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Why 3D Systems Stock Just Dropped 12.5%

By Rich Smith - Aug 8, 2019 at 12:40PM

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Earnings "beat" -- but that doesn't mean 3D actually earned anything last quarter.

What happened

Shares of 3D Systems (DDD -1.84%) stock are down 12.5% as of noon EDT after the 3-dimensional printer manufacturer reported a sales miss and a big GAAP loss in its fiscal second-quarter 2019 earnings results released last night.  

The news wasn't all bad. When adjusted for "one-time items," 3D says it actually broke even for the quarter -- $0.00 losses, $0.00 profits -- whereas Wall Street had thought the company would lose $0.04 per share pro forma.  

Still, sales came in light at only $157.3 million, versus the $160.8 million analysts had expected, and that was a pretty clear "miss."

3D printer

Image source: Getty Images.

So what

Compared to last year's Q2 results, 3D's sales declined 11% year over year. Last year's Q2 GAAP loss was only $0.08 per share; this year it was $0.21 per share. So from that perspective also, the results were not great.

Despite the lousy numbers, 3D CEO Vyomesh Joshi said 3D saw "strength in customer demand for our core and new products and solutions." He attributed the weak numbers to the "ordering patterns of a [single] large enterprise customer" and also a "delay in shipping Factory metals systems" to customers.

Curiously, Joshi also noted that printer unit volume sold was "46.4 percent higher" in this quarter than last, evidencing the demand he earlier referenced -- but suggesting (since sales fell) that perhaps pricing is not holding up very well, or that 3D sold mainly lower-tier, cheaper units. As further evidence of that, printer revenue dropped by 27.4% despite higher unit sales.

Now what

As far as what the future holds, 3D gave no guidance regarding earnings projections for the third quarter or for the year. Analysts, for what it's worth (they were, after all, pretty off the mark in Q2), predict the company will swing from a Q3 profit last year to a loss in this year's Q3 -- again, pro forma -- on a less-steep slide in sales year over year.

If all goes as planned, 3D should lose about a penny per share on total quarterly sales of $164.3 million in Q3.

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