3D Systems Corporation has made a lot of strategic acquisitions this year. The company spent more than $244 million on acquisitions between January-September, 2014. And then it spent another $97 million last month to acquire Cimatron, which makes 3D CAD/CAM software. 3D Systems’ aggressive spending has raised concerns among investors.
3D Systems’ profitability should improve in 2015
But the company’s rapid pace of acquisitions will normalize by the end of 2015. In an interview with Steve Heller of The Motley Fool, 3D Systems’ VP of investor relations, Stacey Witten, said that 2014 was a year of heavy investments with strategic partnerships, acquisitions and R&D. But next year the company will focus on integrating its acquisitions and to fine tune these investments.
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Witten told Heller at EuroMold that investments made this year will drive profitability and operating leverage in the coming year. The company unveiled more than 10 products at the EuroMold, including printers, materials software and scanners. The ProX 400 takes metal printing “to a new level.” It’s probably the largest metal 3D printer. She also discussed the racetrack 3D printing design, which is 50 times faster than today’s jetting technology.
HP, Canon, Epson threaten the dominance of 3D Systems
The racetrack design was inspired by the Google Inc Project Ara. The company is still working on this platform, and expects to start monetizing it sometime in 2015. Witten said investors are likely to see more profitability and higher gross margin as 3D Systems leverages its investments, especially in manufacturing, medical, metal and materials.
3D Systems has stepped up investments as it faces fierce competition from existing rivals, while new entrants continue to intensify competition. Hewlett-Packard, Canon, Epson and other giants are gearing up to enter the 3D printing market. A few days ago, Longbow Research analyst Joe Wittine said 3D Systems was still trading at a premium valuation despite 65% decline in the stock this year.
3D Systems shares gained 1.53% to $32.60 in pre-market trading Thursday.