Third Quarter Financial and Operational Results
- Revenue of $156.1 million reflects double-digit growth versus third quarter 2020
- Revenue adjusted for divestitures(1)was 35.9% higher and 21.2% higher than third quarter 2020 and pre-pandemic third quarter 2019, respectively – reflecting the continued strong growth momentum of the business
- Increasing revenue and sustained cost management drove strong profitability, with adjusted EBITDA margin of 10.5%; diluted GAAP earnings per share of $2.34, which includes gains from divestitures, and diluted Non-GAAP earnings per share of $0.08(1)
- Financial performance yielded positive operating cash flow of $20.7 million, the fourth consecutive quarter of positive cash flow from operations
- Closed on previously announced divestitures, increasing cash on the balance sheet to $502.8 million with no debt
- Two recently announced acquisitions, Oqton, closed on November 1, and Volumetric Biotechnologies, anticipated to close in the fourth quarter 2021, are expected to position the company for continued high-margin growth
Summary Comments on Results
Commenting on the results, President and Chief Executive Officer, Dr. Jeffrey Graves said, “In the third quarter last year we experienced the beginnings of a recovery from the depths of the COVID-19 pandemic. Businesses were opening up, and customers were returning. A year later, global economies are much stronger. We still see continued challenges with COVID-19, and new challenges around supply chains, but thanks to the great work by our team here at 3D Systems, we are pleased to report another strong quarter of double-digit growth as compared to the same period in both 2020 and pre-pandemic 2019, adjusted for divestitures. While we were delivering these results through our core portfolio of business, we also completed our divestitures of non-core assets and began the transition to a strategic growth phase. Our focus during this phase is investing in significant opportunities that we believe will drive high-margin recurring revenue, as evidenced by our acquisition in the software space of Oqton, and the hiring of a new Chief Scientist to further advance our technology development. More recently we made two announcements in the exciting area of regenerative medicine: the acquisition of Volumetric Biotechnologies and the expansion of our development agreement with United Therapeutics to include two additional human organs. The acquisition brings unique biological talent to our organization, including a new Chief Scientist for Regenerative Medicine, that we believe will allow us to expand and accelerate our growth in human and laboratory applications for bioprinting. These investments in software, products platforms, and regenerative medicine compliment an existing business portfolio that generated $20.7 million in cash from operations during the third quarter to bolster a balance sheet that boasted $503 million of cash, ready to support additional growth.”
Dr. Graves summarized, “I couldn’t be more pleased with our performance this quarter, both organic and inorganic. We will continue to focus investment in areas that we believe solve customers’ complex needs, drive adoption of additive manufacturing, and generate high margin, recurring revenue streams.”
Summary of Third Quarter Results
Revenue for the third quarter of 2021 increased 14.6% to $156.1 million compared to the same period last year and increased 35.9% when excluding businesses divested in 2020 and 2021. The results reflect ongoing strength in Industrial, which had revenue growth of 4.0% to $79.7 million compared to the same period last year. Adjusted for divestitures, Industrial revenue increased 28.1% year-over-year.
Revenue from Healthcare increased 28.3% to $76.4 million, compared to the same period last year. Adjusted for divestitures, Healthcare revenue increased 44.5% year-over-year, as we saw high demand for dental applications, both printers and materials.
Gross profit margin in the third quarter of 2021 was 41.2% compared to 43.1% in the same period last year. Non-GAAP gross profit margin was 41.5% compared to 43.2% in the same period last year. Gross profit margin decreased primarily as a result of businesses divested in 2020 and 2021. Excluding the impact of divestitures, gross profit margin increased 80 basis points in the third quarter of 2021 compared to the same period last year.
Operating expenses decreased 35.4% to $81.5 million in the third quarter of 2021, compared to the same period a year ago, primarily as a result of an impairment to goodwill recorded in the third quarter 2020. On a non-GAAP basis, operating expenses were $54.1 million, an 8.0% decrease from the third quarter of the prior year. The lower non-GAAP operating expenses reflect savings achieved from cost restructuring activities and divestitures, partly offset by spending in targeted areas to support future growth.
2021 Gross Profit Margin Outlook
Updating prior guidance, on a non-GAAP basis the company expects 2021 gross profit margins to be between 41% and 43%.
