3D Systems announces strategic refocus and 20% staff cut following Q2 financial

3D printing news
  Jeffrey Graves, the new CEO of 3D printer manufacturer 3D Systems, outlined his strategic vision during this week’s announcement of financial results.
  In his first public outing as the firm’s CEO, Graves announced that the 3D Systems would be imminently restructured to focus on its healthcare and industrial verticals. Segments of the company’s business that don’t align with its new strategy could be divested, as the firm seeks to reduce its operating costs by $100 million. Part of this restructuring will see the workforce cut by 20 percent as part of the plan to make it profitable by next year.
  Following the release of its quarterly figures, 3D Systems’ shares slumped by 11 percent, falling from $7.06 to a low of $6.12. The company summarily announced an equity offering program, making $150 million worth of shares available for purchase. 3D Systems intends to use any proceeds from the sales to repay its outstanding long-term debt.
  During an earnings call with investors and analysts, Graves explained why the restructuring plan is necessary for the future of the firm. “In this organizational realignment, we have an opportunity to maximize efficiencies with a need to align our operating costs with current revenue levels,” said Graves. “This reduction in force is a difficult but essential step in our ongoing strategic process, designed to better position the company for sustainable and profitable growth.
  “I would like to express my appreciation to each of the employees impacted by this decision for their dedicated service,” added Graves.

3D Systems has seen its revenues drop by 28 percent in Q2 2020 when compared to Q2 2019. Photo via 3D Systems.

  3D Systems’ revenue for Q2 2020
  For the three months ending June 30, 2020, 3D Systems generated net revenue of $112.1 million, a reduction of 28 percent on the $157.3 million reported in Q2 2019. Over the first half of 2020, the company earned a combined revenue of $246.8 million, a decline of 20 percent on the $309.3 million reported in H1 2019.
  3D Systems’ reports revenue across two divisions: Products and Services. The former accounts for the company’s revenue generated by 3D printers, software, and materials. Services include the revenue earned from the company’s healthcare solutions and its general on-demand manufacturing capabilities.
Revenues ($)Q1 2020Q1 2019Variance (%)H1 2020H1 2019Variance (%)
Total Revenues112m157.2m-28246.7m309.2m-20
  In the most recent financials, the firm’s Products generated $61.4 million in revenue, a 34 percent reduction compared to the $93.7 million reported in Q2 2019. For the first half of 2020, the 3D Systems’ Products segment generated $140.3 million, a 24 percent decrease on the $186.1 million reported in H1 2019.
  Products from 3D Systems’ two main target verticals, saw their revenue decrease. The company’s healthcare products generated $50 million in Q2 2020, an 11 percent decline on Q2 2019. Revenue from 3D Systems’ industrial business dropped as well, falling by 37 percent to $62.1 million between Q2 2020 and Q2 2019.
  The company’s Services division reported revenue of $50.5 million, a 20 percent reduction compared to the $63.5 million earned in the same period last year. In H1 2020, Services declined by 13.5 percent, with revenue reduced to $106.4 million from $123.1 million in H1 2019.
Operating expenses ($)Q1 2020Q1 2019Variance (%)H1 2020H1 2019Variance (%)
Selling, general and admin52m71m-27108.1m136.7m-21
Research and development16.9m20.8m-1936.2m42.7m-14
Total operating expenses69m92.4m-25144.3m179.4m-20
  3D Systems has already started to reduce its operating expenses in order to account for the drop in demand caused by the ongoing pandemic. The company’s total operational costs decreased from $92.4 million in Q2 2019 to $69 million in Q2 2020. Overall, for the first half of 2020, the company spent $144.3 million on operational expenses, compared to $179.4 million in H1 2019.
  Other 3D printing firms have also reduced their expenditure due to the collapse in customer demand caused by the COVID-19 pandemic. Stratasys has cut its workforce by 10 percent to make it’s business “leaner” and Groupe Gorgé is reducing its output to mitigate its losses from declining revenue.
  3D Systems held $125 million worth of inventory on June 30th, 2020, an 11 percent increase on the $111.1 million it had at the end of the last financial year. Additionally, the firm’s assets fell from $133.6 million at the start of Q1 to $63.9 million by the end of Q2. While 3D Systems did put $20 million towards paying off outstanding debts, its depleted cash reserves further indicate the impact of the company’s fall in revenue.

3D Systems is restructuring its business in an attempt to save $100 million over the next 18 months. Photo via 3D Systems.

  3D Systems’ efficiency savings plan
  Discussing the company’s decline in revenue during the earnings call, Graves outlined the company’s restructuring plan in greater detail. “We’re simplifying and focusing our organization by realigning the company to serve applications in two key market verticals, healthcare and industrial,” said Graves. “Moving forward, we will no longer emphasize the individual software, hardware, and materials elements of additive manufacturing separately, rather than the combination of these elements into specific application solutions within our targeted markets.”

  3D Systems released new 3D printing materials and software over the second quarter, and these will now be part of the company’s more focused offering. The firm announced two new versions

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