3D printing vendors poised to benefit long term from supply chain disruptions

The global supply chain is a complete mess, and that may create a nice inflection point of adoption for additive manufacturing.

Supply chain woes are a headache for multiple industries, and the tech sector is no different amid semiconductor and component shortages and logistics disasters. The one exception may be 3D printing companies, which may actually benefit from supply chain challenges.

Stratasys' third-quarter earnings report hinted at an inflection point for 3D printing as supply chain issues are forcing manufacturers to rip up playbooks that have worked for decades. Offshore manufacturing doesn't look as good as it used to. Shipping costs are killing companies' margins, so you'll need more manufacturing closer to the customer. And inventory forecasting is a nightmare due to hoarding.



3D printing can alleviate a lot of these issues--as long as vendors can get enough inventory to make their own systems. Yoav Zeif, CEO of Stratasys, explained the supply chain challenges and opportunities well on the company's conference call.

We are one of those privileged industries there are not only suffering from the supply chain challenges, but also enjoying it long term because this is what brings to life the essence and the power of additive manufacturing. You want no more offshoring. You want to have digital inventory. You want to produce near the customer, and we see it every day in the level of engagement we have with the largest OEMs. We see that the world of manufacturing is going to change and be much more digitalized than what we see now.

Stratasys won't be the only one that may benefit from a shift from traditional supply chain practices to additive manufacturing.

Desktop Metal said it opened a new in-house manufacturing facility that will triple assembly space for its Production System platform. The upshot is that Desktop Metal is seeing pent-up demand for its Production System P-50 metal 3D printing platform.

3D Systems is also betting that additive manufacturing will see a demanding pop as enterprises look to make supply chains more flexible. 3D Systems has industrial use cases but has staked out healthcare and regenerative medicine as growth markets.

Lilach Payorski, CFO of Stratasys, said the third-quarter revenue growth of 24.3% was a sign of "the inflection point we are experiencing." "There was also strong performance from our manufacturing business, in particular, improvement from automotive and industrials in Europe," she said. Healthcare remains Stratasys' fastest growing business.

Stratasys reported revenue of $159 million with a net loss of $18.1 million, or 28 cents a share. Non-GAAP earnings were a penny a share. During the quarter, Stratasys landed a $20 million contract with the US Navy.

While in the long run, Stratasys can benefit from supply chain turmoil, Payorski said the company also has short-term issues like every other enterprise. She said:

We are carefully monitoring the ongoing macro issues of high global logistic costs and inflationary pricing of raw materials, which have pressured margins. Our top priority is to deliver our product in a timely manner. To help ensure this, we have increased production levels to offset sea and air delays in our planning process. We continue to evaluate a wide area of shipping options to ensure we can deliver goods with a minimal business impact.