Arcam AB (STO:ARCM) financial results for Q3 2017 show losses of $4.3 million

Arcam AB, the Sweden-based manufacturer of EBM 3D printers, metal powder for additive manufacturing and provider of 3D printing services has released its quarterly financial report.

The report shows that despite gross a revenue of 168.4 million Swedish Krona (SEK), the company reported net losses of 36.1 million SEK. At the time of the accounts’ publication, one Swedish Krona amounted to US$0.12, meaning that Arcam’s losses translate to $4.3 million. 

Since last year’s acquisition, GE is the controlling owner of Arcam and holds approximately 75% of share capital. Since then, Arcam’s share prices have ranged between 300 to 338.09 SEK.

An increase in gross revenue 

Arcam’s gross revenue in the third quarter was 168.4 million SEK, an increase of 27.0% from Q3 of 2016. Arcam’s gross revenue amounted to $20.7 million.

Gross Revenue by division

Arcam AB owns Arcam EBM, Advanced Powders & Coatings (AP&C) and DiSanto Technologues, Inc. (DTI), corresponding to its OEM, materials and services divisions respectively.

In Q3 2017, Arcam AP&C earned a gross revenue of 76.5 million SEK, seeing a 55.2% increase from Q3 of 2016, the largest of all divisions. Contributing to the increase in revenue from materials is the additional capacity that will come with the opening of a second AP&C metal powder production plant St Eustache, Quebec, last month.

Arcam EBM earned a gross revenue of 79.9 million SEK, marking a 27% increase in profits. The increase corresponds to the 10 EBM systems delivered to customers in Q3 of 2017 versus 7 in the comparative period.

DTI was the only division to make a loss. The service bureau earned 12 million SEK, a 40% decrease in gross revenue on Q3 of 2016.

An increased cost of goods sold, a marginal fall in gross profit, steep increase in operating expenses

Arcam’s cost of goods sold for Q3 of 2017 was 137.3 (99) million SEK. This marked a 38.7% increase in the cost of goods sold from Q3 of 2016.

Consequently the gross profit for 2017 Q3 was 31.1 (33.6) million SEK, marking a slight decrease of 7.4% in profits from 2016 Q3.

2017 Q3 saw Arcam’s operating expenses (including operating income and tax exemptions) reach 66.7 (37.2) million SEK. This marked a 83.1 % increase in operating expenses on 2017 Q3.

3D printed brackets for the Juno mission. Photo by Michael Petch.
3D printed brackets for the Juno mission. Photo by Michael Petch.

Net Revenue

Arcam made a net loss of 36.1 (3.1) million SEK for Q3 2017. Factors contributing to this may be the increase in cost of goods sold and operating expenses owing to expansion of metal powder production facilities in Quebec.

Logistical Challenges in Asia

The 10 delivered systems in Q3 was also fewer than the 17 systems delivered in Q2 of 2017, and the 15 systems delivered in Q1.

The statement accompanying the report notes that “deliveries in Q3 were lower than the first half of the year due to logistical challenges on systems for customers in Asia.” The statement promised to resolve those particular issues in Q4 of 2017.

Sources tell 3D Printing Industry that since the GE acquisition, the Arcam sales team has changed radically and this may also be a strong factor for the slowdown in sales.

One of Sintavia's Arcam machines. Photo via Sintavia.
One of Sintavia’s Arcam machines. Photo via Sintavia.

Developments over the past year and the future

Arcam’s workforce has increased over the past year by 113 individuals, taking the total workforce to 441 people. Arcam subsidiary AP&C expanded its second powder production plant and is currently producing 750 tons of powder, the plant is expected to eventually expand this capacity to 1250 tons to match the increasing market demand.

AP&C is now certified to supply orthopaedic implants after obtaining an International Standardization Organization (ISO) 13485 certification. In line with this, the statement noted that Arcam continues to “secure long-term supply agreements” in supplying customers with metal powders and EBM machines within the orthopaedic and the aerospace industries.

The statement notes that in Q4 the decision on a rights issue to existing shareholders, will be released, from which Arcam expects to raise capital worth 986 million SEK. The decision, according to the report, is a “confirmation of [Arcam’s] ambition to invest in [its] technology and capacity.”

Table income statement

Q3 2017 (MSEK) Q3 2016 (MSEK) Change (%)
Gross Revenue 168.4 132.6 26.9
EBM 79.9 62.8 27.2
AP&C 76.5 49.3 55.2
DTI 12 20.5 -41.5
OTHER 0 0 0
Cost of Goods Sold 137.3 99 38.7
Gross Profit 31.1 33.6 -7.4)
Operating Expenses 67.2 36.7 83.1
Net Profit/Loss -36.1 -3.1 1064.5

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Featured image shows Arcam EBM Isogrid concial Frustrum engine casing for Zenith Tecnica. Photo by Michael Petch.