3D Systems Announces Additional Partial Repurchase of Convertible Senior Notes

Rhea-AI Summary

3D Systems (DDD) announces the repurchase of $110 million of 0% coupon, convertible senior notes at a 22% discount to par value. This move reduces the outstanding notes balance to $214 million, marking a 50% reduction from the initial principal balance of $460 million due in 2026. The company aims to strengthen its balance sheet and maintain a strong cash position to support operational needs.

Positive

• 3D Systems repurchases $110 million of convertible senior notes at a 22% discount to par value.
• Outstanding notes balance reduced to $214 million, a 50% decrease from the initial $460 million due in 2026.
• The move reinforces the company's balance sheet strength and ensures a strong cash position for operational requirements.
• President and CEO Dr. Jeffrey Graves highlights the proactive liability management and disciplined execution strategy of the company.
• 3D Systems maintains a robust cash reserve in the industry, positioning itself well for the future.

Negative

• None.

Insights

Financial Analyst

The strategic repurchase of convertible senior notes by 3D Systems represents a significant move to strengthen the company's balance sheet. By buying back the notes at a 22% discount, the company not only reduces its debt obligations but also signals to investors its confidence in current liquidity and future cash flows. This action could potentially lead to an improvement in credit ratings and a reduction in the cost of future debt.

From a financial standpoint, the transaction is immediately accretive to the company's net asset value per share, as the repurchase is below the notes' par value. This could be seen as a positive indicator for the stock's intrinsic value, potentially leading to an upward revaluation by the market. However, investors should consider the opportunity cost of using cash reserves for debt repurchase as opposed to investing in growth opportunities or research and development, especially in a technology-driven industry like 3D printing.

Debt Market Analyst

The repurchase of debt at a discount is a noteworthy event in the debt market, as it suggests that the original note holders may view the risk-return profile of holding the notes until maturity as less attractive than liquidating at the current offer. This could be due to a variety of factors, including alternative investment opportunities or concerns about the company's long-term prospects.

For remaining note holders, the reduced principal amount could mean less liquidity in the secondary market. However, the reduction in overall debt could also be perceived as a reduction in financial risk for the company, which might be favorable for the holders of the remaining notes. The 0% coupon rate, while not providing periodic interest income, suggests that investors are more interested in the potential for conversion into equity, betting on the company's future growth.

Market Research Analyst

3D Systems' operational strategy, as highlighted by the CEO, is focused on improving gross margins and cost efficiencies. This aligns with industry trends where companies are increasingly looking to streamline operations and optimize financial performance. The repurchase of debt and the emphasis on maintaining strong cash reserves could be seen as a proactive measure to ensure financial stability amidst a potentially volatile market.

Given that 3D Systems operates in the high-growth 3D printing sector, maintaining a robust balance sheet is crucial for sustaining innovation and competitiveness. The company's actions could be interpreted as a commitment to long-term strategic goals, which may reassure investors about the company's management and future direction. The industry-specific implication is that 3D Systems may be better positioned to weather economic downturns or invest in strategic opportunities as they arise.

• Repurchasing approximately $110 million of 0% coupon, convertible senior notes at approximately 22% discount to par value

• Reduces remaining balance of outstanding notes to approximately $214 million, over 50% reduction from initial issued principal balance of $460 million, due 2026
  
  
• Reinforces balance sheet strength and maintains strong cash position to support operational needs

ROCK HILL, S.C., March 05, 2024 (GLOBE NEWSWIRE) --  3D Systems (NYSE:DDD) (“the Company”) today announced that it has entered into separate, privately negotiated repurchase agreements with a limited number of holders of its 0% Convertible Senior Notes due 2026 (the "Notes") to repurchase $110 million aggregate principal amount of the Notes at approximately a 22% percent discount to par value. The debt repurchase will be paid in cash from the Company’s balance sheet.

The repurchases are expected to close on March 8, 2024, subject to the satisfaction of customary closing conditions. Following such closings, approximately $214 million principal amount of the Notes will remain outstanding, from an initial issued principal balance of $460 million. This remaining debt will continue to be held at 0% interest and will fully mature in November 2026.

President and CEO Dr. Jeffrey Graves stated, “Today’s announced additional repurchase of $110 million of our 2026 notes at a significant discount once again demonstrates our approach to proactive liability management and disciplined execution in the current environment. Over the last three months, we have opportunistically reduced our 2026 maturity by over 50% to reinforce the strength of our balance sheet, while we continue to maintain one of the strongest levels of cash reserves in the industry. Today’s transaction in combination with our targeted initiatives to drive enhanced gross margins and cost efficiencies reinforce our belief that 3D Systems is well positioned to deliver on the bright long-term future ahead.”

No Offer or Solicitation
This press release is neither an offer to sell nor a solicitation of an offer to buy any securities described above, nor will there be any offer, solicitation, or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About 3D Systems

More than 35 years ago, 3D Systems brought the innovation of 3D printing to the manufacturing industry. Today, as the leading additive manufacturing solutions partner, we bring innovation, performance, and reliability to every interaction – empowering our customers to create products and business models never before possible. Thanks to our unique offering of hardware, software, materials, and services, each application-specific solution is powered by the expertise of our application engineers who collaborate with customers to transform how they deliver their products and services. 3D Systems’ solutions address a variety of advanced applications in healthcare and industrial markets such as medical and dental, aerospace & defense, automotive, and durable goods. More information on the company is available at www.3DSystems.com.

Forward-Looking Statements

Certain statements made in this release that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In many cases, forward looking statements can be identified by terms such as “believes,” “belief,” “expects,” “may,” “will,” “estimates,” “intends,” “anticipates” or “plans” or the negative of these terms or other comparable terminology. Forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to the company’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the control of the company. The factors described under the headings “Forward-Looking Statements” and “Risk Factors” in the company’s periodic filings with the Securities and Exchange Commission, as well as other factors, could cause actual results to differ materially from those reflected or predicted in forward-looking statements. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved. The forward-looking statements included are made only as the date of the statement. 3D Systems undertakes no obligation to update or revise any forward-looking statements made by management or on its behalf, whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law.

Investor Contact: investor.relations@3dsystems.com
Media Contact: press@3dsystems.com

FAQ

How much of the 0% coupon, convertible senior notes did 3D Systems repurchase?

3D Systems repurchased $110 million of the 0% coupon, convertible senior notes.

What is the discount percentage at which 3D Systems repurchased the notes?

3D Systems repurchased the notes at a discount of approximately 22% to par value.

What is the remaining balance of outstanding notes after the repurchase?

Following the repurchase, the remaining balance of outstanding notes is approximately $214 million.

What was the initial principal balance of the notes due in 2026?

The initial principal balance of the notes due in 2026 was $460 million.

When will the repurchases of the notes close?

The repurchases of the notes are expected to close on March 8, 2024, subject to customary closing conditions.