3D Systems Printer Technology A Manufacturing Force
Twenty-six years ago, Chuck Hull received a patent for a system he called stereolithography.
The patent described a procedure of creating three-dimensional objects with a computer-controlled system that shoots ultraviolet light into a pool of liquid polymer or some other "fluid medium."
The fluid at the surface turns solid when hit by UV light. The object is then lowered as layer upon layer of light beams hit the liquid surface and stitch together, sliver by sliver, the object the computer has been programmed to produce.
As the Hull patent described, "stereolithography is a method and apparatus for making solid objects by successively 'printing' thin layers of a curable material, one on top of another."
That same year, in 1986, Hull co-founded3D Systems ( DDD ), now based in Rock Hill, S.C., where he is currently the chief technology officer. It began making and selling expensive 3D printers used in aerospace and automotive manufacturing to develop prototype parts, plodding along in a niche market. In 2003, the company hired Abraham Reichental as president and chief executive officer, who saw things in a different light.
"I realized this technology could change everything in terms of how we design, create, manufacture, communicate and educate," said Reichental, in an interview with IBD.
Today, 3D Systems makes a long line of 3D printers ranging in price from $1,300 desktop printers for the home hobbyist to large $1 million printers able to make parts for supersonic jets. One of its biggest markets is the health care field, where 3D printers make custom parts for hearing aids, prosthetics and orthodontics, among other items.
Its 3D printers also make parts for aerospace, military and transportation industries. They can print most anything that can be designed on a computer, from consumer electronic parts like smartphone covers to jewelry, toys, shoes and electric guitars. Just about anything the artist can imagine can be created with 3D printers, said Reichental. The printers can mass customize and locally produce whatever is needed without the need for expensive tooling, manufacturing and shipping.
"We have journeyed from a provider of expensive printers traditionally reserved for deep-pocketed companies to bringing 3D printers in the home and classroom," said Reichental. "This will become a disruptive force in democratizing creativity."
In the third quarter 3D Systems reported revenue of $90.5 million, up 57% from the same quarter a year ago and the 11th straight quarter of double-digit gains. It reported earnings of $18 million. That came to earnings per share, minus special items, of 32 cents, up 78% from a year ago and the third straight quarter of double-digit growth.
For the year, the consensus estimate of analysts polled by Thomson Reuters looks for revenue of $351 million, a 53% increase. Projected earnings for the year of $1.21 a share would be a 68% increase. Shares of 3D Systems are up about 175% from the beginning of this year.
After 3D Systems posted third-quarter earnings on Oct. 25, Bobby Burleson, an analyst at Canaccord Genuity, issued a report saying the company's "strong results" that beat estimates were driven by "strong organic growth," and an expanded distribution channel. He also expects the low-end 3D printer technology aimed at the consumer market "to become a meaningful contributor to the top line by the second half of 2013."
3D Systems' revenue is divided almost equally between printers, print materials and services.
Last month, 3D Systems announced a $3 million contract to develop materials and technology to make parts for theLockheed Martin ( LMT ) F-35 fighter jet and other weapon systems. The company's printers already make about 90 different parts installed in F-18 fighters, Reichental said.
During the quarter, 3D Systems acquired Vitzu Technologies, which provides the ability to turn photos and videos into printable 3D objects. And it acquired Rapidform, a provider of 3D scanning and computer aided design and inspection software tools, for $35 million. Its products are used by engineers and manufacturers.
Rapidform, based in Seoul, will expand 3D Systems' presence in Korea and Japan. It also has offices in Australia, Italy and the Netherlands. The company has acquired about 30 firms in the last three years, many of them small, extending its platform of capabilities and widening its patent portfolio to more than 1,200.
Since its introduction of stereolithography 26 years ago, 3D Systems has developed other 3D printing technologies for an array of applications. Its printers also use a wide variety of print materials, about 100 of them, that replicate the performance of plastics, metals, waxes, rubbers and other composites.
3D parts can be made in as little as 20 minutes or take more than 40 hours, depending on the complexity. About half its printers currently sold are for manufacturing applications.
While 3D Systems has pushed aggressively into the consumer market, the results have yet to show up in quarterly financial results.
But that will change, as Reichental sees a huge market opportunity. In January, the company launched its first 3D printer for the home, called Cube. It concurrently launched Cubify.com , where artists, designers and consumers can make, sell or buy 3D designs and objects.
It is in the consumer area where Reichental begins to speak whimsically with big dreams for the future, with the notion of having a 3D printer in every home and classroom.
"I have a great deal of passion to make this happen," he said. "In terms of technology and cost I think we will have plug-and-play 3D printers for a few hundred dollars that will put this technology in the hands of many people."
For all these reasons, he said, "We believe 3D printing is a canvas for the future that anyone can use to communicate, create, express and educate."