Earlier this month, 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) reported first-quarter 2020 results. (3D Systems' results here and Stratasys' here). We're going to compare the two 3D printing companies' results metric for metric.
Keep in mind that qualitative factors can be just as meaningful as quantitative ones and we're looking at just one quarter. Even with these caveats, however, the findings from this exercise should help you make investing decisions in the 3D printing space.
Image source: Getty Images.
Revenue
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
$134.7 million, down 11% from the year-ago period |
|
Stratasys |
$132.9 million, down 14% |
Data sources: company earnings reports.
Advantage: Tie.
Both companies experienced fairly sizable year-over-year sales declines. These declines were in the same ballpark percentage-wise, so this category is a draw.
Both companies were already struggling to grow revenue before the COVID-19 pandemic due largely to a weak global macroeconomic industrial environment. 3D Systems was also hurt by having to pause shipments of its factory metals printing solution due to quality issues. (Shipments resumed in April.)
The pandemic hurt both companies' results, with the brunt of the impact in March. The impact was due largely to lower demand from customers in their target verticals, particularly those in the aerospace and auto industries. 3D Systems management also said that the company experienced supply chain interruptions.
GAAP earnings per share (EPS)
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
($0.17), up from ($0.22) in the year-ago period |
|
Stratasys |
($0.40), down from ($0.04) |
Data sources: company earnings reports. GAAP = generally accepted accounting principles.
Advantage: 3D Systems.
Both companies were unprofitable from a GAAP basis. 3D Systems is the winner (or the "lesser loser," more accurately) here because its results improved relative to the year-ago period, while Stratasys' got considerably worse.
Adjusted EPS
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
($0.04), up from ($0.09) in the year-ago period |
|
Stratasys |
($0.19), down from $0.10 |
Data sources: company earnings reports.
Advantage: 3D Systems.
3D Systems gets this win, too. Its non-GAAP (adjusted) loss per share narrowed from the year-ago period. Stratasys' result considerably worsened, flipping to negative, from positive.
Adjusted gross margin
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
43.1%, down from 44.2% in the year-ago period |
|
Stratasys |
48.8%, down from 52% |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys is the clear winner here. Its adjusted gross margin was 5.7 percentage points higher than 3D Systems'.
Stratasys is also the winner if we consider GAAP gross margin. Its result for this metric was 45%, versus 3D Systems' 42.4%.
A higher gross margin relative to a competitor with a quite similar business can reflect stronger pricing power.
Liquidity -- operating cash flow and cash on hand
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
|
|
Stratasys |
|
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys generated cash from operations in the quarter, while 3D Systems ate into its cash to run its operations.
In addition, Stratasys had about twice as much cash on hand as its competitor at the end of the period. Its stronger balance sheet gives it the upper hand in acquisitions and the ability to better withstand tough times.
Research and development spending
|
Company |
Q1 2020 Result |
|---|---|
|
3D Systems |
$19.2 million, or 14.3% of revenue |
|
Stratasys |
$24.2 million, or 18.2% of revenue |
Data sources: company earnings reports.
Advantage: Stratasys.
Stratasys spent more money -- both on an absolute basis and as a percentage of revenue -- on R&D than did 3D Systems.
R&D spending can be viewed as an investment to fuel growth. It's critical for companies in the technology space to continue to innovate.
The winner is... Stratasys
Score: Stratasys: 3; 3D Systems: 2 tie: 1.
There was no runaway winner, but Stratasys did edge out 3D Systems.
Keep in mind the two caveats mentioned at the top of this article: qualitative factors can be as important as quantitative ones, and we only considered one quarter's results.
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May 31, 2020 at 07:00AM
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