Presentation of Information in this Press Release
3D Systems reports its financial results in accordance with GAAP. Management also reviews and reports certain non-GAAP measures, including: non-GAAP revenue excluding divestitures and on a constant currency basis (sometimes referred to as excluding divestitures and FX effects), non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating expenses, non-GAAP operating (loss)/income, non-GAAP interest and other income/(expense), net, non-GAAP net income (loss), non-GAAP basic and diluted income (loss) per share, adjusted EBITDA, and adjusted EBITDA margin. These non-GAAP measures exclude certain special items that management does not view as part of 3D Systems’ core underlying results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort underlying business trends and results. Management believes that the non-GAAP measures provide useful additional insight into underlying business trends and results and provide a more meaningful comparison of period-over-period results. Additionally, management uses the non-GAAP measures for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. 3D Systems’ non-GAAP measures are not calculated in accordance with or as required by GAAP and may not be calculated the same as similarly titled measures used by other companies. These non-GAAP measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.
To calculate the non-GAAP measures, 3D Systems excludes the impact of the following items:
- amortization of intangible assets, a non-cash expense, as 3D Systems’ intangible assets were primarily acquired in connection with business combinations;
- costs incurred in connection with acquisitions and divestitures, such as legal, consulting and advisory fees;
- stock-based compensation expenses, a non-cash expense;
- restructuring charges (cost optimization plans), impairment charges, including goodwill and divestiture gains or losses;
- certain legal costs and other settlements;
- certain compensation expense related to the 2021 Volumetric acquisition; and
- revenue and costs from 2021 divested businesses are excluded from 2021 reported results so the results are comparable to the current period.
Amortization of intangibles, acquisition and divestiture related costs are excluded from non-GAAP measures as the timing and magnitude of business combination transactions are not predictable, can vary significantly from period to period and the purchase price allocated to amortizable intangible assets and the related amortization period are unique to each acquisition. Amortization of intangible assets will recur in future periods until such intangible assets have been fully amortized. While intangible assets contribute to the company’s revenue generation, the amortization of intangible assets does not directly relate to the sale of the company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the company’s acquisition activity. Accordingly, the company believes excluding the amortization of intangible assets enhances the company’s and investors’ ability to compare the company’s past financial performance with its current performance and to analyze underlying business performance and trends. Although stock-based compensation is a key incentive offered to certain of our employees, we continue to evaluate our business performance excluding stock-based compensation; therefore, it is excluded from non-GAAP measures. Stock-based compensation expenses will recur in future periods. Restructuring charges (cost optimization plans), impairment charges, including goodwill and divestiture gains or losses, are excluded from non-GAAP measures as the frequency and magnitude of these activities may vary widely from period to period. Additionally, impairment charges, including goodwill, are non-cash. Certain legal costs and other settlement expenses are excluded as the timing and magnitude are not predictable and can vary from period to period distorting underlying business trends and results. Additionally, these amounts are not included when allocating resources and evaluating results relative to employee compensation targets. Furthermore, 3D Systems excludes contingent consideration recorded as compensation expense related to the 2021 Volumetric acquisition from non-GAAP measures as management evaluates financial performance excluding this expense, which is viewed by management as similar to acquisition consideration.
The matters discussed above are tax effected, as applicable, in calculating non-GAAP net income and basic and diluted earnings per share.
Non-GAAP revenue excluding divestitures and on a constant currency basis, as used in this earnings release, means reported revenue less revenue from businesses divested in 2021 and adjusted for foreign exchange changes for the quarter and nine months ended September 30, 2021, estimated using the same exchange rates as applied for the respective period in 2022. Non-GAAP revenue excluding divestitures and on a constant currency basis is used to assist management in the analysis of the company’s net revenue trends.
Adjusted EBITDA, defined as net income, plus income tax (provision)/benefit, interest and other income/(expense), net, stock-based compensation expense, amortization of intangibles, depreciation expense and other non-recurring and/or non-cash items all as described above (excluding the impact of divestitures in 2021), is used by management to evaluate performance and helps measure financial performance period-over-period.
A reconciliation of GAAP to non-GAAP financial measures is provided in the accompanying schedules in the Appendix.
3D Systems does not provide forward-looking guidance for certain measures on a GAAP basis. The company is unable to provide a quantitative reconciliation of forward-looking non-GAAP gross profit margins and non-GAAP operating expenses to the most directly comparable forward-looking GAAP measures without unreasonable effort because certain items, including legal, acquisition expenses, stock-compensation expense, intangible amortization expense, restructuring expenses, and goodwill impairment, are difficult to predict and estimate. These items are inherently uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.
About 3D Systems
More than 35 years ago, 3D Systems brought the innovation of 3D printing to the manufacturing industry. Today, as the leading Additive Manufacturing solutions partner, we bring innovation, performance, and reliability to every interaction - empowering our customers to create products and business models never before possible. Thanks to our unique offering of hardware, software, materials and services, each application-specific solution is powered by the expertise of our application engineers who collaborate with customers to transform how they deliver their products and services. 3D Systems’ solutions address a variety of advanced applications in Healthcare and Industrial markets such as Medical and Dental, Aerospace & Defense, Automotive and Durable Goods. More information on the company is available at www.3dsystems.com
Investor Contact: investor.relations@3dsystems.com
Media Contact: press@3dsystems.com
Tables Follow:
3D Systems Corporation | |||||||
Unaudited Condensed Consolidated Balance Sheets | |||||||
September 30, 2022 and December 31, 2021 | |||||||
(Unaudited) | |||||||
(In thousands, except par value) |
September 30,
2022 |
December 31,
2021 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 341,297 | $ | 789,657 | |||
Short-term investments | 268,097 | — | |||||
Accounts receivable, net of reserves — $3,049 and $2,445 | 100,310 | 106,540 | |||||
Inventories | 125,962 | 92,887 | |||||
Prepaid expenses and other current assets | 29,599 | 42,653 | |||||
Total current assets | 865,265 | 1,031,737 | |||||
Property and equipment, net | 55,942 | 57,257 | |||||
Intangible assets, net | 82,538 | 45,835 | |||||
Goodwill | 357,545 | 345,588 | |||||
Right of use assets | 41,810 | 46,356 | |||||
Deferred income tax asset | 4,337 | 5,054 | |||||
Other assets | 23,933 | 17,272 | |||||
Total assets | $ | 1,431,370 | $ | 1,549,099 | |||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND EQUITY | |||||||
Current liabilities: | |||||||
Current lease liabilities | $ | 8,205 | $ | 8,344 | |||
Accounts payable | 53,419 | 57,366 | |||||
Accrued and other liabilities | 56,016 | 76,994 | |||||
Customer deposits | 7,089 | 7,281 | |||||
Deferred revenue | 27,644 | 28,027 | |||||
Total current liabilities | 152,373 | 178,012 | |||||
Long-term debt, net of deferred financing costs | 448,852 | 446,859 | |||||
Long-term lease liabilities | 42,011 | 47,420 | |||||
Deferred income tax liability | 8,577 | 2,173 | |||||
Other liabilities | 43,647 | 32,254 | |||||
Total liabilities | 695,460 | 706,718 | |||||
Commitments and contingencies (Note 14) | |||||||
Redeemable noncontrolling interest | 1,654 | — | |||||
Stockholders’ equity: | |||||||
Common stock, $0.001 par value, authorized 220,000 shares; shares issued and outstanding 130,419 and 128,375 | 130 | 128 | |||||
Additional paid-in capital | 1,533,340 | 1,501,210 | |||||
Accumulated deficit | (718,410 | ) | (621,251 | ) | |||
Accumulated other comprehensive loss | (80,804 | ) | (37,706 | ) | |||
Total stockholders’ equity | 734,256 | 842,381 | |||||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ | 1,431,370 | $ | 1,549,099 |