3D Systems (NYSE:DDD) has filed its 10-K with the SEC. The documents show a decrease in headline revenue of $33 million to $633 million for 2016. However, gross profit has increased by $18 million to a total of $309 million for 2016.
The companies bottom line also improved with a net loss of $38 million, compared to the $642 million reported in 2015. Prior year figures were substantially impacted by a write down of goodwill. In their filing with the SEC 3D Systems say, “These results primarily reflect an increase in materials revenue that was more than offset by a decrease in products revenue, including the exit of consumer products, and a decrease in services revenue.”
The company reports revenue of $165.9 million in the fourth quarter with “continued strong gross profit margin.”
The filing continues,
Healthcare revenue includes sales of products, materials and services for healthcare-related applications, including simulation, training and planning, 3D printing of surgical guides and instruments and medical and dental devices. For the year ended December 31, 2016, healthcare revenue increased 5.0%, or $7.0 million, to $148.1 million, and made up 23.4% of total revenue, compared to $141.1 million, or 21.2% of total revenue, for the year ended December 31, 2015. The increase in healthcare revenue reflects customers expanding their capabilities and capacity as well as timing of orders, including large orders from certain customer, which resulted in increased sales of products and services and lower materials sales.
For the year ended December 31, 2016, total software revenue from products and services increased by 12.3%, to $87.7 million, and made up 13.9% of total revenue, compared to $78.1 million, or 11.7% of total revenue for the year ended December 31, 2015.
As of December 31, 2016 and 2015, our backlog was $31.7 million and $38.4 million, respectively. Production and delivery of our printers is generally not characterized by long lead times; backlog is more dependent on timing of customers’ requested deliveries. In addition, on-demand parts services lead time and backlog depends on whether orders are for rapid prototyping or longer-range production runs. As of December 31, 2016 and 2015, backlog included $9.2 million and $13.0 million of on-demand manufacturing services orders, respectively.
Gross profit for the year ended December 31, 2016 increased by 6.1%, or $17.9 million, to $309.8 million, compared to $291.8 million for the year ended December 31, 2015. Gross profit margin for the years ended December 31, 2016 and 2015 was 48.9%, and 43.8%, respectively. Our shift away from lower margin consumer products combined with cost reduction efforts drove higher gross profit and margin, notwithstanding lower revenue in 2016.
Operating expenses for the year ended December 31, 2016 decreased by 62.7%, or $585.6 million, to $348.2 million, compared to $933.7 million for the year ended December 31, 2015. Excluding goodwill and other intangible asset impairment charges that were recorded during 2015, operating expenses for the year ended December 31, 2016 decreased 12.2% compared to the year ended December 31, 2015, due to lower selling, general and administrative expense and lower research and development expense, as further discussed below.
Our operating loss for the years ended December 31, 2016 and 2015 was $38.4 million and $641.9 million, respectively. Excluding goodwill and other intangible asset impairment charges that were recorded in 2015, our operating loss improved 63.3%, as further discussed below.
For the years ended December 31, 2016 and 2015, we generated $56.9 million and used $3.1 million, respectively, of cash in operations, as further discussed below. In total, our unrestricted cash balance at December 31, 2016 and 2015, was $184.9 million and $155.6 million, respectively.
60% gain for 3D printing investors
Since Vyomesh Joshi (VJ) was appointed as CEO in April 2016 he has made no secret of his ambitions for the company. VJ has brought with him a succession of colleagues from his former employer, HP to bolster the ranks of 3D Systems. The stock market’s response has, in the main, been favorable. This time last year 3D Systems stock was trading at $10.67, the share price today opened at close to $17: almost a 60% gain for investors who were able to time the market.
Takeover rumors denied
Takeover rumors resurfaced earlier this year, rumors that were swiftly denied by a communications officer when 3D Printing Industry approached 3D Systems for comment.
While 3D Systems may still be a takeover target for any one of the deep-pocketed multinationals looking to enter the 3D printing market, CEO VJ appears focused on building the company rather than courting investors. On a recent visit to the 3D Systems healthcare facility in Colorado I saw first hand the approach the company want to deploy in other key verticals.
3D printing for medical applications is supported at 3D Systems by a team with impressive experience.
Strategic foothold in digital dentistry
The 3D printing company acquired Vertex-Global Holding B.V in January, in a deal described at the time as a, “strategic foothold in the multi-billion dollar digital dentistry opportunity.”
VJ has previously announced that the Healthcare segment will be used as a blueprint for other verticals. 3D Printing Industry understand that Aviation and Aerospace is one such area where the company are currently ramping up, and we expect more news around developments here later in the year.
3D Systems will host a call with investors later this morning and we will bring you more news about the company as we have it.
Featured image shows 3D Systems Healthcare Technology Center. Photo by Michael Petch.