Swedish industrial metals 3D-printing specialist Arcam AB (NASDAQOTH: AMAVF) reported fourth-quarter and full-year 2016 results last week. Quarterly revenue grew 18.2% to 208.1 million Swedish krona, or approximately $22.9 million. However, operating income, net income, and earnings per share turned negative. 

Arcam's results were better than the headline numbers reflect. The company incurred nonrecurring costs of 44.8 million Swedish krona in the quarter, which were fully responsible for turning operating income negative. Moreover, it faced tough comparables, as it had a strong year in 2015. 

Shares of Arcam have soared 117% in the one-year period through Feb. 13. The bulk of this gain came in September after General Electric (NYSE:GE) announced its intention to acquire Arcam. While the industrial giant came up short on the complete takeover, it owns 76.1% of Arcam's shares, giving it a controlling stake. 

Arcam's Q4 key numbers 


Q4 2016

Q4 2015

Change (YOY)


208.1 million SEK

176.0 million SEK


Operating income

(29.1 million SEK)

14.0 million SEK


Net income

(17.5 million SEK)

2.7 million SEK


Earnings per share

(0.84 SEK)  0.13 SEK  N/A 

Data source: Arcam. SEK = Swedish krona. YOY = year over year.

Excluding the nonrecurring costs mentioned above, operating income is 15.7 million SEK, representing growth of 12.1% over the year-ago period. These costs carry through to negatively impact net income and earnings per share (EPS).

Of the total revenue, 128.7 million SEK -- or nearly 62% -- was generated from the parent company, down from 139.7 million SEK in the fourth quarter of 2015.  The remaining revenue was generated by the company's two subsidiaries: Connecticut-based orthopedic implant contract manufacturer DiSanto and Canada-based metal powder producer AP&C.

Arcam's full-year 2016 key numbers 




Change (YOY)


648.3 million SEK

576.1 million SEK


Operating income

(29.8 million SEK)

50.2 million SEK


Net income

(10.8 million SEK)

24.3 million SEK


Earnings per share

(0.52 SEK)

1.18 SEK


Data source: Arcam. SEK = Swedish krona.. YOY = year over year.

As with the reported quarter, operating income for the year includes nonrecurring costs of 44.8 million SEK. Excluding these costs, operating income was 15.0 million SEK, representing a decline of 70.1% over the year-ago period. These costs carry through to negatively impact net income and EPS.

Of the total revenue, 403.4 million SEK -- or just over 62% -- was generated from the parent company, down from 423.5 million SEK in 2015. DiSanto and AP&C contributed the remainder. 

Skull with a 3D-printed implant.

Image source: Arcam.

What happened with Arcam in the quarter?

  • 15 3D printers, powered by Arcam's electron beam melting (EBM) technology, were delivered in the quarter, versus 16 in the year-ago period.
  • 24 orders for EBM systems were received, versus 29 in the year-ago period.
  • GE acquired 76.1% of Arcam shares.
  • The Q10plus and Q20plus 3D printers were launched. These models offer "up to 25% higher productivity with improved surface finish and precision" over the first-generation models.
  • DiSanto continues to be a drag on results. While revenue from the 3D printing of implants is increasing, it hasn't been enough to offset the decrease in revenue from the production of implants using traditional technology. 
  • AP&C continues to perform well. To meet growing demand for its high-quality titanium powder for 3D printing and other processes, Arcam has been adding to capacity. In May, it added three reactors to its existing five at its facility in Montreal, and in May, it announced it was building a new powder manufacturing plant outside of Montreal.

What happened with Arcam in the year?

  • 50 EBM systems were delivered during the period, which is the same number as in 2015.
  • 48 orders for EBM systems were received, versus 58 in 2015.
  • 25 systems were on backlog at the end of the year, versus 27 in 2015.

Given General Electric's deep pockets and influence in the industrial realm, its acquisition of a controlling stake in Arcam should provide a tailwind for Arcam's growth going forward. However, the bidding process had a negative impact on Arcam's operations in the second half of 2016, since it consumed top management time, according to CEO Magnus Rene's statement in the press release.

Moreover, Rene noted that EBM customers have been taking a "somewhat cautious position," and that Arcam is finding that "it takes longer to close new orders."

A decent year for a challenging market 

Arcam's year-over-year revenue jumped 18.2% in the quarter and 12.5% in 2016. This is good growth for a pure-play 3D printing company in the current environment, which continues to be characterized by a slowdown in demand for 3D printers by industrial customers and a lengthening of sales cycles. 

Moreover, Arcam's operating income for both the quarter and year were positive, excluding the nonrecurring expenses incurred in the fourth quarter. Excluding these expenses, year-over-year operating income increased in the quarter.

Importantly, demand for Arcam's EBM systems remains solid. Granted, investors would prefer an increase, but the absence of a decrease in the current environment is a positive. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.