3D Systems (DDD 2.31%) released only preliminary fourth-quarter and full-year 2017 results after the market close on Wednesday.
The diversified 3D printing company plans to file its 10-K for the year with the Securities and Exchange Commission (SEC) and hold its conference call on Wednesday, March 14. The delay in filing is related to accounting procedures for revenue and costs related to its product warranties.
The market loved the preliminary numbers, sending shares of 3D Systems rocketing 15% in after-hours trading on Wednesday.
Here's what you should know.
Image source: 3D Systems.
3D Systems' preliminary quarterly numbers
|
Metric |
Preliminary Q4 2017 |
Q4 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue (or sales) |
$176 million to $180 million |
$165.9 million |
6% to 7% |
|
GAAP earnings per share GAAP) |
($0.10) to ($0.08) |
$0.05 |
N/A |
|
Adjusted EPS |
$0.03 to $0.05 |
$0.15 |
(80%) to (67%) |
Data source: 3D Systems. GAAP = generally accepted accounting principles.
For context -- though long-term investors shouldn't place too much weight on Wall Street's near-term estimates -- analysts were looking for 3D Systems to post adjusted EPS of $0.01 on revenue of $162.1 million. The company's preliminary results crushed both estimates, which is why the market reacted so positively. We know this for sure because 3D Systems didn't release 2018 guidance at this time, so we can rule out attributing the stock's pop to this reason.
For full-year 2017, 3D Systems expects to report revenue in the range of $645 million to $647 million, which represents growth of approximately 2% over 2016. (2017 revenue got a boost from the company's acquisition of Vertex Global's dental material brands in the first quarter. Excluding the contribution from this acquisition, 3D Systems' revenue in 2017 was likely flat, at best, with 2016.)
For the year, the company expects to report a GAAP loss in the range of $0.58 to $0.60 per share, which is wider than its $0.35-per-share loss in 2016. It also anticipates a non-GAAP, or adjusted, loss of $0.01 to $0.03 per share, versus the EPS of $0.46 it posted in the prior year.
What management had to say
Here's what CEO Vyomesh Joshi had to say in the press release about the quarter:
We are pleased with the growth in revenue from healthcare, metals, software and on demand manufacturing, as well as more balanced regional execution experienced in the fourth quarter.
From this statement, we can surmise that the company probably didn't experience growth in revenue generated from 3D printer sales. While overall revenue growth in the quarter is certainly a positive, investors should stay focused on 3D printer revenue, which continues to slide on a year-over-year basis. Considered along with changes in unit sales, this metric can reflect demand and the degree of pricing pressure in the market. Competition heated up beginning in 2016 when HP Inc. and well-funded start-up Carbon launched fast polymer 3D printers for the enterprise market. Moreover, sales of 3D printers are central to 3D Systems' razor-and-blade-like business model as they drive sales of high-profit-margin print materials.
Joshi continued:
While we still have work to do, we made significant progress in 2017 to stabilize and turn around the company. We believe our investments in go-to-market combined with improved processes and better execution have started to show results, and I'm looking forward to discussing our progress and our significant opportunity going forward on our conference call in a couple of weeks.
Looking ahead
3D Systems' preliminary revenue and earnings exceeded Wall Street's expectations, which is surely welcome news to the company's investors, who are ravenous for any shred of good news. That said, the market may have gotten a bit carried away, sending shares soaring 15% in after-hours trading. While revenue growth looks promising, one quarter is just one quarter and doesn't make a trend. More importantly, 3D Systems didn't release 2018 guidance, so investors don't yet know how sustainable the company views its modest uptick in revenue and what it expects from a profitability standpoint this year.
Cautious optimism is the name of the game at this point. Investors will know much more on March 14 when the company releases its official results and holds its earnings call.
