By Jhbinz, via Wikimedia Commons
3D printing and additive manufacturing technology stocks are fashionable within tech investor sets at present, but the road has not been smooth for speculators in 2014.
With ExOne, voxeljet and Renishaw yet to reveal their full-year results for 2013, let us digest the 12-month reports already published by 3D Systems, Stratasys and Arcam.
Sweden's Arcam was the first of the 3D printing stocks to announce its full-year 2013 and Q4 earnings on February 9th, with 3D Systems making its results for this period public last week on February 28th. Stratasys, meanwhile, published its figures on March 3rd. Investors have been given enough cool down, but is the 3D printing set faring better on the markets than it has been during this uncomfortable first quarter thus far?
It can be both a good and a bad thing that when 3D Systems' (NYSE:DDD) share price moves, it sends ripples through the rest of the industry, but when the company announced its full-year results last week I unfortunately did little to set the heather on fire.
3D Systems has been slow off the starting blocks in 2014, but even so, its share price is still double what it was this time last year. The new year spike - using 20:20 hindsight - was always going to be too steep to maintain and after troughing in early February to November 2013 levels, the bears appear to have returned to their caves for a spring thaw.
The company’s Q4 and full-year 2013 results show a record quarterly and annual revue on the back of organic growth. Fourth-quarter revenue soared by 52 per cent year-on-year to a record $154.8 million on 34 per cent overall organic growth. Gross profit grew by 53 per cent over this period and the gross profit margin stabilised at 51.7 per cent compared to 2012's Q4 period.
Full year results show an increase in revenue of 45 per cent to a record $513.5 million on 80 per cent printer and other product growth and 29 per cent organic growth.
So, compared to 2012 full-year results, 3D Systems' revenue from 3D printers and other products rocketed by 80 per cent to $227.6 million, while print materials revenue increased by 24 per cent to $128.4 million. Services revenue rose by 27 per cent to $71.7 million, while healthcare revenue jumped by 45 per cent to $71.7 million. Consumer solutions did extremely well, with revenue for this business sector soaring by 206 per cent to $34.8 million.
The company also upped its research and development spending in Q4 from $7.8 million in 2012 to $16.6 million.
CEO Avi Reichental was positive, praising demand for "robust professional and advanced manufacturing printers'" and growth in materials. However, he admitted the results were not as robust as expected in the latter part of 2013.
"Compared to our late quarter expectations, we are disappointed that our stronger order book didn't convert to higher revenue, but instead, resulted in a near doubling of last quarter’s backlog," he said. "Despite our higher growth, certain revenue categories fell short of our expectations and the concentration of new product announcements deferred sales and suppressed expected gross profit margin for the quarter."
Looking ahead to 2014, 3D Systems remains confident that the 3D printer market will continue in its heading, resulting in between $680 million and $730 million in revenue for the company on 30 per cent organic growth.
At close of play in Manhattan last night (March 6th) 3D Systems' share price was nearly four per cent lower at $68.50 per unit. This is still double March 2013's average $34 per unit share price so investors playing the long game have no cause to panic as yet.
Just like 3D Systems, Stratasys' (NASDAQ:SSYS) market wield is such that its stock market activities tend to impact on the rest of the 3D printing stock set.
Nevertheless, Stratasys has remained fairly buoyant over the first months of the year, particularly in the weeks after the announcement of the industry-shaking multi-colour, multi-material Objet500 Connex3. Its share price took a tumble prior to the company's Q4 and full-year results being published amid widespread investor supposition that the company would miss its earnings estimates; such speculation did, in fact, come to pass.
The continual realisation of the Stratasys-Objet merger and the expanding additive manufacturing market boosted growth in the fourth quarter. Hardware and consumables - excluding revenue contributions made by MakerBot - grew by 38 per cent and 33 per cent respectively year-on-year.
MakerBot made a "significant contribution" to Stratasys' fourth quarter results, padding the bottom line with $24.9 million in revenue for the three-month period.
In all, GAAP revenue for October-December 2013 was $155.1 million, but a GAAP net loss of $2 million was recorded. $15.5 million was invested in research and development and the company generated $15.6 million in cash from operations over this period.
CEO David Reis stated: "We experienced strong organic growth driven by demand across multiple product lines, as well as an impressive contribution from MakerBot. In addition, a favourable product mix benefited margins and helped contribute to our record profits. We are very pleased with our fourth quarter and overall annual results."
Looking ahead to 2014, the introduction of the Objet500 Connex3, in addition to MakerBot's new Replicator, the MakerBot Replicator Z18 and the Replicator Mini have been named as major business highlights for the firm. Revenue guidance for 2014 has been set out at between $660 million and $680 million.
At close of play on the NASDAQ last night, Stratasys shares were 2.5 per cent lower at $116 per unit, but as with 3D Systems, this is still much improved on last year's share price when Stratasys shares were just $70 per unit.
Finally to Sweden, where Arcam's (OTCMKTS:AMAVF) stocks are listed on the Stockholm Stock Exchange. Industrial additive manufacturing giant Arcam was the first of the 3D printing stock set to announce its results and in the month since publishing its figures for the fourth quarter and full year, the company has made good progress.
Arcam's 4:1 stock split came into effect in late January (a shock to those who missed the January 16th memo who may have thought the share price was down by more than 70 per cent overnight). Indeed, it was at this time Arcam's share price jumped to $49, leaping out of a sub-$40 December-January plateau. The decline post-spike looks set for upturn, however, particularly as Arcam's robust figures begin to stand up to the competition as more and more full-year results are published.
Arcam posted October-December sales growth figures of seven per cent, with sales climbing over the fourth quarter to 66.9 million Swedish crowns, up from 62.5 million Swedish crowns (MSEK) in 2012. Heavy research and development investment dented pre-tax profits, however, with these falling to 7.9 million MSEK from 13.7 million MSEK.
CEO of Arcam Magnus René said: "2013 was very eventful and the highlights were the strategic co-operation with DiSanto Technology, and the agreement to acquire the powder manufacturer AP&C. Through these strategic initiatives, we can maintain a fast pace of business development and thereby both increase our business with existing customers and reach new ones.
"After a strong fourth quarter, we closed the year with a turnover of almost 200 MSEK and a net profit of more than 15 MSEK. Sales increased by more than 40 per cent while earnings were essentially unchanged. The unchanged earnings is due to the result being burdened by R&D expenses, costs in conjunction with introduction of new systems and non-recurring costs associated with the strategic initiatives with DiSanto and AP&C.
"The growth in aftermarket revenue is due to an increase in the number of production applications among our customers. Through the agreement to acquire AP&C, we ensure that we can meet our customers' growing need for high quality metal powders."
Arcam will close its acquisition of AP&C from Raymor Industries in Canada - a leading manufacturer of metal powder and current Arcam supplier - during the first quarter of 2014, further bolstering its position as a leading metal additive manufacturing technology expert, while increased research and development spending will doubtless bring about the next generation of Arcam machines, with the Q Series anticipated for release this year.