The 3D Printing industry continued its dismal performance in the third quarter after two disappointing back-to-back quarters. The below-par performance for the companies that have reported so far was primarily attributable to the excess capacity due to rapid expansion of the industry on one hand and weaker macroeconomic conditions on the other, resulting in an overall slowdown in capital equipment spending. This created a huge imbalance in the demand and supply chain, and adversely affected both the top- and bottom-line of almost all the industry participants.
Q3 Earnings Recap
A major chunk of the companies in the 3D Printing industry have already reported their third-quarter results, including some of the bigwigs. Let us have a brief recap of their earnings.
3D Systems Corporation DDD: This Zacks Rank #5 (Strong Sell) stock reported an adjusted loss of 4 cents per share for third-quarter 2015 that miserably missed the Zacks Consensus Estimate of earnings of 1 cent. A continued challenging operating environment as well as lower revenue from 3D printing products and services added to the woes. Revenues declined 9% year over year to $151.6 million and lagged the Zacks Consensus Estimate of $179 million.
In order to tide over the situation, 3D Systems has decided to reduce its cost structure through stringent cost-cutting initiatives, refocus its resources around near-term opportunities and improve quality across the organization.
Perceptron, Inc. PRCP: This Zacks Rank #3 (Hold) stock reported a net loss of 23 cents for the quarter, which was wider than the Zacks Consensus Estimate of a loss of 18 cents. The disappointing year-over-year performance despite higher revenues was primarily driven by significantly higher operating expenses. Although revenues increased 34.3% year over year to $15.1 million, it missed the Zacks Consensus Estimate of $16 million. Moving forward, the company aims to capitalize on the launch of several new 3D metrology products for a healthy earnings growth.
Camtek Ltd. CAMT: Camtek reported adjusted earnings of 3 cents per share that was flat year over year and missed the Zacks Consensus Estimate by a penny. Although this Zacks Rank #2 (Buy) stock faltered in earnings, revenues of $26.3 million were up 17% year over year and were in line with the Zacks Consensus Estimate. The healthy top-line performance was largely due to solid sales in the semiconductor market. The company expects a steady revenue stream with higher penetration levels in new markets.
Stratasys Ltd. SSYS: Stratasys appears to be the lone bright spot in the earnings chart with net loss of 5 cents for the quarter, which was narrower than the Zacks Consensus Estimate of a loss of 15 cents. However, this Zacks Rank #3 stock slipped on top-line performance with revenues of $167.6 million, down from $203.6 million in the year-ago quarter and missing the Zacks Consensus Estimate of $176 million as orders did not materialize as expected. The company expects the near-term visibility to continue to remain low, adversely affecting its revenue growth in the future quarters as well.
Stratasys intends to make adjustments to its costs and operating structure, while remaining committed to working on significant advancements for existing platforms, as well as the development of new capabilities and business models to beat the odds in the long term.
Light at the End of the Tunnel?
A handful of companies in the sector are yet to report their quarterly results and the beleaguered industry expect to get some reprieve from the battered earnings chart. Below we provide you with a brief synopsis of the upcoming earnings releases.
The ExOne Company XONE: This Zacks Rank #4 (Sell) stock is scheduled to report its third quarter results after the closing bell on Nov 5. The current Zacks Consensus Estimate is pegged at a loss of 7 cents, which represents a year-over-year improvement of 77.0%, on revenues of $18 million. However, ExOne has a dreaded history of drastically missing both the estimates over the past several quarters. Whether an increased credit facility for providing lease financing to customers will increase its global installed base and lend stability to earnings remains to be seen.
Voxeljet AG VJET: With third-quarter 2015 results due on Nov 12, this Zacks #3 stock expects Services revenue growth to outpace Systems revenue growth in the current year. The Zacks Consensus Estimates for revenues and earnings are currently pegged at $6 million and a loss of 14 cents, respectively. Historically, Voxeljet had a mixed bag of earnings and revenue surprises over the past few quarters. The company expects higher global Systems sales and continued Services revenue growth at its facility in Friedberg, Germany. Let’s see if the company can surpass the corresponding estimates when it reports a few days later.
Autodesk, Inc. ADSK: This Zacks Rank #4 stock is scheduled to report its third quarter results after the closing bell on Nov 19. The company is well positioned to capitalize on the rapid adoption of computer-aided designing and manufacturing through its comprehensive product portfolio. For the third quarter of fiscal 2016, Autodesk expects revenues in the range of $580 million – $600 million, while the Zacks Consensus Estimate is pegged at $592 million. The Zacks Consensus Estimate for the impending earnings remains at a loss of 13 cents.
Moving Forward: Reasons to Cheer
Although the year-to-date performance of almost all 3D Printing stocks vis-à-vis average price return is relatively abysmal in comparison to the benchmark S&P 500 index, there appears to be a glimmer of hope as several experts believe that these stocks have found a bottom.
According to Wohlers Report 2014, the worldwide 3D printing industry is expected to grow from $3.07 billion in revenue in 2013 to $12.8 billion by 2018, and exceed $21 billion in worldwide revenue by 2020 with a CAGR of 34%. Chat Reynders, chairman & CEO of Reynders, McVeigh Capital Management, observed: “While we may or may not be on the absolute bottom for the stock, there is promise ahead for long-term investors that can weather through the current volatility.”
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