3D Systems Corporation DDD reported adjusted loss (including stock-based compensation) of 2 cents for second-quarter 2015 which missed the Zacks Consensus Estimate earnings of 3 cents.
The weak results were primarily attributed to higher expenses.
Quarter Details
The 3D printer maker reported revenues of $170.5 million, reflecting a year-over-year increase of 12.5%. On constant currency (cc) basis, revenues increased 22%. However, revenues lagged the Zacks Consensus Estimate of $178 million.
Increased demand for products from industrial customers, including aerospace and healthcare, contributed to overall top-line growth. However, weakness in the overall operating environment proved to be a drag on the organic revenue performance.
On a geographic basis, the EMEA region, comprising Europe, the Middle East & Africa, witnessed organic growth of 25% year over year. Growth in this region was triggered by strong demand for the company’s offerings. Also, Americas recorded a 15% year-over-year increase in revenues for the second quarter, backed by modest recovery in the area. However, sluggish economic environment in the Asia Pacific region led to a 9% decline in revenues on a year-over-year basis.
Gross margin remained flat on a year-over-year basis at 47.8%. Also, the company’s selling and administrative expense was up 58.4% to $79.7 million, while research and development expenses rose 45.2% to $25.7 million.
Quarter Highs
Despite a challenging quarter, 3D Systems continues to focus on expansion of market share through strategic partnerships. In this regard, the company has entered into new partnerships with Konica Minolta in Australia, HK 3D in the U.K. and MLC CAD Systems in the U.S. to strengthen its foothold across key markets. Additionally, to improve its position in the emerging Chinese economy, the company completed the acquisition of Easyway.
In a bid to improve its competitive position in the research & development area of aerospace and defense, the company inked agreements with Honeywell, a well renowned Air Force Research Laboratory as well as the U.S. Navy. This apart, the company has also penned distribution agreements with biotechnology product development company Thermo Fisher Scientific that bodes well for the long term. Growing adaptability of 3D printing in government and defense, industrial/business machines and education research continues to prompt the company to take such actions.
Cash Flow and Balance Sheet
3D Systems ended the quarter with cash and cash equivalents of $171.2 million, down from $199.9 million as on Mar 31, 2015. As of Jun 30, 2015, cash utilized in operating activities was $6.4 million compared with a cash flow of $0.9 million from operating activities as of Mar 31, 2015.
To Conclude
Over the past few quarters, 3D Systems is experiencing unfavorable broader market conditions that have badly hit its financial performance. The company had also withdrawn its guidance in the first quarter of 2015 due to strong volatility in macroeconomic environment, which severely upset investors. Macroeconomic factors such as economic slowdown, inflation, currency fluctuations, commodity prices and credit availability negatively impacted the company’s performance.
3D Systems presently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the technology sector include Apple Inc. AAPL, Ambarella, Inc. AMBA and Mellanox Technologies, Ltd. MLNX. While both Apple Inc. and Ambarella carry a Zacks Rank #2 (Buy), Mellanox Technologies sports a Zacks Rank #1 (Strong Buy).
We are reissuing this article to correct a mistake. The article issued earlier should no longer be relied upon.
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