3D Systems and Stratasys have reported fourth-quarter 2019 results, which we're going to compare metric for metric. (3D Systems' results here and Stratasys' here).
Remember, qualitative factors can be just as meaningful as quantitative ones and we're just looking at one quarter. However, even with these caveats, the findings from this exercise should help you make investing decisions in the 3D printing space.
Image source: Getty Images.
Revenue
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems (DDD -3.63%) |
$164.6 million, down 8.9% from the year-ago period |
|
Stratasys (SSYS -2.25%) |
$160.2 million, down 9.5% |
Data sources: company earnings reports.
Advantage: Tie.
Both companies experienced sizable year-over-year sales declines in the fourth quarter. These declines were very similar percentage-wise, so I'm calling this category a draw.
Both companies cited a soft global macroeconomic industrial environment as the main culprit for their struggles. In addition, 3D Systems also named two other factors: the delay in factory metals printing shipments and the timing of large enterprise customer orders.
Unfortunately, that weak macroeconomic environment they experienced in Q4 is poised to get much weaker due to the COVID-19 pandemic.
GAAP earnings per share (EPS)
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems |
($0.04), flat with ($0.04) in the year-ago period |
|
Stratasys |
($0.05), down from $0.12 |
Data sources: company earnings reports. GAAP = generally accepted accounting principles.
Advantage: 3D Systems.
Both companies had an unprofitable quarter from a GAAP basis, with their results quite similar. 3D Systems gets this win, however, because its results at least held steady, while its rival's results deteriorated considerably from the year-ago quarter.
Adjusted EPS
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems |
$0.05, down 50% from $0.10 in the year-ago period |
|
Stratasys |
$0.18, down 14% from $0.21 |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys takes the gold medal here. Its non-GAAP (adjusted) profit per share declined only slightly from the year-ago period, while 3D Systems' results were cut in half.
Image source: Stratasys.
GAAP gross margin
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems |
43.6%, down from 45.7% in the year-ago period but slightly higher than the third quarter's 43.3% |
|
Stratasys |
49.1%, flat with the year-ago period but slightly lower than the third quarter's 49.3% |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys comes out on top again. Its GAAP gross margin was 5.5 percentage points higher than 3D Systems'. Moreover, Stratasys' gross margin was flat with the year-ago period's, while 3D Systems' declined.
A higher gross margin relative to a competitor with a similar business profile often reflects stronger pricing power.
Liquidity -- net cash on hand and operating cash flow
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems |
$133.7 million in cash and cash equivalents. Generated $21.5 million in cash from operations in the quarter. |
|
Stratasys |
$321.8 million in cash and cash equivalents. Used $3.4 million in cash in operations in the quarter. |
Data sources: company earnings reports.
Advantage: Tie.
There's no clear winner here. Stratasys has much deeper pockets than 3D Systems, which gives it a big advantage in acquisitions and the ability to weather prolonged tough times. However, 3D Systems generated cash from its operations in the quarter, while Stratasys used up some cash.
On the third quarter's earnings call, Stratasys CFO Lilach Payorski explained why the company was using cash in its operations this year. (For full-year 2019, Stratasys used $11.2 million in operations, a relatively small amount relative to its cash hoard.) She said it was "primarily due to proactive steps to increase inventory levels to improve fulfillment time and support product demand as well to prepare for new product launches in 2020."
Research and development spending
|
Company |
Q4 2019 Result |
|---|---|
|
3D Systems |
$17.1 million, or 10.4% of revenue |
|
Stratasys |
$24 million, or 15% of revenue |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys spent significantly more money -- both on an absolute basis and as a percentage of revenue -- on R&D than did its competitor.
R&D spending is an investment. It's particularly important for companies in the technology realm to invest in innovation, or they risk obsolescence.
The winner is... Stratasys
Score: Stratasys: 3; 3D Systems: 1 tie: 2.
Keep in mind the two caveats mentioned at the beginning of this article: Qualitative factors can be as important as quantitative ones, and we only looked at one quarter's results. Moreover, we didn't look at stock valuations.
