Arcam AB Kicks Off the 3-D Printing Q2 Earnings Season With Weak Results

Swedish industrial metals 3-D printing company Arcam (NASDAQOTH: AMAVF  ) reported weak second-quarter 2014 earnings before the Stockholm exchange opened today. Arcam, which sells its electron beam melting 3-D printing systems to the orthopedic implant and aerospace markets, is the first company in the volatile 3-D printing sector to report Q2 results.

After initially dropping more than 11% on the Stockholm exchange, Arcam's stock price is now down about 8% in mid-day trading. Markets in the U.S. have not yet opened. (Arcam is listed on the Nasdaq OMX Stockholm, but it also trades over the counter in the U.S.)

Source: Arcam.

Arcam's Q2 results 
Here are the highlights: 

  • Revenue decreased by 14.6% to 46.1 million Swedish krona (MSEK), or about $6.75 million, from 54 MSEK in the year-ago period.
  • Net income plummeted 95% to 400,000 Swedish krona (SEK), or about $58,568, from 7.5 MSEK. 
  • Earnings per share dropped to 0.02 SEK, or about $0.003, from 0.47 SEK, or about $0.07. (Note: These numbers should be very close. Arcam only list EPS (and certain other data) for the six-month period, so quarterly EPS (and other data) has to be calculated. Additionally, the number of shares changed, so there were a couple calculations involved. At a minimum, Arcam should release its quarterly EPS on its quarterly earnings releases, as is customary. Further, it would also be a plus if the company included equivalent U.S. dollars in its financial releases. (The company would draw more U.S. investors, in my opinion, if it didn't make folks jump through hoops to obtain basic data.)
  • Four (4) electron beam melting systems were delivered versus seven (7) in the year-ago period.

There's no way to spin the quarterly financial results as anything but weak. Revenue was down somewhat, earnings were down even more (which means that margins contracted), and the company delivered only four 3-D printers, three fewer than in the second quarter of 2013. Additionally, on a pro forma basis, revenue (and possibly earnings) was surely down an even greater percentage, as Arcam completed the acquisition of the metal powder manufacturer AP&C in mid-February 2014. So AP&C's revenue was included in this year's Q2 results.

The forward-looking good news: increase in new orders
There is some good news: Arcam received 10 orders for 3-D printers in the quarter, which is three more than in the prior-year's quarter. Order backlog at the end of the second quarter was 16, versus 13 at the end of the second quarter of last year. (Note: While Arcam's current release lists 13 printers as the backlog for the year-ago period, the company's Q2 2013 earnings release shows 12 as the backlog at the end of the quarter. However, 13 was the backlog at the time of the earnings report. My guess is that 12 is the correct number, and this is likely a Swedish to English translation issue.)

At the time of this writing, Arcam had only released its earnings highlights, rather than its full results, so I can only provide results, not an analysis at this point. Stay tuned, Foolish investors! 

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Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 18, 2014, at 10:15 AM, HerrFreitag wrote:

    Sales in the first half increased 21%. Most of the sales this year came in the first quarter. Last year most of the sales were in the second quarter. Overall the company continues to grow. Orders are up sharply. This looks like a buying opportunity.

  • Report this Comment On July 18, 2014, at 7:02 PM, TMFMcKenna wrote:

    @HerrFreitag,

    You're correct that when looking at the first half picture, revenue increased 21%. Net income also grew in a pro forma basis (taking AP&C out of the pic). This article was simply my reporting of the quarterly results. The analysis and my throughts will be included in the more throrough piece. Certainly, when looking at a smaller company that sells pricey products, it's important to keep the "lumpiness" factor in mind. That's why it's best to look at results with a wider lens. I like annual or rolling 12-month.

    So, while I won't comment on the "buying opportunity" statement now, I don't disagree with you that the most important factor (orders) looked solid here. That said, I wouldn't categorize orders as "up sharply." Orders received for the first half of 2014 were 16, and they were 13 for the first half of 2013.

    Stay tuned -- and thanks for your comment.

    Beth McKenna

  • Report this Comment On July 18, 2014, at 8:14 PM, TMFMcKenna wrote:

    Hello HerrFreitag,

    You're correct that on a half year basis sales increased 21%. I might add that net income was also up for the half on a pro forma basis (adjusting for AP&C aquisition).

    This article was simply a reporting of the quarterly results as soon as we could bring them to readers. I always do an more thorough analysis, as well. However, that needs to be done after a conference call, as the calls are absolutely key in an analysis, IMO.

    I'm fully with your implication that simply looking at quarterly results in shortsighted. That's especially true of companies such as Arcam, which are smaller and sell relatively few numbers of pricey products. Quarterly results for such a company will be "lumpy" because just one or two sales shifted from one quarter to the next (for whatever reason) can greatly affect the year-over-year comparisons.

    While orders were up for both the quarter and the half, I'd not characterize them as up "sharply." There were 16 orders in the first half of this year vs. 13 in H1 2013. Steady growth for sure, but not strong.

    Thanks for your comment -- and I hope you'll read along with our coverage of Arcam and the other 3-D printing stocks.

    Beth McKenna

  • Report this Comment On July 21, 2014, at 10:58 AM, MayTepper wrote:

    Canaccord Maintains Buy On Arcam As Order Book Begins To Reflect Aerospace Ramp http://bit.ly/1yQjkA7

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