3D Printing Financials – 3D Systems Restructuring will Save $50M in Q4 2024, according to 3DPrint.com

In a year that has been defined by the struggle for 3D printing supremacy, 3D Systems’ (NYSE: DDD), just announced its next step: a restructuring to streamline operations as well as a preliminary look at third-quarter financials. This announcement reflects not only the company’s current standing but also speaks to broader trends and maneuvers that have defined the 3D printing industry throughout the year.

According to the company’s strategic reorganization, it aims to improve the efficiency of the company and produce annualized savings of $45 million to $55 million before the end of 2024. Central to this restructuring is the intent to “rationalize headcount.” This could mean reducing, reallocating, or potentially increasing employees in some areas. Additionally, by aiming to rationalize “geographic locations in all functions across the company,” the firm could indicate plans to evaluate and merge its various physical locations, ensuring more streamlined operations across all departments.

Industry Dynamics

This isn’t the first time we’ve heard about a restructuring initiative from 3D Systems. Jeffrey Graves was appointed CEO of 3D systems in May 2020. He rolled out a plan to reshape his company over four phases. By August 2020, amidst the pandemic, he shifted the company’s focus onto two key areas, healthcare and industrial, letting go of parts of the business that didn’t fit this vision. He also made the difficult decision to cut the workforce by 20 percent and set the goal of saving $100 million in costs. Graves announced that 3D Systems would be taking another step forward in its ongoing restructuring by 2023.

Dr. Jeffrey Graves, President and CEO of 3D Systems. Image courtesy 3D Systems.

While seeking to cut costs, the company stresses that it won’t compromise on customer service or delivery reliability. It says it is looking to the future and has plans to introduce new printers and materials by 2024. These actions are aimed not only at immediate profit but also at positioning the business for long-term growth on a rapidly expanding 3D printing global market.

This move could be a reaction to the dynamic changes expected in 2023. Stratasys, the leader in 3D printing (Nasdaq SSYS), has been at the center of many acquisition attempts including one by 3D Systems. Though Stratasys rejected 3D Systems’ offer, the move highlighted the aggressive strategy 3D Systems was eager to adopt.

Stratasys’ 2023 saga offers crucial context. The year began with Nano Dimension’s (Nasdaq: NNDM) acquisition bid. Despite Stratasys’ rejections, Nano Dimension persisted, even raising their final offer. Stratasys announced a merger agreement for Desktop Metal (NYSE DM) only to cancel it due to shareholder dissatisfaction. 3D Systems’ unsolicited bid was also rejected. Stratasys shares fell due to the chaotic sequence. With Stratasys’ strategic alternatives announcement still pending and their third-quarter earnings release on the horizon, the sector remains tense.

Earnings preview

3D Systems expects to generate revenues between $123 million and $124 millions for the third quarter in 2023. Comparing these values to 2022, it appears that there is a decline in the market, primarily due to continued softness of printer demand. While the company expects its fourth-quarter revenues will continue to grow, in line with seasonality trends historically, it is not expecting 2023 revenues to be as strong as expected. This, coupled with the continued uncertainty in the geopolitical and macroeconomic environment, has led the company to withdraw their full-year financial guidance for 2023. The company had previously projected revenues between $525 and $545 million for the full-year.

Shedding light on the statement, Troy Jensen, Managing Director Senior Research Analyst at Cantor Fitzgerald, says 3D Systems negatively preannounced Q3 results and is no longer endorsing their prior 2023 guidance because “the market remains soft.”

“We believe the high-interest rate environment and softening economy have continued to extend sales cycles and given customers a reason to defer purchase decisions. Our survey results were in line with these findings. The hardware (printer) market continues to be the most challenging, but materials and service bureau demand appears to be more in line with channel expectations,” states Jensen.

3D Systems Headquarters. Image courtesy 3D Systems.

Trends

With the Stratasys failed acquisition backdrop, 3D Systems’ early results could be considered a strategic step to help manage market speculations. These numbers can help investors make decisions and prevent big, sudden changes in stock prices. These are strategic moves for 3D Systems in a rapidly changing landscape. When viewed in light of 2023’s industry dynamics, its preliminary results and restructuring initiative show a company attempting to bolster its position amid the turbulence in the sector.

Notably, 3D Systems is still riding high on recent news: the company’s founder, Charles “Chuck” Hull, was recently honored with the prestigious National Medal of Technology and Innovation. Hull’s game-changing invention, stereolithography has led to the birth of a new industry. Often hailed as the “Father of 3D Printing,” Hull’s visionary contribution not only streamlined production processes but also democratized design and manufacturing, enabling big and small innovators to bring their visions to life like never before.

Investors and industry experts should mark November 8, 2020 in their calendars, as this is when 3D Systems will release its full financial results of the quarter and restructuring plan. This will be a significant moment, especially after the rollercoaster 2023 was for the world of 3D printing.

3D Systems CEO Jeff Graves will be participating in 3DPrint.com’s AM Investment Strategies, a free, online roundtable presented by Additive Manufacturing Research and Cantor Fitzgerald on November 2, 2023, just a week before the start of Formnext 2023. Also participating will be Yoav Zeif, CEO of Stratasys; Benny Buller, CEO of Velo3D; Arno Held, Managing Partner at AM Ventures; Scott Dunham, Executive Vice President of Research at AMR; Max Lobovsky, CEO of Formlabs. Troy Jensen will moderate the discussion. He is a Managing Director of Cantor Fitzgerald.

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