U.S. 3D printer manufacturer 3D Systems (DDD) has announced that it has agreed to sell its on-demand manufacturing business.
Acquired by private equity firm Trilantic North America and industry veteran Ziad Abou for $82 million, 3D Systems’ five on-demand production sites in the U.S. and Europe, will now operate as service providers under the revived ‘QuickParts’ moniker. The company’s decision to sell its service bureau segment ties into the broader strategic restructuring it announced last year, which has seen it refocus on its core industrial and healthcare verticals.
“We are continuing to aggressively execute our four-phase plan that we announced a year ago, to position the company for exciting growth and profitability as the market for industrial-scale AM continues to expand,” said Dr. Jeffrey Graves, President, and CEO of 3D Systems. “The on-demand manufacturing business is solid, and it has a very bright future under the stewardship of Trilantic North America.”
3D Systems’ divestiture drive
Since Graves’ appointment as CEO in May 2020, 3D Systems has undergone a dramatic course change, which has seen it attempt to rapidly reduce its operating costs by $100 million per year. After a revenue decline of 28% between Q2 2019 and Q2 2020, the firm moved quickly to cut its expenditure, reducing its workforce by 20% and divesting business segments that don’t align with its revised strategy.
During November 2020, the company announced the sale of its Cimatron business and its related subsidiaries to global technology investment firm Battery Ventures, raising $65 million in capital. Thanks to its improved cash position, 3D Systems has since been able to re-invest in the growth of its key industrial and healthcare divisions, via the acquisitions of Allevi and Additive Works in May 2021.
Elsewhere, the firm has invested heavily in infrastructure, including a 50,000 sq. ft expansion of its Littleton base, which should enable its Colorado team to advance the healthcare and industrial R&D being conducted there, while the addition of metal 3D printing to its site in Leuven, Belgium, is designed to aid the aerospace, defense and automotive-focused applications its engineers there are developing.
Evidence of the firm’s revised focus can also be seen within its recent business moves, with the launch of its industrial Roadrunner FFF 3D printer, as well as advances within its Print to Perfusion bioprinting program. Similarly, 3D Systems’ progression towards profitability was apparent within its Q1 2021 financials, in which it reported annual revenue growth of 8%.
Now, with the sale of its on-demand production segment, Graves says that the company is better-positioned to maintain or even expedite its rate of revenue growth in the months ahead.
“With a very strong balance sheet and cash position, proceeds from the sale will be used to further accelerate our investments for growth in our core AM capabilities, for which we are seeing rapidly rising demand in new, extraordinary applications ranging from the human body to electric vehicles and space travel,” added Graves.
Trilantic North America’s $82M deal
3D Systems’ $82 million deal with Trilantic North America will see its on-demand production staff and facilities in Lawrenceburg, Seattle, Le Mans, Pinerolo and High Wycombe change hands. Under Trilantic North America’s ownership as QuickParts, 3D Systems’ soon-to-be ex-division will offer a variety of rapid manufacturing services, providing clients with both additive and subtractive capabilities.
As part of the acquisition agreement, Ziad Abou, who held the roles of Senior VP and General Manager of 3D Systems’ on-demand manufacturing division for nearly a decade, is set to become CEO of the reformed QuickParts. In his new role, Abou will seek to leverage the firm’s install base of 200 3D printers and the knowledge of his team of more than 250 colleagues, to continue addressing the aerospace, automotive, consumer and industrial sectors.
Interestingly, despite selling the business on, Graves has stated that 3D Systems intends to continue working with QuickParts once the deal has been concluded, in order to cater for their shared customers. In fact, Graves has emphasized that the divestiture wasn’t agreed based on other aspects such as profitability at all, only on its wider restructuring plan, which is focused on addressing “growing markets that demand high-reliability products.”
“Our sole reason for divestiture is to enable our entire focus and investment priorities to be on AM, where we play a unique leadership role in enabling industrial-scale AM adoption across a range of exciting end markets,” said Graves. “We will continue to collaborate with the Quickparts, and are confident that, with the focus this brings to both organizations, the future will be bright for all stakeholders.”
Although 3D Systems and Trilantic North America’s deal remains subject to certain closing conditions and adjustments, they have already signed a formal agreement, with the transaction expected to be finalized during Q3 2021.
Exiting the service bureau arena
3D Systems’ decision to sell-off its on-demand manufacturing arm marks the end of its era as a 3D printing service bureau, and sees it leave an increasingly crowded space. In recent years, the rebranded Hubs has successfully begun to target more professional clientele, while its parent firm Protolabs has sought to expand on its Metal Laser Sintering offering.
3D printer manufacturer Stratasys, meanwhile, has opted to hold onto its Stratasys Direct Manufacturing subsidiary, despite committing to a ‘strategic resizing’ in June 2020, and has since chosen to work with manufacturing marketplace Xometry, as a means of marketing its high-performance nylon materials.
Elsewhere, 3D printing service provider Shapeways has announced its intention to go public via a merger with SPAC Galileo Acquisition Corp. Once completed in H2 2021, the deal is set to see the company raise around $195 million in funding, which it intends to reinvest in expanding on its current technology portfolio.
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Featured image shows 3D Systems’ Advanced Additive Manufacturing Center in Pinerolo. Photo via 3D Systems.