Insights on earnings and potential mergers in the 3D printing industry are provided by Stratasys and 3D Systems, the pioneers.

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The additive manufacturing industry had a major day as Stratasys and 3D Systems published their second quarter 2023 financial results. Stratasys showed resilience with revenue growth and continued profitability, while 3D Systems reported a decline due to challenges in the dental orthodontics sector.

During their earnings calls, both CEOs discussed the potential merger between Stratasys and 3D Systems and highlighted its strategic importance and value to stakeholders. Stratasys CEO Yoav Zeif mentioned that the board is evaluating an unsolicited proposal from 3D Systems, which could potentially replace the existing merger agreement with Desktop Metal. However, the board has not yet confirmed its superiority.

Stratasys had a stellar Q2 performance, driven by record recurring revenues. Zeif expects to achieve over $1 billion in organic revenue by 2026, backed by a strong balance sheet and a recent acquisition of Covestro assets. Despite this, the board remains supportive of the merger with Desktop Metal and will continue to work towards closing it.

Zeif highlighted the synergy between Stratasys and Desktop Metal, particularly with Desktop Metal’s leading metal solutions for mass production and dominance in the dental sector. Their combination of skills is the main reason for the deal.

On the other hand, 3D Systems CEO Jeffrey Graves sees a bright future in the potential merger with Stratasys. He noted that the merger would accelerate growth and cut down expenses, potentially contributing $110 million to the bottom line. While 3D Systems has a solid standalone strategy in critical sectors like aerospace, defense, and orthodontics, joining forces with Stratasys offers a promising way to speed things up.

While the review between the two companies has taken a long time, they are almost done. While Stratasys still discusses the potential merger with Desktop Metal, 3D Systems remains determined and driven by shareholder support.

The partnership with Stratasys provides a wider range of technologies and a better financial position for ongoing investments in the rapidly growing field of 3D printing in factories. The merger is expected to result in significant savings, potentially adding $110 million to profits.

Financially, Stratasys had another impressive quarter, setting record revenues mainly from consumable sales and customer services. Despite a net loss of $38.6 million, or 56 cents per share, the company has had positive adjusted earnings per share for eight straight quarters. Additionally, Stratasys ended the quarter with over $200 million in cash and no debt.

Overall, the simultaneous release of financial results and merger talk between Stratasys and 3D Systems highlights the near future of these additive manufacturing giants. While both companies face challenges, the potential merger offers strategic advantages and the opportunity for long-term growth and profitability.

Maintaining Optimism Amidst Challenges: 3D Systems Forecasts Positive Future

The recent financial results of 3D Systems showed a decline in performance compared to the previous year, primarily due to difficulties in the dental orthodontics markets. However, the company remains positive about the future and is forecasting full-year revenue between $630 million and $670 million, with a net loss between $115 million and $96 million. In addition, profitability is anticipated in the coming years.

Graves, the company’s spokesperson, acknowledged the importance of achieving scale in the additive manufacturing (AM) market. Although the company’s focus on the dental orthodontics market resulted in reduced revenues, there are signs of market stabilization. Graves remains hopeful, as he cited growth in areas such as personalized healthcare solutions.

In the second quarter, 3D Systems’ revenue was $128 million, indicating an 8.5% decrease from the previous year. However, excluding the dental orthodontics segment, the year-to-date revenue grew by over 3%. The net loss for the quarter was $28.8 million, or 22 cents per share. The adjusted EBITDA for the period improved over 30% sequentially, but experienced a decline year-over-year due to reduced sales volumes, inflationary impacts, and significant investments in organic growth.

Graves emphasized that the AM market is currently at a pivotal moment, transitioning to factory production on a global scale. He stated that achieving scale is vital for sustainable profitability and diversifying end markets. Despite the recent decline in consumer spending on dental aligners, which resulted in a reduction of over $50 million in revenues over the past four quarters, Graves believes that broadening market exposure and expanding sales and service expertise is crucial for resilience against market fluctuations.

Furthermore, the company has been focused on strategies to achieve scale, including a proposed merger with Stratasys. While this merger has faced delays, it remains a priority. 3D Systems has adjusted its full-year 2023 revenue projection to between $525 million and $545 million. Additionally, the company anticipates a positive adjusted EBITDA in the last quarter of 2023.

The AM landscape is currently witnessing potential landmark changes, as key players like Stratasys, 3D Systems, and Desktop Metal consider strategic mergers and partnerships. As both companies navigate economic challenges, their decisions in the coming months could deeply impact the industry’s future.

Despite the challenges faced by 3D Systems, the company maintains an optimistic outlook. They remain committed to achieving scale, diversifying their markets, and focusing on growing areas such as personalized healthcare solutions. By staying up-to-date on the latest news from the 3D printing industry, stakeholders can gain valuable insights and make informed decisions for their businesses.

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