3D Systems Cash Metrics 2021 – Cash Flow And Cash On Hand

3D printing process. Flickr Image.

Cash is the lifeline of a business.

It is no exception for 3D Systems (DDD).

In fact, cash has become even more important for 3D Systems as the company has not been running a profitable operation since fiscal 2018.

According to the 2020 annual report, 3D Systems has been incurring net loss totaling as much as $150 million in fiscal 2020 alone.

Prior to fiscal 2020, 3D Systems’ net loss clocked at $70 million and $46 million in fiscal 2019 and 2018, respectively.

While 3D Sytems has run into hundreds of millions of losses, the company could still generate meaningful cash flow.

That said, in this article, we will explore several of 3D Systems’ cash metrics such as the cash on hand, operating cash flow, free cash flow and cash margin.

From these metrics, we can find out how 3D Systems’ cash flow has been doing and whether the firm has been generating positive cash flow.

Without further ado, let’s take a look!

Cash On Hand

3D Systems’ cash on hand

Let’s start with DDD’s total cash on hand for the period from fiscal 2018 to 2021.

For your information, DDD’s cash on hand consists of only cash and cash equivalents which can be easily obtained from the company’s balance sheets.

As seen in the chart above, 3D Systems’ total cash on hand averaged around $100 million on a historical basis.

Unlike other companies such as General Motors and Altria where their cash on hand spiked considerably during the onset of the COVID-19 outbreak, 3D Systems’ cash on hand remained flat throughout fiscal 2020 and even declined slightly.

Therefore, it looks like the COVID pandemic totally has no impact on DDD’s cash position.

Nevertheless, 3D Systems’ total cash reserves spiked significantly as of fiscal 3Q 2021 to slightly above $500 million USD, a record high in the last 3 years.

A detailed check into the company’s latest filings shows that 3D Systems’ huge pile of cash on hand reported in Q3 2021 was driven primarily by the sales of several non-core assets, including those related to healthcare simulators and on-demand solutions.

In short, 3D Systems is a cash-rich company as of fiscal 3Q 2021.

Net Cash From Operating Activities

3D Systems’ net cash from operations

In terms of cash flow from operating activities, 3D Systems’ cash generation ability has been quite poor.

According to the chart, 3D Systems generated negative cash flow in several quarters on a TTM basis, meaning that the company actually burned more cash than the business produced.

While DDD’s net cash from operations has been poor prior to fiscal 2021, the figures have been rising since fiscal 1Q 2021, indicating an improving business operation in fiscal 2021.

As of 3Q 2021, 3D Systems’ net cash from operations came in at $75 million on a TTM basis, a new high in the last 3 years.

Operating Cash Flow Margin

3D Systems’ operating cash flow margin

The operating cash flow margin measures the amount of cash being converted from revenue.

As shown in the chart, 3D Systems’ operating cash flow margin averaged less than 5% on a historical basis, a rather poor result.

Besides, 3D Systems’ operating cash flow margin was seen plummeting to the negative regions in several quarters, indicating negative net cash being generated in those quarters.

While the figures have been poor, we are seeing significant improvement in fiscal 2021.

For example, 3D Systems’ operating cash flow margin has been rising since fiscal 1Q 2021 and reached as much as 12% as of 3Q 2021, a new high in the last 3 years.

At this ratio, 3D Systems managed to squeeze $0.12 dollars of cash out of $1.00 dollars of sales.

Free Cash Flow Net Of Capital Expenditures

3D Systems’ free cash flow net of capital expenditures

The above free cash flow is measured by subtracting capital expenditures from net cash from operating activities.

Capital expenditures consist of only the purchase of properties and equipment.

All told, 3D Systems’ free cash flow follows nearly the same pattern as that of the operating net cash which we saw in the prior chart.

The reason is that 3D Systems does not have a whole lot of capital expenditures and the amount came in at only $14 million in fiscal 2020 or $17 million on a TTM basis.

Therefore, 3D Systems’ free cash flow reached a massive $60 million in fiscal Q3 2021, a record high since fiscal 2018.

Free Cash Flow Net Of Net Cash From Investing Activities

3D Systems’ free cash flow net of net cash from investing activities

The above free cash flow is measured by subtracting net cash from investing activities from net cash from operating activities.

In DDD’s case, net cash from investing activities consists of all cash used for investment, including capital expenditures, purchase of businesses, purchase of minority interest, proceeds from the sales of assets and/or subsidiaries, etc.

That said, the current free cash flow chart looks completely different from the prior one.

As seen, 3D Systems’ free cash flow came in at nearly all negatives, indicating little to no cash being produced after accounting for the cash used in investing activities.

In other words, 3D Systems burned more cash than the business operations could produce when net cash from investing activities is taken into account.

While free cash flow had been poor prior to fiscal 2021, the figures spiked significantly to $470 million in fiscal Q3 2021.

As mentioned, the jump in free cash flow in fiscal Q3 2021 was primarily driven by the sales of several assets, including those that come from healthcare simulators and on-demand solutions.

Free Cash Flow Margin

3D Systems’ free cash flow margin

Similar to the operating cash flow margin, the free cash flow margin measures the amount of free cash flow being converted from revenue.

As seen in the chart, 3D Systems’ free cash flow margin averaged less than 5% on a historical basis and came in at mostly negative figures, indicating higher cash flow consumption than cash being produced.

While free cash flow margin has been poor prior to fiscal 2021, the 2021 results have been rising and reached 9% in fiscal 2021 3Q.

At this ratio, 3D Systems managed to generate about $0.09 dollars of free cash flow out of $1.00 dollars of revenue.

Net Cash From Financing Activities

3D Systems’ net cash from financing activities

Net cash from financing activities shows the inflow and outflow of capital raised through debt and/or equity.

Apart from capital, the net cash from financing activities also shows cash returned to investors in the form of share buyback and cash dividends.

However, 3D Systems has never paid any dividends or bought back shares.

Therefore, in 3D Systems’ case, the net cash from financing activities indicates only the inflow and outflow of capital.

That said, according to the chart above, 3D Systems was seen raising capital in most quarters prior to fiscal 2020.

Post fiscal 2020, 3D Systems was seen paying back capital in most quarters as reflected in all negative figures of the net cash from financing activities.

As of Q3 2021, 3D Systems returned the capital back by paying down debt that totaled as much as $35 million on a TTM basis.

The negative trend of the net cash from financing activities is actually a good sign.

In this aspect, it shows that 3D Systems actually has the ability to pay back the debt borrowed from investors in the past.

Conclusion

To recap, DDD’s cash on hand was at a record high in Q3 2021 at more than $500 million, due primarily to the sales of non-core assets, including those from healthcare simulators and on-demand solutions.

Therefore, DDD was a cash-rich company as of fiscal 3Q 2021.

While 3D Systems was loaded with cash, the firm’s cash flow generation ability has been very poor.

For example, 3D Systems’ operating net cash has been mostly in the red, indicating cash burn instead of cash generation from business operations.

While that has been the case prior to fiscal 2021, 3D Systems’ net cash from operating activities has been on a rise in fiscal 2021, reaching $75 million as of 3Q 2021.

Similarly, 3D Systems’ free cash flow has been very poor, with the free cash flow margin averaging less than 5% in the last 3 years and most of them were in the red.

However, 3D Systems’ free cash flow also has been increasing in fiscal 2021, reaching as much as $60 million as of Q3 2021, a record high since fiscal 2018.

A notable trend is that 3D Systems has been paying down debt since fiscal 2020 as seen in all the negative figures in recent quarters in the net cash from financing activities plot.

Credits and References

1. All financial figures in this article were obtained and referenced from DDD’s quarterly and annual filings which are available in the following location: DDD Investor Relation.

2. Featured images in this article are used under creative commons licenses and sourced from the following websites: Spatial Cardioidal Variations and 3D printing.

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The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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