3D Systems reports Q2 2020 results; announces reorganisation and restructuring plans
August 12, 2020
3D Systems Corporation, Rock Hill, South Carolina, USA, has announced its financial results for the second quarter ended June 30, 2020. The company also announced plans for a new strategic focus, restructuring and reorganisation to focus on its Healthcare and Industrial offerings.
The company reported revenues of $112.1 million for Q2 2020, compared to $157.3 million in Q2 2019. An operating loss of $33.9 million was reported, compared to $19.2 million in Q2 2019. The gross profit margin in Q2 2020 was 31.4%, compared to 46.6% in Q2 2019.
For the six months ended June 30, the company reported revenues of $246.8 million, down from $309.3 million in 2019. A six month operating loss of $52.1 million was recorded, compared to $40.5 million in 2019.
The company saw lower demand across all products and services during the quarter, due primarily to the COVID-19 pandemic, as many customers were shut down or on a significantly reduced level of activity.
Revenue from the company’s Healthcare segment decreased by 11.4% to $50 million, compared to Q2 2019, driven by the decrease in the dental market. Industrial sales decreased 38.5% to $62.1 million compared to Q2 2019, in all products, materials and services across all geographies.
Dr Jeffery Graves, president and CEO, commented, “Our results in the second quarter reflect continued impact from the COVID-19 pandemic; however, the pandemic has also demonstrated a clear role for flexible supply chain enabled by Additive Manufacturing, particularly in the medical field.”
“Redirecting the company is intended to bring us back to a sharp application focus on key markets that are growing,” he explained. “With a clear statement of purpose and a return to the ideals we were founded on, I believe 3D Systems will be successful.”
The company stated that it expects its announced resizing efforts, in conjunction with other cost reduction measures, to reduce annualised costs by approximately $100 million by the end of next year, enabling it to be profitable at current revenue levels, and be well positioned to leverage the sales growth as it returns.
Cost reduction efforts include reducing the number of its facilities and examining every aspect of its manufacturing and operating costs. 3D Systems will incur a cash charge in the range of $25–30 million for severance, facility closing and other costs, primarily in the second half of this year.
The company added that it may incur additional charges in 2021 as it finalises all the actions to be taken. Non-cash charges related to these actions are expected to be less than $5 million. The company is also evaluating the divestiture of parts of the business that do not align with this strategic focus.
Speaking on 3D Systems’ plans to focus on the healthcare and industrial markets, Graves stated, “We have a tremendous opportunity in this industry, and I am excited by the passion, the breadth of technology and the exceptional capabilities within our company.”
“In the two months since I joined 3D Systems, I have held many reviews and discussions with our employees and key customers to understand the value we deliver and the markets that we serve,” he stated. “This has enabled us to state a clear purpose for our company moving forward – one that builds on our unique history and core strengths […] We are the leaders in enabling AM solutions for applications in growing markets that demand high-reliability products.”
Graves added, “In connection with this organisational realignment, we have an opportunity to maximise efficiencies with a need to align our operating costs with current revenue levels. As such, we will reduce our workforce by nearly 20%, with the majority being completed by year-end.”
“This reduction in force is a difficult but essential step in our ongoing strategic process, designed to better position the company for sustainable and profitable growth,” he continued. “I would like to express my appreciation to each of the employees impacted by this decision for their dedicated service.”
