• First Half Revenue: $216 million, a decline of 13% from the prior year.
• Healthcare Revenue: $94 million, a decline of 14% from the prior year.
• Industrial Revenue: $122 million, a decline of 13% from the prior year.
• Sequential Revenue Growth: Over 10% from Q1 to Q2.
• Gross Margin: 40.5% for the first half, a 160 basis point improvement from the prior year.
• Operating Expense: $66.3 million in Q1 and $64.2 million in Q2, with significant audit-related costs.
• Adjusted EBITDA: Negative $20.1 million in Q1 and negative $12.9 million in Q2.
• Cash and Cash Equivalents: $193 million at the end of the quarter.
• Debt Reduction: Reduced long-term debt by over 50% through convertible note repurchases.
• Full Year Revenue Projection: $450 million to $460 million for 2024.
• Full Year Gross Margin Projection: 40% to 42%.
• Full Year OpEx Projection: $248 million to $253 million.

• Warning! GuruFocus has detected 7 Warning Signs with DDD.

Release Date: August 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• 3D Systems Corp (NYSE:DDD) reported a sequential revenue growth of over 10% from Q1 to Q2 2024, indicating a recovery from the weak start of the year.
• The company has a strong backlog of new application development requests, driven by both existing and new customers, showcasing increased interest in 3D printing technology.
• 3D Systems Corp (NYSE:DDD) has successfully reduced its long-term debt by over 50%, strengthening its balance sheet and positioning it well for future investments.
• The healthcare segment, particularly personalized healthcare, showed significant growth with revenues up over 12% from the prior year.
• The company secured a large contract in the dental market, valued at approximately $0.25 billion, positioning it as a key supplier for clear aligners over the next five years.

Negative Points

• 3D Systems Corp (NYSE:DDD) experienced a 13% decline in first-half revenues compared to the prior year, primarily due to weak printer sales.
• The company faced significant operational expenses due to the extended 2023 audit, impacting its financial performance in the first half of 2024.
• Despite improvements, the company reported adjusted EBITDA losses for both Q1 and Q2 2024, reflecting ongoing financial challenges.
• The macroeconomic environment, including high inflation and geopolitical tensions, continues to create uncertainty and impact customer CapEx spending.
• Printer demand remained weak in the first half of 2024, affecting overall sales performance despite resilience in consumables and services.

Q & A Highlights

Q: Can you discuss the challenges and opportunities in the dental market, particularly regarding the direct printing of aligners? A: Jeffrey Graves, CEO, explained that the direct printing method for aligners has been challenging but offers potential benefits such as more effective teeth movement and new market channels. While not expected to be the highest revenue product, it will carve a niche. The denture market is particularly exciting due to the fast production and durability of 3D printed dentures, which are expected to be cost-effective and aesthetically pleasing.

Q: How has the pipeline changed, and what are the key drivers of recent activity? A: Jeffrey Graves noted that the pipeline has never been bigger, driven by the economics and value of 3D printed parts. Defense applications are strong, with examples like a naval part produced in four days versus 400 days traditionally. The semiconductor industry is also seeing exploratory work in metals, and there is significant interest in polymer applications for electronics and automotive industries.

Q: With the pipeline strengthening, has visibility improved for pipeline conversion, or is it still a wait-and-see situation? A: Jeffrey Graves stated that while customer interest and modeling of economics have increased, actual equipment orders depend on customers' CapEx budgets. The company is projecting mid-single-digit growth for Q3 and Q4, contingent on broader economic factors like inflation and interest rates.

Q: Regarding the large aligner contract, is the average annual value around $50 million, and how does this fit with other dental initiatives? A: Jeffrey Graves confirmed the contract's cumulative value over five years but noted that annual fluctuations are expected. The dental industry is broadly converting to 3D printing, and the company is excited about opportunities in dentures, night guards, and tooth repair, which are expected to drive growth alongside the aligner contract.

Q: What are the expectations for sequential growth in Q3 and Q4 across healthcare and industrial sectors? A: Jeffrey Graves expects growth in both sectors, with healthcare showing high sustainability and industrial seeing a rebound primarily from printer sales. The recovery in printers, which bottomed out in Q1, is anticipated to drive growth, supported by strong material pull-through and services.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.