4 Must-Read Quotes From 3D Systems Corporation's Management

3D Systems' second-quarter earnings may have missed Wall Street expectations, but that didn't stop the stock from soaring after the results. It seemed investors were relieved that the 3D printing maker didn't announce any new major negative developments -- an all too common occurrence in recent quarters.

The company also reported some signs of stabilization from its core business after two quarters of abrupt pause, which may have sent bears clamoring for the exits and prompted a classic short-covering rally. Prior to the release, nearly one-third of 3D Systems' shares outstanding were sold short.

The conference call that management hosted along with its earnings release highlighted the current state of 3D Systems' underlying business. In total, there were four major takeaways.

1. Previous problems weighed on organic growth.Although 3D Systems didn't announce any new major problems during the quarter, several issues that developed in previous quarters persisted.

In his opening remarks, CEO Avi Reichental shed light on these ongoing problems and how they affected the company's organic growth rate, which helps investors measure the company's annual revenue growth outside acquisitions made within the last year:

2. Mea culpaDuring the call, Reichental finally admitted that the company's hyper-aggressive acquisition strategy of the last four years has hurt its operational performance.

3. About those printer problems...According to Reichental, the ongoing performance issues that have been plaguing some of its nylon and metal 3D printers are a combination of inherent technological challenges and customers pushing the technologies into "uncharted territories."

Specifically, the nylon issue was related to temperature distribution, while its large-format metal 3D printer had issues with feeding the metal powders into the build chamber during builds that exceeded 40 hours:

4. A new approachOne of the biggest lies told by the 3D printing industry in recent years has been that consumers will soon adopt 3D printers en masse. This couldn't have been further from the truth, as the use casesexplainingwhy an everyday consumer would benefit from owning a low-cost 3D printer have been severely lacking.

Reflecting the reality of the situation, 3D Systems' consumer revenue only represented 5.5% of its total revenue in the second quarter, and declined by 41% sequentially on lower demand. Consequently, Reichental highlighted that the company will now be shifting how it approaches the consumer segment:

A long road aheadAs Reichental made clear, in order for the company to get a better handle on its inefficient operations, it has to improve quality controls, costs, processes, and become a better partner with its distributors. Ultimately, between the challenging industry environment and the internal improvements the company is working to make, it's likely that the company has a long road ahead before it can redeem itself.

The article 4 Must-Read Quotes From 3D Systems Corporation's Management originally appeared on Fool.com.

Steve Heller owns shares of 3D Systems. The Motley Fool recommends 3D Systems. The Motley Fool owns shares of 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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