Image source: Arcam.

What: Shares of Arcam AB (NASDAQOTH: AMAVF) closed down 8.7% on Thursday after the Swedish industrial metals 3D printing specialist released tepid second-quarter 2016 earnings results before the market opened. The stock had been down as much as 11% before regaining some lost ground. 

Arcam sells its proprietary electron beam melting, or EBM, systems to the aerospace and orthopedic implant markets. 

So what: Arcam's revenue slipped 1.9% to 147.7 million Swedish krona, or about $17.5 million, from the year-ago period. The company posted an operating loss of 4.8 million krona, versus a profit of 19.7 million krona in the second-quarter 2015. Net income dropped to 1.5 million krona from 12.4 million krona.

Arcam delivered 14 EBM systems in the quarter, which is flat compared to the year-ago period's deliveries. Positively, it received nine orders for its 3D printers in the quarter, up from seven in Q2 2015.

Arcam also has two subsidiaries: AP&C, which produces metal powders, and DiSanto, a contract manufacturer of orthopedic implants. AP&C is buzzing along -- demand for its product is strong, so Arcam has been steadily increasing capacity. DiSanto, however, continues to be a drag on the company's results. Arcam's press release states that revenue from the EBM side of the business "is still not compensating for the weak sales within traditionally manufactured implants."

Now what: It's not surprising that the market sent the stock tumbling, as the stock price had -- and still has -- assumptions of robust growth built in. The stock was trading at a lofty valuation of 128 times trailing 12-month earnings going into the release.

That said, this is a small company, so quarterly earnings will be especially lumpy. Moreover, Arcam's 3D printer deliveries are dependent upon customers' schedules.

The six-month 2016 picture is mixed: Positively, Arcam stepped up its delivery rate -- delivering 28 EBM systems, versus 23 in the first half of 2015. However, it received just 15 system orders in the first half of 2016, down from 17 in the year-ago period. While this is just a small decline, it's a number investors must watch. Orders are a direct reflection of customer demand.