3D printing during COVID-19 shows potential, but financial realities bite

Stratasys and 3D Systems show the promise of 3D printing as well as the perils of a technology that's still emerging to revamp manufacturing.
Written by Larry Dignan, Contributor

The COVID-19 pandemic has highlighted the potential of additive and 3D printing to shore up weak spots in manufacturing and global supply chains, but the profits have been hard to come by.

Earnings reports from Stratasys and 3D Systems this week highlight financial turmoil in the industry. Stratasys said it is cutting salaries another 5% for top executives, eliminating 10% of its workforce and shifting to a 4-day workweek to save money. Stratasys missed estimates with second quarter sales that fell 27.9%.

Stratasys reported a second quarter net loss of 51 cents a share on revenue of $117.6 million, down from $163.2 million a year ago. Yoav Zeif, CEO of Stratasys, highlighted the potential and clash with the COVID-19 economy. Zeif said:

3D Printing continues to penetrate further into manufacturing across every relevant business sector. Despite the current macro slowdown due to COVID-19, we remain very optimistic about where our business and our industry is headed. The largest opportunity for us in 3D Printing is in Polymers, and the fastest-growing area is manufacturing.

Zeif said that Stratasys should be able to reboot growth in the short- to medium-term, but the long-term strategy revolves around polymers. Stratasys aims to offer polymer systems, materials, software and services.


The biggest issue is that Stratasys has a customer base that is largely industrial. Those companies in sectors like aerospace and automotive have been crushed amid the COVID-19 pandemic. Even as enterprises find innovative use cases for 3D printing, the customer base is struggling and can't ramp up the financial commitment.

Lilach Payorski, Stratasys CFO, said:

In Q2, we saw a reduction in almost across all industry: in aero, auto, dental significantly and also across other sectors.

He said dental appears to be rebounding, but it's too early to make a call on auto. "It's probably too early to comment on that specifically in our visibility. We are cautiously optimistic given what we see in the market," said Payorski.

3D Systems' second quarter was similar in that there were restructuring efforts and revenue declines. 3D Systems reported a second quarter net loss of $38 million, or 33 cents a share, on revenue of $112.1 million, down 28.7% from $157.3 million a year ago. 3D Systems also said it would reorganize to focus on the healthcare and industrial markets.

In the second quarter healthcare revenue fell 11.4% to $50 million largely due to the dental market. Industrial sales fell 38.5% to $62.1 million.

CEO Jeffrey Graves said the company will cut its workforce by almost 20% and aim to cut annualized costs by $100 million by the end of next year.

Graves added on a conference call:

Within health care, we'll focus on dental, medical devices, surgical planning and simulation. Industrial will encompass aerospace, defense, automotive and durable goods. Within these targeted markets, we'll focus heavily on specific applications that benefit the most from the use of additive manufacturing. For example, in health care, this could be orthopedic implants, while in industrial, it could be the manufacturer of highly complex heat exchangers.

From a balance sheet perspective, Stratasys has more cash to execute its turnaround. Stratasys ended the second quarter with  $313 million in cash, cash equivalents and short-term deposits and no debt. 3D Systems had cash on hand of $63.9 million, total debt of $21.5 million and a $100 million unused revolving credit facility with about $24 million of availability based on the terms of the agreement. 3D Systems did say it would sell $150 million in shares from time to time to boost cash

Editorial standards