Company profile, 3D Systems Corp. (DDD: nyse)

Company overview3D Systems Inc. (3D) is a holding company that designs, makes, sells, and services 3-D printing, manufacturing, and prototyping systems within 2 business segments:

  • Technology platforms for manufacture and sale of 3-D printing systems
  • Rapid Manufacturing Solutions for manufacture and sale of finished parts to customers.

The customers are businesses/professionals/government agencies in N.A., Europe, and Asia.

Corporate history.  Founded in 1986 with the patent of stereo-lithography by founder Chuck Hull, 3D became the first company to produce rapid prototyping machines using stereo-lithography.  Although the company owned 367 patents by 2003, emerging competitors and lawsuits caused 3D’s profits to plummet.  A new CEO was appointed in 2004 to refocus the business.  3D’s net deficits subsequently decreased until 2010 when the firm began earning a net profit.  Growing sales and stock issuance accounted for 3D’s recovery and accumulation of $37 million in cash. 

Product pathway (Operations).  Technology platforms: 3D’s printers are manufactured by several foreign companies based on customer orders.  Proprietary software is embedded in the equipment and the technology platforms are sold to businesses globally.  After-market services support the platforms.  Rapid manufacturing: The rapid manufacturing solutions business designs and makes precision parts for customers.  No single customer accounts for more than 10% of revenues.

Strategy for growth.  The plan for growth includes acquisitions of businesses aimed at penetrating new markets and expanding the current line of products (e.g., healthcare services).

Risks.  3D’s business operations are vulnerable to the following forces and events:

1)  Interrupted supply of materials

2) Loss of market share upon expiration of patents and commoditization of 3D printing

3) Competing technologies within the rapid prototyping industry

4) Strong bargaining power of customers

Competition.  3D’s main competitor in the 3-D printing industry is Stratsys Corp., who has a partnership with HP.  Other 3-D printing competitors are Z Corp, Solidscape (private firm), Sony, EOS GmbH, Arcam,  Objet Geometries, and Optomec (private firm).

Position within the industry.  3D’s competitive advantages are its patents (353 approved and 152 pending) and an offering of diversified products.

Rapid Prototyping Industry (additive manufacturing, desktop manufacturing). Rapid Prototyping is a series of automated processes that fabricate three-dimensional objects for the purpose of testing their form, fit, and function. The fabrication process is a layer-based additive manufacturing method. Business segments of the Rapid Prototyping industry are: 1) concept modeling, 2)rapid prototyping, and 3) rapid manufacturing.  Competing technologies offer alternative solutions as displayed in the following table:

RAPID PROTOTYPING TECHNOLOGIES BASE MATERIALS
selective laser sintering (SLS) Thermoplastics, metals powders
direct metal laser sintering (DMLS) Almost any alloy metal
fused deposition modeling (FDM) Thermoplastics, eutectic metals.
stereolithography (SLA) photopolymer
laminated object manufacturing (LOM) Paper
electron beam melting (EBM) Titanium alloys
3-D printing (3DP) Various materials

3-D (three dimensional) printers are cheaper and faster than other rapid prototyping machines (see below).  In 3-D printing, computer-aided design software or digital media are used to program a 3-D printer to build an object for a prototype or final product.  The construction process involves additive-part production without tooling. The typical 3-D printer business segments are 1) hardware, 2) consumables, and 3) add-on services.  The advantages of 3-D printing are comparatively low-cost machinery, reduced labor, rapid production, and rapid customization.  3-D printing may not be as accurate as other types of rapid prototyping methods.  The industry is fragmented by many private companies and several public companies.

Stock valuation.  3D’s common stock (DDD: nyse) has a market capitalization of $0.7 billion and 52% institutional ownership.  The beta is 1.65.  The company is focused on growth of assets rather than on payments of dividends or repurchasing stock.

Copyright © 2011, Douglas R Knight

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2 Responses to Company profile, 3D Systems Corp. (DDD: nyse)

  1. SPPCTTRADE says:

    Do you think DDD is bound for another $15.00 something low again?? Since Monday it has fallen $2.00 today dropping (-3.12%). What do you think may be causing this?? Do you think their could be a big uptrend like there was in July??? or is the stock bond for worse days ahead??

    What is your person thoughts on SYSS??

    • Thanks for your interest in my blog and DDD. In response to your Qs:
      1. LOW- This is an uncertain market, so DDD’s price will continue to fluctuate. I don’t have a method for predicting the extent of decline; wish I did.
      2. CAUSE- market conditions seem to contribute. DDD appears to correlate negatively with the CBOE volatility index (http://www.cboe.com/micro/VIX/historical.aspx). You can check me on this by comparing DDD:US and VIX:IND on Bloomberg’s interactive chart.
      3. UPTREND?- My interpretation of the news is that the Eurozone’s sovereign debt problem will linger and likely worsen. Stocks will decline and offer opportunities to buy fundamentally sound companies at bargain prices.
      4. SSYS- SSYS enjoys an enduring partnership with Hewlet Packard and has a large share of the 3D Printer market. I’m not familiar with the fundamentals at the moment.
      Again, thanks for your Q’s.

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