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3D Systems Stock Soars After Earnings Crush Expectations

By Beth McKenna - May 10, 2021 at 8:46PM

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In Q1, the 3D printing company's revenue also sped by the Wall Street estimate.

3D Systems (DDD 3.97%) reported first-quarter 2021 results after the market close Monday, May 10, that pleased the market.

Shares of the 3D printing company soared 14.5% in Monday's after-hours trading session. The market's positive reaction is largely attributable to adjusted earnings and revenue easily beating the Wall Street consensus estimates. The company's solid generation of cash from operations is also likely a factor.

Investors should know that Monday's after-hours reaction stems only from the first-quarter data, as 3D Systems didn't provide any guidance in its release. Management will probably issue at least a general outlook when it holds its analyst conference call, which is scheduled for Tuesday at 8:30 a.m. EDT.

Closeup of an industrial 3D printer producing a white plastic object.

Image source: Getty Images.

3D Systems' key numbers

Metric Q1 2021 Q1 2020

Change

Revenue $146.1 million $135.6 million

7.7%; with organic growth of 17%

GAAP operating income ($2.0 million) (18.2 million) N/A. Loss narrowed 89%.
Adjusted operating income $13.1 million ($5.0 million)

N/A. Result flipped to positive from negative.

GAAP net income $45.2 million ($18.9 million) N/A. Result flipped to positive from negative.
Adjusted net income $20.9 million ($4.5 million) N/A. Result flipped to positive from negative.
GAAP earnings per share (EPS) $0.36 ($0.17) N/A. Result flipped to positive from negative.
Adjusted EPS $0.17 ($0.04) N/A. Result flipped to positive from negative.

Data source: 3D Systems. GAAP = generally accepted accounting principles. 

Organic revenue growth excludes the impact of businesses divested over the last year.

GAAP gross margin was 44%, up from 42.1% in the year-ago period. Adjusted gross margin also landed at 44%, up from 42.7% in the first quarter of last year.

The company generated cash from operations of $28.5 million. It ended the period with cash on hand, including restricted cash, of $133 million and no debt. 

Wall Street was looking for Q1 adjusted EPS of $0.02 on revenue of $136.4 million, as outlined in my earnings preview. (The consensus adjusted earnings estimate was $0.01 per share at the time that article was published.) So, 3D Systems sped by both expectations. 

For context, in the fourth quarter of 2020, revenue edged up 2.6% year over year to $172.7 million. Reported loss per share widened 300% to $0.16, while adjusted for one-time factors, earnings per share increased 80% to $0.09.

Segment results: Healthcare is still carrying the load, but industrial is stabilizing  

Segment Q1 2021 Revenue Year-over-Year Change
Healthcare $72.5 million 39%
Industrial $73.6 million (12%)
Total $146.1 million 7.7%

Data source: 3D Systems. 

The healthcare segment's year-over-year revenue growth was driven by strong sales in both dental and medical applications.

The industrial segment's underlying performance seems to have stabilized after being significantly hurt in 2020 from shutdowns stemming from the COVID-19 pandemic. Excluding businesses divested over the last year, industrial sales inched up nearly 1% year over year. 

What management had to say

Here's part of what CEO Jeffrey Graves said in the earnings release:

[Our] combination of strong top-line growth, profitability, and cash generation distinguishes us in our industry. We attribute this performance to the breadth of our technology portfolio, which includes industrial metal and polymer systems, leading-edge software solutions, and a rapidly increasing range of materials for both human and industrial application. [...]

With our solid progress on the initial stages of our transformation plan, we have now increased our focus on the fourth stage of our plan, which is to invest for accelerated growth and profitability... 

Second-quarter 2021 estimates

Wall Street is currently modeling for Q2 adjusted EPS of $0.03 on revenue of $139.4 million. Even if management doesn't provide any outlook on the earnings call, it seems likely that some analysts will revise upward their Q2 estimates based on the company's better-than-expected Q1 results. 

For context, in Q2 2020, 3D Systems posted an adjusted loss per share of $0.13 on revenue of $112.1 million.

In short, 3D Systems' Q1 results reflect good progress in its turnaround efforts. That said, investors should know more Tuesday following the company's earnings call. 

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool has a disclosure policy.

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