Avi Reichental has stepped down as president and chief executive officer of Rock Hill’s 3D Systems.
Company officials said the move was a mutual decision but some analysts say Reichental may have been pressured to resign, given the company’s financial performance over the past two years.
“The company says it was a mutual agreement, but we believe Avi may have been pushed out, given 3D Systems’ struggles of late and investor frustration over the last two years,” S&P Capital IQ analyst Angelo Zino told Reuters.
Reichental’s last day on the job was Wednesday.
To provide ongoing leadership and support the company’s operations and strategic initiatives, 3D Systems’ board of directors has formed an executive management committee. Charles Hull, who founded the company in 1986 and is currently a director and chief technology officer, will chair the committee.
Andrew Johnson, chief legal officer, will be the interim president and CEO.
“Over the past 12 years, Avi has helped build 3D Systems into a global leader in 3D design and digital fabrication and we thank him for his many contributions,” said G. Walter Loewenbaum II, chairman of the 3D Systems’ board of directors. “We are fortunate to have such a knowledgeable and capable leadership team already in place that can execute on our strategic initiatives while we identify the right individual to lead 3D Systems into a new era.”
3D Systems’ headquarters is located at Waterford Business Park in Rock Hill. The company moved its headquarters to Rock Hill in 2006.
No reason was given for the decision. It comes, however, as 3D Systems continues to face mounting financial pressure.
3D Systems shares were trading for $10.28 at the close of stock market Thursday, slightly higher than its low for the year of $10.15 a share. In early 2014, 3D Systems stock traded for about $100 a share. The last time 3D Systems stock traded below $10 was in January 2012.
3D Systems was once the poster boy of 3D printing with the technology, touted as the next big thing, allowing people to print everything from cars to chocolates.
Inside the Waterford building, large, computer-controlled 3D printers precisely apply soft or hard plastics, or reinforced composite materials, to create objects. The process is called additive manufacturing because material is added rather than taken away to make something. The process starts with a 3-dimensional computer image. Printers slice the image into layers no thicker than a human hair, applying materials slowly to build the product.
The printers can create one-of-a-kind parts, or the same part over and over. That’s the beauty of 3D printing, Reichental said in a 2013 interview with The Herald. With a tweak of a computer program, you create custom material, he said. Creating prototypes for all kinds of industries is simpler, quicker and cheaper, Reichental said.
The Rock Hill location, as well as other sites scattered throughout the country, offer content-to-print solutions for a variety of industries from aerospace to health care and transportation.
3D Systems made Fortune’s fastest-growing companies list in 2013.
The past two years were tumultuous for the company, with its stock value falling and investors raising questions about the viability of the company and consumer 3D printers.
Some stockholders recently filed a class action lawsuit against 3D Systems, alleging the company intentionally deceived investors by making false and misleading statements they used to make financial decisions.
According to federal court filings, some stockholders lost millions of dollars in stock value when 3D Systems announced twice in 2014 that its quarterly earnings were below analysts’ expectations, causing 3D Systems’ stock prices to plummet.
At the time of the suit, officials from 3D Systems declined to comment on the pending litigation, saying the company “believes the claims alleged in the putative stockholder class action lawsuit and the related derivative lawsuit are without merit and we intend to defend the company and its officers and directors vigorously.”
The class action lawsuit names the company as well as Reichental and Damon Gregoire, the company's executive vice president for mergers and acquisitions, as defendants.
The company also recently lost an arbitration case involving one of its acquisitions.
An arbiter ordered 3D Systems to pay Ronald Barranco, co-owner of Print3D Corp., and his attorneys, $11.2 million. Barranco’s initial share of the settlement is $7.2 million, according to court filings.
Barranco alleged 3D Systems bought his company and then did not fulfill the contract by not employing him as a manager for his product – a “plug-in” program to allow computer-assisted design users to estimate the cost of three-dimensional parts they designed – as required by the acquisition contract and not paying him “earn out” payments of about $10 million.
3D Systems said it plans to appeal the arbiter’s decision.
In his decision, the arbiter wrote that while he did not find any “smoking gun,” he believed the breaches of the contract were intentional.
“The totality of such actions, whether a comedy of errors, a plethora of misunderstandings, or the machinations of an arcane management structure ultimately deprived Mr. Barranco of his ‘benefits of the bargain,’” the arbiter wrote.