3D Systems Reports Operating Results

VALENCIA, Calif.—(BUSINESS WIRE)—Aug. 14, 2006— 3D Systems Corporation (NASDAQ: TDSC), a leading provider of Rapid 3-D Printing, Prototyping and Manufacturing solutions, reported its operating results for the second quarter and first half of 2006 today. The company also filed its Quarterly Report on Form 10-Q with the SEC today.

The company reported revenue for the second quarter of 2006 of $28.0 million, a 15% decrease from revenue reported for the second quarter of 2005. Revenue for the first six months of 2006 was $61.5 million, a 3% decrease from revenue reported for the first six months of 2005.

Foreign currency translation had a minor adverse effect on revenue in the quarter and a $1.5 million adverse effect on revenue in the first six months.

The company also reported that gross profit for the second quarter of 2006 declined 43% to $8.1 million from $14.3 million in the second quarter of 2005 and declined 19% to $22.1 million from $27.4 million in the first six months of 2005.

Net loss available to common stockholders in second quarter of 2006 was $8.9 million or $0.56 per fully diluted share compared to $0.9 million of net income available to common stockholders or $0.05 per fully diluted share in the 2005 quarter. Net loss available to common stockholders in the first six months of 2006 was $10.2 million or $0.65 per fully diluted share compared to $1.6 million of net income available to common stockholders or $0.10 per fully diluted share in the first six months of 2005.

As the company previously reported on August 9, it started up its new enterprise resource planning ("ERP") system in the U.S and in most of Europe during the second quarter of 2006, and it quickly began to experience unforeseen disruptions and delays in operating the system. These disruptions, as well as other disruptions in its supply chain activities arising primarily from the outsourcing of logistics and warehousing of spare parts to a major global third party logistics provider, made it difficult for the company to enter and process customer orders, procure and manage inventory, schedule orders for production and shipping and invoice finished products to customers during the second quarter.

                         Operating Highlights
             Second Quarter and First Six Months of 2006
             ($ in millions except for per share amounts)
----------------------------------------------------------------------
                              Second Quarter       First Six Months
                          --------------------------------------------
   Operating Highlights     2006  2005 % Change   2006  2005 % Change
----------------------------------------------------------------------
Revenue                    $28.0 $32.8     (15%) $61.5 $63.2      (3%)
----------------------------------------------------------------------
Gross profit                $8.1 $14.3     (43%) $22.1 $27.4     (20%)
    % of Revenue              29%   44%            36%   43%   
----------------------------------------------------------------------
Operating expenses         $16.0 $12.6      27% $30.6 $24.0       28%
    % of Revenue              57%   38%            50%   38%      
----------------------------------------------------------------------
Operating income (loss)    ($7.9) $1.7       NM     ($8.6) $3.4    NM
    % of Revenue               NM    5%             NM    5%      
----------------------------------------------------------------------
Net income (loss)
 available to common       
 stockholders              ($8.9) $0.9       NM   ($10.2) $1.6     NM
    % of Revenue               NM    3%              NM    3%       
----------------------------------------------------------------------
Diluted income (loss) per
 share available to 
 common stockholders      ($0.56) $0.05      NM ($0.65) $0.10      NM
----------------------------------------------------------------------
Unrestricted cash          $12.7 $28.1     (55%) $12.7 $28.1     (55%)
----------------------------------------------------------------------
                                       
Depreciation and           
 amortization               $1.5  $1.6        -   $3.0  $3.1        -
    % of Revenue               5%    5%             5%    5%       
----------------------------------------------------------------------

NM= Not Meaningful



As a result of the disruptions mentioned above, the company ended the second quarter with an approximately $9.8 million order backlog. Of this amount, approximately $8.3 million in orders, primarily for systems and materials, were generated and planned for shipment during the second quarter. The company reported that, as of today, it has shipped the majority of this new orders backlog and that it expects to finish catching up on this high backlog as it resolves the remaining disruptions.

               Revenue By Class of Product and Service
                           ($ in millions)
----------------------------------------------------------------------
                               Second Quarter      First Six Months
                            ------------------------------------------
     Product or Service      2006  2005 % Change   2006  2005 % Change
----------------------------------------------------------------------
Systems and other products   $7.6 $11.8     (35%) $20.0  $21.9    (9%)
----------------------------------------------------------------------
Materials                   $11.9 $10.9        9% $23.8  $21.0    13%
----------------------------------------------------------------------
Services                     $8.4 $10.1     (17%) $17.7  $20.3   (13%)
----------------------------------------------------------------------
Total                       $28.0 $32.8     (15%) $61.5  $63.2    (3%)
----------------------------------------------------------------------


The supply chain and ERP-system disruptions experienced during the second quarter adversely impacted revenue from systems and services in the second quarter, with significant reductions in unit sales volume in each of those product and service classes. The company experienced continued revenue growth from its engineered materials and composites, which were only mildly impacted by the ERP and supply chain disruptions, reflecting the relative simplicity of the materials' portfolio sourcing and logistics for these products.

The company also reported that revenue declined during the second quarter and first six months of 2006 in each geographic area in which it conducts business, due primarily to the overall decline in unit sales volume.

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