3D Systems comments on Stratasys bid, publishes Q2 results
August 10, 2023
3D Systems, Rock Hill, South Carolina, USA, has announced its financial results for the second quarter ended June 30, 2023, and the paths the company may take to scale. The company’s financial results showed a Q2 2023 revenue of $128.2 million and year-to-date revenue of $249.4 million, which represents a decrease of 8.5% and 8.6% from the prior year, respectively. This decrease was mainly attributed to expected weakness in the dental orthodontics markets. However, when excluding this market, year-to-date revenue increased by over 3% and approximately 2% on a purely organic basis.
In relation to the potential Stratasys merger, 3D Systems CEO Jeffrey Graves stated, “At 3D Systems, we see two distinct paths to achieving scale. The first is an immediate step-function change through our proposed combination with Stratasys, which has the added benefits of significant short-term cost synergies and an outstanding breadth of combined technology platforms for sustained, long-term growth. The second path is to attain scale organically, leveraging our current metal and polymer technology portfolio, which is the broadest in the industry, and our groundbreaking development efforts in regenerative medicine, which you will hear much more about over time. Either path can be successful, but the combination with Stratasys clearly accelerates the benefits to our customers and shareholders, which is why we have been working on this concept for the last two years, and so passionately over the last two months.”
“Candidly, we expected this transaction to be announced by now and are frustrated by the pace and the lack of any engagement on the merger agreement we delivered to Stratasys signed in escrow on July 13. We remain committed to pursuing this powerful combination for the benefit of our collective shareholders, but can only conclude the merger if Stratasys shares our commitment.”
“Looking at the state of the Additive Manufacturing market today, it is increasingly clear to us that the industry is at an exciting inflection point, with 3D printing now moving into factory production environments worldwide,” stated Dr Graves. “What we and many others in our space agree upon is that scale is increasingly necessary, not only to deliver sustainable profitability, but also to diversify end markets and smooth out quarterly results, such that one market, technology, or customer does not have an outsized impact on consolidated financial results.”
”For our company, the dramatic success we have experienced in the dental orthodontics market over many years has now translated into an outsized negative impact as consumer discretionary spending on dental aligners has plummeted,” he continued. “Over the last four quarters this has created a significant headwind to our performance, with total revenues from this market declining by over $50 million. While we are pleased to see this market now showing signs of stabilisation, the ultimate answer is to broaden market exposure and continue to expand the sales, service and technology expertise that our customers require. Unfortunately, our 3D printing industry today remains highly fragmented and, until this is rectified, all companies will be exposed to similar volatility over time.”
The company reported a net loss of $28.8 million, with a diluted loss per share of $0.22, and a diluted non-GAAP loss per share of $0.07. The Adjusted EBITDA of negative $6.9 million improved over 30% sequentially, but declined year-over-year. This was primarily driven by lower total sales volume, inflationary impacts on input costs, and substantial investments in future organic growth.
Gross profit margin in the second quarter of 2023 was 39.0% compared to 37.9% in the same period last year. The non-GAAP gross profit margin was 38.9%, compared to 38.0% in the same period last year. Gross profit margin increased primarily due to favourable pricing, product mix and cost optimisation efforts to in source production.
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