3D Systems Corporation (NYSE:DDD) announced today its financial results for the fourth quarter and full year ended December 31, 2021.
Fourth Quarter Financial Results and Recent Business Highlights
- Q4 2021 revenue of $150.9 million, a decline of 12.6% compared to Q4 2020 driven solely by divestitures of non-core assets; Q4 2021 revenue , adjusted for divestitures(1) , increased 13.1% and 10.4% compared to Q4 2020 and Q3 2021, respectively, reflecting continued strength in both the Industrial and Healthcare Solutions segments
- Adjusted EBITDA margin(1) of 11.8% reflects disciplined approach to growth, cost management and focus on our core business
- Diluted GAAP loss per share of $0.05 and diluted non-GAAP income per share(1) of $0.09 driven by strong revenue and gross profit margins
- Announced two agreements to acquire Titan Robotics and Kumovis, adding extrusion-based technology to our broad suite of offerings supporting both Industrial and Healthcare Solutions segments
- Completed a five-year $460.0 million convertible bond issuance with a 0% coupon, ending the year with a significant cash balance of $789.7 million to support ongoing growth initiatives and investments
Full Year 2021 Financial Highlights
- 2021 revenue of $615.6 million; an increase of 10.5% compared to 2020 revenue of $557.2 million
- Underscoring the successful execution of our strategy, revenue adjusted for divestitures(1) , increased 31.8% from 2020 and 16.9% from pre-pandemic 2019
- Industrial and Healthcare Solutions segments revenue, adjusted for divestitures(1), grew 24.4% and 40.1%, respectively, from 2020 reflecting success of the company’s vertical and applications focused approach
- Revenue growth, disciplined cost management, and focused operational execution resulted in higher operating income, adjusted EBITDA, and earnings per share(1) for 2021 compared to both 2020 and pre-pandemic 2019(1)
- Generated $48.1 million of cash from operations
|Quarter Ended December 31,||Year Ended December 31,|
|(in millions, expect per share data)||2021||2020||2021||2020|
|Operating income (loss)||$||(3.8||)||$||0.7||$||(33.1||)||$||(119.0||)|
|Net income (loss)||$||(6.2||)||$||(19.8||)||$||322.1||$||(149.6||)|
|Basic income (loss) per share||$||(0.05||)||$||(0.16||)||$||2.62||$||(1.27||)|
|Diluted income (loss) per share||$||(0.05||)||$||(0.16||)||$||2.55||$||(1.27||)|
|Non-GAAP measures for year-over-year comparisons (1)|
|Non-GAAP operating income||$||12.3||$||16.1||$||49.8||$||0.3|
|Non-GAAP net income (loss)||$||11.5||$||10.6||$||56.6||$||(13.1||)|
|Non-GAAP basic income (loss) per share||$||0.09||$||0.09||$||0.46||$||(0.11||)|
|Non-GAAP diluted income (loss) per share||$||0.09||$||0.09||$||0.45||$||(0.11||)|
(1) See “Presentation of Information in this Press Release” below for a description and the Appendix for reconciliation of non-GAAP revenue, adjusted for divestitures, operating income (loss), net income (loss) and basic and diluted income (loss) per share to the most closely comparable GAAP measure.
Summary Comments on Results
Commenting on the results, President and CEO, Dr. Jeffrey Graves said, “2021 was a remarkable year for 3D Systems. In the face of a difficult operating environment, we executed well against our four-phased strategy that we introduced in the summer of 2020. As a result, we exited 2021 as one of the largest and the most profitable pure-play additive manufacturing companies in the world, entering 2022 with great momentum, an extremely strong balance sheet, and focused on investing for the exciting growth we see ahead. Our segment-led application focus leverages the unique scale of our business and breadth of our technologies, which span polymer and metal printing systems, as well as the most advanced materials and software technology platforms in the industry. The success attained through our intense focus on bell-weather customer applications in key market verticals is clearly reflected in the strong, double-digit revenue growth of our core additive manufacturing business. At the same time, the impact of our lean organization structure and effective cost management has driven earnings per share higher than, not only 2020, but also our pre-pandemic 2019. This combination of revenue growth and profitability has singled us out as leaders in our industry, creating significant value for our customers, our employees and our shareholders alike. This performance, when combined with our exceptional balance sheet and operating cash flow, positions us very well to invest for the exciting future now expanding before us.”
Dr. Graves continued, “By organizing our company into two market-focused business units, Healthcare and Industrial Solutions, we have been able to clearly identify the unique technologies, expertise and infrastructure required to be a comprehensive provider of additive manufacturing solutions for key verticals within each of these segments. In 2021, we invested significantly in both R&D and infrastructure for growth and continued operational efficiency improvements. An important focus was talent acquisition, both through direct hiring in key leadership roles, and through the acquisition of two software firms, Additive Works, specializing in print process simulation, and Oqton, developers of a unique ‘manufacturing operating system’ that we believe will accelerate the adoption of additive manufacturing in production environments for the entire 3D printing industry. Beyond these core technology investments, in 2021 we also invested to expand our biologics technology and printing expertise, which we believe will be instrumental in enabling next-generation applications ranging from the acceleration of new drug therapies to the manufacturing of human organs. This investment theme continued in early 2022 with the announcement of our agreements to acquire two companies having unique polymeric extrusion technology for 3D printing, Titan and Kumovis, and further expand our application capabilities.”
Dr. Graves summarized, “As we enter 2022, there are clear challenges that all companies are facing – inflation, supply chain constraints, COVID-19 variants, and geopolitical instability – all of which may have an impact on the global economy and our results. However, at 3D Systems we enter the new year with a great deal of optimism, confident that continued execution of our strategy to deliver essential solutions to our Healthcare and Industrial customers, while prudently increasing investment in our core technologies and infrastructure to meet our growing demand outlook, will accelerate adoption of additive manufacturing. We believe the result will be exciting, profitable growth, and the creation of meaningful shareholder value in the years ahead.”
Summary of Fourth Quarter Results
Revenue for the fourth quarter of 2021 decreased 12.6% to $150.9 million compared to the same period last year. The decrease is solely a result of business divested during 2021. When excluding revenue from divestitures, the business had strong double-digit growth of 13.1% over the same period last year. Compared to the third quarter of 2021, and adjusting for divestitures, company revenue increased 10.4%. The results reflect continued strength in Healthcare Solutions and an increase in demand from Industrial Solutions customers. The strong divestiture-adjusted double-digit revenue growth in our business was driven primarily by higher revenue in the Industrial Solutions segment, which increased 22.2% from fourth quarter 2020 and 12.4% from third quarter 2021. This is the fourth consecutive quarter of year-over-year divestiture adjusted revenue growth in the Industrial Solutions segment. Revenue adjusted for divestitures from Healthcare Solutions increased 5.1% compared to the same period last year, and increased 8.4% compared to third quarter 2021.
Gross profit margin in the fourth quarter of 2021 was 43.9% compared to 42.0% in the same period last year. Non-GAAP gross profit margin was 44.1% compared to 42.9% in the same period last year. GAAP and non-GAAP gross profit margins increased primarily as a result of better absorption of supply chain overhead resulting from higher production, combined with strong inventory management resulting in reduced obsolescence. Prior year gross margin included $1.5 million of cost optimization expenses which favorably impacted year over year GAAP gross margin comparisons.
Operating expenses decreased 2.3% to $70.1 million in the fourth quarter of 2021 compared to the same period a year ago. On a non-GAAP basis, operating expenses were $54.3 million, a 6.4% decrease from the same period a year ago. The non-GAAP decrease is primarily a result of lower SG&A expenses due to restructuring efforts and divestitures.
Summary of Full-Year 2021 Results
Revenue for 2021 of $615.6 million increased 10.5% compared to the prior year. Revenue adjusted for divestitures increased 31.8% compared to 2020, and 16.9% from pre-pandemic 2019, reflecting the successful strategy of divesting non-core assets and transforming into a company focused on delivering additive manufacturing solutions for Industrial and Healthcare Solutions customers. Both the Healthcare and Industrial Solutions segments contributed to the growth, with Healthcare revenue adjusted for divestitures increasing 40.1% and Industrial increasing 24.4% compared to 2020.
Gross profit margin for the full year 2021 was 42.8% compared to 40.1% in the prior year. Non-GAAP gross profit margin was 43.0% for the full year 2021 compared to 42.6% in the prior year. Gross profit margin under GAAP increased primarily as a result of prior year end of life inventory charges and cost optimization expenses. Better absorption of supply chain overhead resulting from higher production, combined with strong inventory management resulted in reduced obsolescence which benefited both GAAP and non-GAAP gross margins.
Operating expenses for the full year 2021 decreased 13.3% to $296.8 million compared to the prior year, primarily as a result of a goodwill impairment charge of $48.3 million and cost optimization charges of $20.1 million that both occurred in 2020. Non-GAAP operating expenses were $214.7 million in 2021, a 9.4% decrease from the prior year. The lower non-GAAP operating expenses are primarily a result of restructuring efforts done in late 2020 and businesses divested as part of the company’s strategic plan.
The company is now providing annual guidance for revenue, non-GAAP gross margins and non-GAAP operating expenses. The company expects full-year 2022 revenue to be within a range of $570 million and $630 million. The company expects full-year 2022 non-GAAP gross margins to be between 40% to 44% and non-GAAP operating expenses to be between $225 million and $250 million. Our 2022 guidance assumes no significant macroeconomic events that negatively impact our business, such as COVID-19, geopolitical events, or other factors that could impact either demand or disrupt our supply chain.
At December 31, 2021, the company had cash and cash equivalents of $789.7 million, and total debt of $460.0 million. The $705.3 million increase since December 31, 2020 was primarily driven by proceeds from divestitures of $421.1 million, net proceeds from a $460.0 million convertible bond issuance, and cash generated from operations of $48.1 million, partially offset by acquisition costs of $139.7 million, capital expenditures of $18.8 million and debt repayment of $21.4 million.
Q4 and FY 2021 Conference Call and Webcast
3D Systems will file its Annual Report on Form 10-K for the year ended December 31, 2021 with the Securities and Exchange Commission on March 1, 2022. The company will host a conference call and simultaneous webcast to discuss these results this afternoon, which may be accessed as follows:
Date: Monday, February 28, 2022
Time: 4:30 p.m. Eastern Time
Listen via webcast: www.3dsystems.com/investor
Participate via telephone: 201-689-8345
A replay of the webcast will be available approximately two hours after the live presentation at www.3dsystems.com/investor.