3D Systems Hits Up the Market ATM for $250 Million

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Just as I began to think 3D Systems (NYSE: DDD  ) management couldn't possibly give investors more to talk about, they go and float a new stock issue with the aim of raising around $250 million.

Of course, last week the company put up great first-quarter results, followed up by raising guidance and acquiring Rapid Product Development Group, and then announced that Staples  (NASDAQ: SPLS  ) will be the first retailer to offer its consumer-oriented Cube 3-D printers both online and in brick-and-mortar locations.

As a result, now's undoubtedly a great time for the company to raise capital, with the stock trading around 95 times trailing earnings and up more than 30% over the past month alone. Naturally, though, investors are frowning on the news of impending shareholder dilution.

What are they up to?
So how does 3D Systems plan to use the money? Future acquisitions, of course! In addition, some of the funds will also go toward working capital and the ever-vague "general corporate purposes."

That'll definitely give the company some breathing room, considering it ended last quarter with $110.5 million in cash, and we're still not exactly sure how much the company paid for RPDG.

One can't help wondering, then, who exactly sits in 3D Systems' well-funded crosshairs now. For one, up-and-coming competitor ExOne (NASDAQ: XONE  )  did recently post some solid numbers that sent its shares skyrocketing, but the newly public company is probably just out of reach, given its $550 million market capitalization. On that note, I still maintain that it wouldn't be a bad idea for 3D Systems to swallow the relatively tiny, privately owned MakerBot whole, especially considering that MakerBot's Replicator 3-D printers currently represent one of the most significant competitors to 3D Systems' Cube and CubeX lines.

Makerbot Replicator 3-D printer. Image source: MakerBot.

Foolish final thoughts
Of course, there are also dozens of other smaller privately owned companies in the additive manufacturing space, so, like RPDG, 3D Systems' next acquiree may very well be another name few people know.

Despite the dilution, however, 3D Systems' growth-by-acquisition tactics have served shareholders well so far, and there's little reason believe the company will squander this latest round of funding. As a result, I won't be selling my recently opened stake in 3D Systems anytime in the near future.

3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell the stock today. To start reading, simply click here now for instant access.

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  • Report this Comment On May 08, 2013, at 11:32 PM, MountainEdge wrote:

    I find it fascinating to follow 3D Systems' management and investors. It could quite possibly be the only company whose trading was halted and the stock finishes the day up. The company's management is going to issue another 6 million plus shares for approximately $250 million and many investors seem pleased. I guess it really isn't that much though, considering in the end it is going to take 10 million shares to retire the $152 million in convertible debt. Actually the company only received a little over $145 million after a 2 per cent discount and underwriting and other fees. All of which, is added back to GAAP earnings to arrive at "Non-GAAP earnings".

    However, perhaps the most interesting observation is the lack of pressure on management to separate revenue and gross margins for software, consumer printers and professional printers into a meaningful schedule each quarter.

  • Report this Comment On May 09, 2013, at 4:53 PM, chadvanslam wrote:

    I know that Makerbot is a private company that isn't publicly shared....that is a bummer or is it? I am a fan of DDD's earnings and its volatility. I would think of Makerbot as the Apple company of 3d printing and DDD the Microsoft. I guess that makes SSYS and XONE the LINUX and perhaps ONVO the true operating system. Its to bad I cant purchase any shares of Makerbot being that its not publicly traded. But on the other hand this might be a good thing because they can't be snuffed out through acquisition by DDD. I feel lucky to have broken even with my DDD shares in the last three months. Being more then a fool I was all in with my savings. So I guess you could say I pulled a hell merry. This being the case I guarantee I spent more time then most familiarizing myself with DDD and immersing myself with anything I could find on the subject. I tried to see what every good eye was seeing and had several discussion with others smarter then I on the subject. First off come on DDD.....get a website that doesn't have so many different urls and that is poorly put together. Did some lazy front pager navigator put this thing together.....sheesh! How hard is it to have a web designer make a website that doesn't look like a middle school-er put it together. This is actually a good way to scare an investor. Another thing that shakes me is how witty these people the way in which the company pulls these strategic & intelligent ballsy moves only when they have investors locked in with some other great news. Like yeah we had a great quarter but now I think we need to do some more dilution of your shares. Ha Ha Ha ! Like the 3 for 2, or this recent issuing of more shares. Hey...come on they were upfront and honest that insiders will be unloading a large some of the shares they carry. How else are they going to get away with it? I guess they could just do it Nike style but hey that might really rub people the wrong way. Hey, Michael Jacksons music is still popular though. It's like going into a store and taking something then walking out or they go up to the clerk being you and I and say hey I am going to take some valuables and walk out. Either way someone is being taken advantage of if they put up with it. Which is up to you. When you start looking at some of the fine details its just poorly put together. It just doesn't make sense. If you have company that is so great and profitable why do you have to acquire so many companies? I would have to say I would rather be a company that is able to organically culture good ideas and concepts from within to develop better and brighter things. Isn't this what FB is lacking? I just dont get it. On the other hand you look at Makerbots web site and you see its up to par with some simple standards of quality. I believe that I jumped in at the end of one of the companies up trends and would bet that this trend is going to start heading back down during this month like it did three months ago. This company may be a good investment for investing strategically but that's it. It is built around concepts user friendly for the chicken mcnugget people but lacks the quality of organic fine dining. I'm talking about quality baby! Hey if you can afford to spend 1300 on a printer I would bet you could do 3000. The funny thing is that its all going to get better and cheaper just like the cell phones did and computers. I know I am in no rush to purchase one. But after seeing how much a printed bird was going for on ebay maybe I am wrong. Makerbot printed that one by the way. I will have to go with a swing trade concept. Hopefully next time I jump on the swing it wont be 3/4 of the way up on its up trend. I hope I am right and that's all we really got. Nothing is for certain unless you are doing something illegal. I wish I was illegally good and right. I guess we will see ha ha ha!

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