spending in targeted areas to support future growth.

2021 Gross Profit Margin Outlook

Consistent with prior guidance, on a non-GAAP basis the company expects 2021 gross profit margins to be between 40% and 44%.

Financial Liquidity

At June 30, 2021, the company had cash on hand of $131.8 million, no debt and a $100 million unused revolving credit facility with full availability based on the terms of the agreement. Cash has increased $47.8 million since December 31, 2020, driven primarily by net proceeds from divestitures of $54.7 million and cash generated from operations of $42.0 million, partially offset by a debt repayment of $21.4 million, acquisition costs of $14.9 million and other financing and investing uses of cash.

Q2 2021 Conference Call and Webcast

3D Systems expects to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 with the Securities and Exchange Commission today, August 9, 2021. The company will host a conference call and simultaneous webcast to discuss these results tomorrow morning, which may be accessed as follows:

Date: Tuesday, August 10, 2021
Time: 8:30 a.m. Eastern Time
Listen via webcast: www.3dsystems.com/investor
Participate via telephone: 201-689-8345

A replay of the webcast will be available approximately two hours after the live presentation at www.3dsystems.com/investor.

Forward-Looking Statements

Certain statements made in this release that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements, including the ability to consummate the divestiture of non-core assets as expected. In many cases, forward looking statements can be identified by terms such as “believes,” “belief,” “expects,” “may,” “will,” “estimates,” “intends,” “anticipates” or “plans” or the negative of these terms or other comparable terminology. Forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to the company’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the control of the company. The factors described under the headings “Forward-Looking Statements” and “Risk Factors” in the company’s periodic filings with the Securities and Exchange Commission, as well as other factors, could cause actual results to differ materially from those reflected or predicted in forward-looking statements. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved. The forward-looking statements included are made only as the date of the statement. 3D Systems undertakes no obligation to update or revise any forward-looking statements made by management or on its behalf, whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law.