3D Systems announced preliminary third-quarter 2023 revenue results and provided a business update on the next phase of its restructuring initiative. In the third quarter of 2023, the company expects revenues of $123-124.0 million, which means a decrease of ~$9 million compared to the revenues from the third quarter of 2022. The reason is the continuing weak demand for 3D printers. While the company expects fourth-quarter 2023 revenues to grow steadily, full-year 2023 revenues will be weaker than previously expected. This, combined with continued uncertainty in the macroeconomic and geopolitical environment, is prompting 3D Systems to withdraw its full-year 2023 financial guidance, which was last published on August 9, 2023.
In light of these results and ongoing risks, the company also announced another change to its restructuring initiative, which aims to improve the operational efficiency of the entire organization. The restructuring goal will be to achieve annual savings of $45-55 million by the end of 2024, with the majority of costs expected to be reduced by the end of the first quarter of 2024. As part of the activities, 3D Systems will reduce the number of employees and branches. These efforts are expected to streamline the organization and reduce operating costs while improving customer service and delivery reliability.
Despite cost reductions, key investments in new product development are expected to be maintained. In 2024, new platforms for production 3D printing and advanced engineering materials are to be presented. The net result of these activities will translate into short-term profitability and cash revenues.
3D Systems also emphasizes that it has not yet completed the financial and operational closing procedures for the third quarter of 2023. Additionally, the above preliminary financial data have not been reviewed by an independent accounting firm. As a result, actual results may differ materially from the preliminary results presented above and will not be available to the public until third quarter 2023 results are released in early November 2023.
Throughout the summer this year. we have witnessed public conversations, disputes and tussles between 3D Systems, Stratasys, Desktop Metal and Nano Dimension regarding potential mergers and acquisitions. For the record:
During the “talks” between 3D Systems and Stratasys, Stratasys informed that after an initial due diligence analysis, it turned out that the financial situation of 3D Systems was not as good as it may seem from the outside, which was one of several reasons for which he ultimately rejected the merger offer. 3D Systems’ preliminary financial reports for the third quarter and information about the need for thorough restructuring only confirm these allegations.
3D Systems’ share price has plummeted over the past few months. Currently, the company is worth ~65% less than this summer. In the face of the failure of the merger with Stratasys, the lack of decisive restructuring actions could cause the share price to decline even more, especially since the results for the third quarter of 2023 are expected to be poor.
From a broader point of view, the weakness of 3D Systems’ financial results may be a phenomenon common to other manufacturers of industrial 3D printers. It is quite possible that in the coming weeks, other companies will present their own restructuring plans?
Source: www.3dsystems.com