Avi Reichental CEO of 3D Systems Corporation (NYSE:DDD) on conference call. This is a big ‘battle ground stock’, although we mostly know the shorts, there are some GARPish investors who are long. Check out the CEO’s comments from the conference call today after the company announced earnings.
3D Systems Corporation (DDD)’s CEO on the company’s second quarter
Good morning everyone.
Second quarter we (Inaudible) Earnings per Share of $0.02 on a nonGAAP basis we aren’t $0.16 per share.
For the first six months 3D Systems Corporation (NYSE:DDD) increased revenue 34% the prior year to $299.3 million and reported net income of $7 million and earnings per share of $0.07. On a nonGAAP basis we have $.30 per share.
Purchase another product revenues rose to $61.9 million and made up 41% of total revenue.
Higher placing utilization of our plastic, nylon and metals (Inaudible) continues to fuel strong but euros revenue which increased 30% contributing $38 million of revenue.
Service revenue rose 38% to $51.5 million and made up 34% of total revenue we continue to experience robust growth in all geographic regions during year with a 45% revenue increase from Asia-Pacific top 32% revenue growth from Europe and a 16% revenue increase for North America.
Materials revenue continued to benefit from strengthening design and manufacturing demand , integrated sales which more accurately represent the strength of our installed base grew by 35% to $27 million or the periods and 41% for the first six months.
We expect materials growth rate to rise further as industrial printers and expel base expands our newer and faster printers and the introduction of higher performance materials.
Demand for 3D Systems Corporation (DDD)’s Direct Metal sprinters
Demand for 3D Systems Corporation (NYSE:DDD)’s Direct Metal sprinters continues to rise faster than we can add manufacturing capacity . After maxing out our Phoenix manufacturing facility, we are bringing a these sister manufacturing facility online in the United States during the third quarter and expect to enter 2015 with ample production capacity for metal printers.
I want to remind everyone that when we acquired Phoenix last July revenue was in a multiyear decline and under our revenue Phoenix more than doubled in increased sequentially by 55% in the March quarter. We expanded sales of metal printers up to aerospace, automotive and medical customers. Where adding metals printers to our grid card services and 59 Medical Modeling services with the Direct Metal printers and pursuing FDA clearances for personalized medical devices.
Gross profit for the quarter was $72.4 million in gross profit margin was 47.8% . The decrease in gross profit margin reflects the absorption of a one-time inventory write-off, regressive shipped to multiple new products which accounted for 81.3 percentage points depression and a change in mix mix in sales which are mounted to another to percentage points.
During the first half of the year 3D Systems Corporation (NYSE:DDD)’s gross profit margin shouldered a number of factors copy impacted of a concentrated number of an product launches that ring additional start across the end of life or legacy products including A-One down in the to write-down in the second quarter pretty incremental costs are bringing several manufacturing facilities online in first-half sales mix.
While these transitional forces ever early pressured our — margin after conducting a careful and detailed analysis of the specific drivers we concluded that fundamentals are intact on our gross profit margins are pleased to rebound and resume their expansion trajectory.
Specifically, 3D Systems Corporation (NYSE:DDD) expect to begin to see materials margin recovery in the third quarter and further expansion thereafter.
We see our (Inaudible) rebound in purchase ledger beginning in the third quarter as we work through the product transition and complete recovery to historic printer gross profit margins in the fourth quarter. And we expect continued service margin expansion driven by higher margin contribution continued softening growth in our expanding healthcare services.
3D Systems Corporation (DDD)’s nonGAAP operating expenses remain flat
Sequentially quarterly nonGAAP operating expenses remain flat. Clearly indicating that a step up operating expenses of stabilize Iraq operating religious that further than the second of this year into 2015 which is consistent with the revenue growth. We generated $19 million of cash from operations during the quarter and ended with $570.3 million in cash on hand.
Ring the first half of the year we paid $53.8 million or acquisitions and venture investment and $9 million per capital investments and we also received $299.7 million in cash program received from our equity proceeds in may. Continued enterprise wide sent synergies more than offset a temporary rise in inventory that resulted in substantially higher cash from operations. The first half of this year we generated $15.9 million more cash from operations in the same period last year.
Notwithstanding the $15.1 million of new product inventory buildup that 3D Systems Corporation (NYSE:DDD) expect to liquidate in the second half of this year. Sequentially, we reduced DSO for the quarter by three days and expected DSO to decline further 277 days with periodic fluctuations depending on timing and concentration of sales. We enter the second half of this year with higher demand cost favorable growth indicators and a record order book of $31.9 million, 77% increase compared to last year’s (Inaudible) we typically generate a higher portion of revenue during the second half of the year and as we evidence last year did you percent and percent of our revenues in the second year.
3D Systems Corporation (DDD) expects to deliver a higher portion of annual revenue
Accordingly, as we have said all along, 3D Systems Corporation (NYSE:DDD) expect to deliver a higher portion of our annual revenue during the second half. Let me be more specific on this. If we just apply our historic second half annual revenue this division ratio, 57% cotton suggest a growth rate up 37% for the second half of this year. After that the fact that we expect less than 10% of our total revenues from the second half to be generated from businesses, we acquired within the past year and the organic growth rate is in line with expectations.
But beyond the historic fasters, we expect higher revenue contributions or all of the new products that were not available during the first half of 2014 and to recognize the revenue from the right number of orders already placed for our new consumer products. These factors combined with a record bookings for our design and manufacturing solution providers with the confidence to revise our revenue guidance this morning.
Factoring in the expected net contribution after the planning commission of Simbionix acquisition on the delayed closing of the does not technician that was already included in our previous guidance, we are raising our 2014 revenue guidance . We expect revenue to be in the range of $700 million-$740 million and we are reiterating our EPS guidance expected Earnings share to be in the range of $0.44 to $0.56 per share and our nonGAAP earnings-per-share to be the range of $.73 to $0.85 per share.
As a reminder our guidance is fully tax affected in inclusive all at traditions completed today and the anticipated closing of the closing of the previously announced acquisitions of Robtec and Simbionix both the which we expect to close in the second half of this year. Our expanded blended annual tax rate is (Inaudible) percent and reflected in our guidance. What I would also like to remind you that this guidance is based on our current plans and assumptions and is subject to land and uncertainties.
That was the contents.
Avi Thank you Damon.
3D Systems Corporation (DDD) recent acquisitions
During the second quarter 3D Systems Corporation (NYSE:DDD) continue to expand and refine their business in line with our growth initiative. We acquired Medical Modeling and (Inaudible) virtual surgical planning guiding and delivery of 3-D printed medical implants and devices we announced the acquisition of Robtec in Brazil to establish a strategic sales and platform and scalable gateway into Latin America which we now expect to close later during the second half of this year. And we added several major tributaries including scandalous, Konica Minolta, and Canon marketing Japan that we expect will contribute meaningfully to future growth.
We advance the development of our continuous high-speed printer platform and related polymer and conductive materials development, and we are convinced at this point that this advanced manufacturing platform can significantly increase 3-D printing production and successfully address the needs of many industrial and consumer (Inaudible) companies we launched our digital education is to of showcase at the White House and (Inaudible) at the other education the bench.
And secured is not made by 3D Systems Corporation (NYSE:DDD) and we also secured an additional 200,000 ft.² manufacturing facility in Rock Hill con South Carolina to further expand — enhance and expand our manufacturing Pacitti and capabilities . And we expect that this facility will become fully operational during the first quarter of 2015.
