3D Systems Corp. announced its financial results for the second quarter ended June 30, 2024.
Second Quarter Financial Results and Recent Business Highlights
(All numbers are unaudited and are presented in millions, except per share amounts or as otherwise noted)
- Q2'24 revenue of $113.3 million increased 10.1% quarter-over-quarter across printers, materials and services and both Healthcare and Industrial markets. Year-over-year revenue decreased 11.7% primarily driven by lower printer sales, partially offset by growth in services
- Q2'24 gross profit margin of 41.6% and Non-GAAP gross profit margin(1) of 40.9%. Improvements from prior year period primarily driven by favorable mix
- Q2'24 net loss of $27.3 million, diluted loss per share of $0.21, and Non-GAAP diluted loss per share(1) of $0.14, including approximately $2 million (or $0.01 per share) of transient fees related to extended 2023 audit
- Q2'24 negative Adjusted EBITDA(1) of $12.9 million reflects impacts of lower total sales volume, and higher than anticipated operating expenses primarily driven by 2023 audit related costs
- Updating guidance for remainder of FY'2024 to now include expectation for continued sequential quarterly improvement and full-year revenues within the range of $450 million - $460 million
Summary Comments on Results
Commenting on second quarter results, Dr. Jeffrey Graves, president and CEO of 3D Systems said, “We are encouraged by the sequential revenue progress we delivered during the second quarter despite a challenging operating environment. Our top-line improved 10% quarter-over-quarter, reflecting strong performance by our Industrial and Healthcare markets for hardware, materials, and services . While our second-quarter revenue saw a year-over-year decline, this was primarily due to reduced printer sales to a specific dental customer and ongoing macroeconomic pressures on customer capital spending. We remain optimistic about the future given our most recent sequential recovery and continued momentum in our robust customer pipeline. As a result, given our performance through the first half and current macroeconomic and geopolitical conditions, we are now targeting revenues for the full-year 2024 in the range of $450 million - $460 million, as we anticipate continued sequential revenue improvements in the third and fourth quarters.”
Dr. Graves continued, “During the quarter, we continued to deliver gross margin improvements annually and sequentially, in spite of the year-over-year volume decline. Looking forward, we believe our in-sourcing and restructuring actions, which have favorably impacted our cost-of-goods this year, will continue to drive gross margin expansion moving forward. Additionally, we are beginning to demonstrate steady improvement with respect to our operating expenses, which should accelerate in the second half of the year. While many of these costs remain elevated from the prior year, the primary driver is related to costs associated with our extended 2023 audit, which we expect will be more muted in the third quarter and then fully behind us by the fourth quarter. We expect to exit the year with normalized Non-GAAP operating expenses below $60 million by the fourth quarter, which on an annualized basis would be within our previously provided full-year range. In combination with the sequential improvement in revenues expected throughout the second half, we believe the significant reduction of operating expense in the second half will propel the company to near break-even adjusted EBITDA for the fourth quarter. While conditions remain challenging in the near-term, we have taken considerable actions to derisk our balance sheet since the end of 2023 and believe we are well-positioned with our critical R&D investments to capitalize on a very bright future ahead.”
Summary of Second Quarter Results
Revenue for the second quarter of 2024 decreased 11.7% to $113.3 million compared to the same period last year, primarily driven by lower printer sales and partially offset by growth in services.
Healthcare Solutions revenue decreased 19.7% to $48.9 million compared to the same period last year primarily due to a decline in printer sales to a large orthodontics customer, partially offset by growth in our personalized health services business.
Industrial Solutions revenue decreased 4.4% to $64.4 million compared to the same period last year with declines noted year-over-year in both hardware and materials but increasing on a consecutive quarter basis.
Gross profit margin for the second quarter of 2024 was 41.6% compared to 39.0% for the same period last year. Non-GAAP gross profit margin was 40.9% compared to 38.9% for the same period last year. Gross profit margin increased primarily due to favorable product mix, partially offset by unfavorable absorption associated with lower volumes.
Operating expense for the second quarter of 2024 was $73.5 million compared to $81.7 million for the same period last year. Non-GAAP operating expense of $64.2 million increased $2.1 million compared to the same period last year and included approximately $2 million of higher external auditor fees and outside services primarily related to the delayed filing of the Annual Report on Form 10-K for the year ended December 31, 2023.
Net loss attributable to 3D Systems Corporation for the second quarter of 2024 was $27.3 million compared to a net loss of $28.9 million for the same period last year.
Adjusted EBITDA decreased by $6.0 million to a loss of $12.9 million in the second quarter of 2024 compared to the same period last year. The decrease in Adjusted EBITDA primarily reflects lower total sales volume and an increase in operating expense.
Updating 2024 Outlook
Based on current macroeconomic and geopolitical conditions, 3D Systems is updating its financial guidance for the remainder of 2024 as follows:
- Revenues for the full-year 2024 within the range of $450 million - $460 million, with continued sequential revenue improvement in Q3'24 and Q4'24
- Non-GAAP gross profit margin for the full-year 2024 within the range of 40% - 42%
- Non-GAAP operating expense of less than $60 million for Q4'24 and for the full-year 2024 within the range of $248 million - $253 million
- Adjusted EBITDA near break-even for Q4'24
Financial Liquidity
At June 30, 2024, the company had cash and cash equivalents of $192.7 million, a decrease of $138.8 million since December 31, 2023. The decrease resulted primarily due to cash used in operations of $36.3 million, capital expenditures of $7.2 million, and repayment on borrowings of $87.2 million. At June 30, 2024, the company had total debt, net of deferred financing costs of $211.4 million.
Q2 2024 Conference Call and Webcast
The company will host a conference call and simultaneous webcast to discuss these results on August 29, 2024, which may be accessed as follows:
Date: Thursday, August 29, 2024
Time: 5:00 p.m. Eastern Time
Listen via webcast: www.3dsystems.com/investor
Participate via telephone: 201-689-8345
A replay of the webcast will be available approximately two hours after the live presentation at www.3dsystems.com/investor.
