Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- 3D Systems Corp (DDD, Financial) reported a 10% year-over-year growth in consumable materials sales, indicating increased utilization of their installed base.
- The company's industrial application group saw a 26% increase in revenues year-to-date, reflecting strong customer interest in new 3D printing applications.
- Healthcare segment revenues grew by 5% from the prior year, driven by a significant recovery in dental and personalized healthcare businesses.
- 3D Systems Corp (DDD) has introduced new products, including the PSLA270 printing platform and QuickCast Air, which are expected to drive future growth.
- The company is on track to achieve a 20% reduction in inventory by year-end, improving cash flow and working capital management.
Negative Points
- Third-quarter revenues were flat sequentially and declined 9% year-over-year, primarily due to macroeconomic pressures impacting hardware system sales.
- Non-GAAP gross margin decreased to 37.6%, affected by increased inventory obsolescence reserves and lower factory utilization.
- The company reported an adjusted EBITDA loss of $14.3 million for the third quarter, compared to a gain in the same quarter last year.
- 3D Systems Corp (DDD) adjusted its full-year revenue guidance to $440 million to $450 million, reflecting a more modest recovery than previously anticipated.
- The company faces challenges with inventory management and factory absorption, which could continue to impact gross margins negatively.
Q & A Highlights
Q: With only a month left in the quarter, why is there a relatively wide range of scenarios for Q4 revenue guidance?
A: Jeffrey Graves, CEO, explained that the uncertainty is due to customers managing their inventories cautiously amid geopolitical and economic uncertainties. Additionally, the timing of capital expenditures (CapEx) is uncertain, as some installations may be delayed, affecting revenue recognition.
Q: Can you elaborate on the gross margin guidance for the year, given the nine-month gross margin was 39.5%?
A: Jeffrey Graves, CEO, noted that the gross margin guidance reflects potential unfavorable absorption if Q4 revenues are at the low end of guidance. Additionally, a mix effect due to an expected uptick in printer sales, which typically have lower margins, could impact overall gross margins.
Q: Is profitability a realistic goal for 2025, and what factors could influence this?
A: Jeffrey Graves, CEO, expressed optimism about reaching profitability in 2025, driven by new application developments and potential revenue growth. However, the timing of customer capital investments remains uncertain, and cost management opportunities will also play a crucial role.
Q: Can you provide an update on the Oqton software and its impact on production processes?
A: Jeffrey Graves, CEO, highlighted that Oqton software is being integrated into high-reliability markets, such as oil and gas, to improve productivity and quality. It allows for real-time monitoring and traceability, making 3D printing a true production process.
Q: What are the plans for the convertible debt due in 2026?
A: Jeffrey Graves, CEO, stated that the company is exploring traditional methods to address the convertible debt, aiming to deal with it well before maturity. More details will be provided in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
