3D Systems Announces Net Income For Q1 2005

VALENCIA, Calif.—(BUSINESS WIRE)—May 5, 2005— 3D Systems Corporation (Nasdaq: TDSC), a leading provider of rapid 3-D printing, prototyping and manufacturing solutions, announced today that its trend of improving financial results had continued in the first quarter of 2005. The company reported:

-- $30.4 million of revenue for the first quarter of 2005, a 3% increase over the prior-year period;

-- $1.6 million of operating income for the 2005 quarter, reversing a $1.2 million loss in the corresponding 2004 quarter; and

-- $0.8 million of net income available to common stockholders for the quarter, resulting in $0.05 per share of fully diluted earnings available to common stockholders, reversing a $0.19 per share loss in the 2004 period.

"While revenue growth in the first quarter of 2005 was modest, it reflects positive underlying trends and successful early results from several fundamental changes in our business model that we implemented during the course of 2004," said Abe Reichental, 3D Systems' president and chief executive officer.

"These include our efforts to accelerate product mix changes from our aging, large-frame systems and materials to new 3-D printing and rapid manufacturing solutions, our initiatives to increase recurring revenue from materials, composites and services, the restructuring of our U.S. sales organization and our decision to discontinue quarter-end discounts," continued Reichental.

"Sales of new products, which include the increasing revenue contributions of our InVision(TM) 3-D printers, grew to 20% of total revenue in the quarter while revenue from our older products and in particular our mature equipment models declined by 7% compared to the first quarter of 2004," continued Reichental. "Late in this year's first quarter, we experienced a resurgence of efforts by customers to place deeply discounted orders, a trend that was present in early 2004 but absent during the fourth quarter of 2004. Consistent with our earlier decision to discontinue quarter-end, deep discounting of systems, we rejected these efforts, which would have done little to improve our profitability. We believe that our resolve may have resulted in foregone revenue in the first quarter in excess of $2.5 million.

"At the same time, recurring revenue from materials and composites increased 16% in the quarter, and service revenue increased 4% in the quarter. The combination and timing of these underlying positive trends underscore the ongoing dramatic transformation in our business model and mix. Without the favorable effect of foreign currency translation, revenue would have increased 1% for the first quarter of 2005.
               Revenue By Class of Product and Service
                             ($ Millions)

                                            First Quarter
---------------------------------------- ------------------- ---------
                                           2005      2004    % Change
---------------------------------------- --------- --------- ---------
Systems and other products                  $10.2     $11.0       (8%)
---------------------------------------- --------- --------- ---------
Materials                                   $10.1      $8.7        16%
---------------------------------------- --------- --------- ---------
Services                                    $10.2      $9.8         4%
---------------------------------------- --------- --------- ---------
       Total                                $30.4     $29.5         3%
---------------------------------------- --------- --------- ---------


"Although we were not satisfied with our rate of revenue growth in the first quarter, we were very pleased with the accelerating growth from our new products and, in particular, the significant growth from new materials and composites. This favorable trend is consistent with our long-term strategy of having these products constitute an increasing share of our total revenue. We were also gratified by the continuing improvement in the company's profitability," continued Reichental.
                         Operating Highlights
                ($ Millions, except per share amounts)

                                           First Quarter
-------------------------------------- --------------------- ---------
                                         2005       2004     % Change
-------------------------------------- ---------- ---------- ---------
Revenue                                    $30.4      $29.5         3%
-------------------------------------- ---------- ---------- ---------
Gross profit                               $13.0      $12.0
    % of Revenue                              43%        41%        8%
-------------------------------------- ---------- ---------- ---------
Operating expenses                         $11.4      $13.3
    % of Revenue                              37%        45%     (14%)
-------------------------------------- ---------- ---------- ---------
Operating income                            $1.6      ($1.2)
    % of Revenue                               5%       (4%)      N/A
-------------------------------------- ---------- ---------- ---------
Net income (loss) to common
 stockholders                               $0.8      ($2.5)
    % of Revenue                               3%       (8%)      N/A
-------------------------------------- ---------- ---------- ---------
Diluted income (loss) per share to
 common stockholders                       $0.05     ($0.19)            N/A
--------------------------------------  ----------  ----------  ---------
Depreciation  and  amortization                              $1.5              $1.7
        %  of  Revenue                                                              5%                  6%            (9%)
--------------------------------------  ----------  ----------  ---------
 


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