DDD - Earnings call 4 2023 | 3D Systems Corporation

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Operator

Hello, and welcome to the 3D Systems Fourth Quarter and Full Year 2024 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.It's now my pleasure to turn the call over to Mick McCloskey, Vice President, Investor Relations. Please go ahead, Mick.

Michael McCloskey

Good morning, and welcome to 3D Systems conference call to discuss the preliminary results of the fourth quarter and full year 2023.The financial results presented on today's call and included in our earnings release are unaudited. The company is in the process of completing its quarterly and year-end close process. differ our anticipated earnings may and discussed results in shown release. actual from results the today Accordingly,

We are December delaying of the on will Form deadline the a Late filing of for file the SEC, fiscal our Filing, the to with year to XXb-XX, file ended Form XX, the and XX-K XXXX, Notification annual extend report XX-K. Form

presentation following Chief me Jeffrey financial section in this we Executive and do presentation the discussion Chief our on once access will Executive Corporate described and this filed.With the call. to who phone the only webcast Chief as today that included Graves, Relations to may and include Creech, of results Dr. Form Development results this view Vice to will and questions refer and are be forward-looking Actual Investor on portion Officer; of will audited the of materially. contains during call portion Vice statements the final slide. Chief call slide differ reflect along on Our and today's Jeff Financial management's slide President, Executive your President Andrew may as Officer.The Officer website.Following XX-K President of responses on Legal Officer; Those Johnson, a so wish

comparable non-GAAP unless will our additional reconciliations release annual discuss all latest find in press to turn In otherwise measures, the our including remarks. period recent about call, measures.Finally, we call comparable accompanying factors slides most this with of XXXX.With and release press webcast, for financial I'll our this reports will certain and opening our over on results the financial including against for that, Jeff this on disclosures call non-GAAP comparisons measures. filings and in our quarterly information Additional the XX-Q.During CEO, results included that could our Form stated, Graves, GAAP potentially will be our regarding is Form with SEC, XX-K impact you these report

Jeffrey Graves

this on morning, a path good initiatives XXXX in equally the consciously choosing I'll and only reflection and with to future out morning then everyone.I'll the brief not for cost areas Mick, but take discussing of performance. restructuring Thanks, growth. our forward, begin important that we business, to shift focus to our to continue XXXX invest are

finance Creech, things with XXXX up wrap financials.As into outlook to comments off the in Jeff. dive and company close. in deeper has Jeff I'll our experience our He results the may leadership XX things you led you Finally, brings with us great through year-end to aboard, and the Jeff forecast over for ground and years business begin year. before joined already he on as for It's recent some have the our mid-December. new of transformation us.Before handing a CFO, recall, I the hit discussing running Welcome

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strategy so fundamentally we've philosophy implemented our While of our actions for doing and own, cost I'd argue is different.

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CFO value the transformational the years, newly human drug Harris company executive As his for change years XD Medicine in regenerative is Harris X us. our times medicine unparalleled tissue of technology XD will from future draw only of organs, last Systems over President role distinct opportunities: medicine regenerative printing profoundly may you've created with strategic our as growth that our multiple technology health and from is our development. differentiator start-up us, X Harris company spending leadership, for non-organ would The from tenure. growth President over biotech leadership lead with decades Luminex than and emerging with a joining a to the produce his technology Vice our the and the exciting for ever building role partnership most their we're was as United product to development outstanding working Senior million revenue human helping printed, our lung. of but commercial heard announced focus in shareholder and we toward work new experience $XXX application.Specific structured more maturation In the Regenerative December, join few organs conceptual of Currie his from importantly, Therapeutics, move in deliver of Corporation, with during that XX complex into we to businesses.Prior on to initiative reflects me on the early-stage vigorously creation increasing not care.Leveraging

began Something trials well and that once toward as track is of a goal XXXX. to underway continues now dream our for human

on last back third a the Looking eclipsed during point the quarter. development year, lung we critical in

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For printing competitor invest products our XD space. expect the to and regenerative over XXXX, we to we have unrivaled momentum any our continue in maintain lead key in

the the Slide is area some you others, I'll still in While medicine this to tremendous a progress year.So regenerative finish future. We'll continue believe developmental on than advance that, value highly more we be creation XX. throughout proud quickly with and undoubtedly avenues offers will that to update on our

it would what current be last position revenues but environment, we throughout time. prudent this take, conservative remains say year me to our so experienced is year hope the morning, full to recap for the flat at this heard expect a relatively given to the to from you've this softness economic that We So given XXXX year.

this now growth XXXX. flow our top to in we chain for I'll initiatives, supply performance, gross margins Any R&D foundation leverage stable at provided improvement, Jeff. prudent restructuring turn we to revenue EBITDA performance profitability XXXX, margin the insourcing, enhance expect from an operating and OpEx upside and line in a can work performance.And adjusted sustained that, a gross to and sales reduced managed further we're years positive and investments has for strong believe cash Our exciting that with expanded environment. with deliver and highest-priority customer and levels volume With would ahead.So things committed static finally, Jeff? date carefully over even on deliver to we continue revenue on

Jeffrey Creech

warm you I and very thank appreciate call. welcome, Jeff, much, everyone on good the the morning to and

with While I've analyst community on look Slide near and our already the the of begin meeting I XX in in met many our very to forward revenue summary. January, future.I'll of more investor you conference circuit with

remainder XXXX. of full on such primarily in areas broader further the motorsports, momentum we other our declining The of results reflected quarter approximately the headwind million, defense.Healthcare impacted for year. XX% approximately segment decline business, macro pressure in X% prior dental reported in fourth to in by the $XXX by down XX% revenues transportation consolidated was revenues embedded the Solutions segment orthodontics offset full most down despite Healthcare XXXX, the $XXX sales. from and year about full in the such weakness XX. flat, amplified printer this were revenue essentially year XX% consolidated our of year. declining prior from million, roughly our delivered by Year-over-year jewelry, orthodontics business, while was influenced price-conscious Slide more as a was From For which accurately most performance most of in from of year and XXXX, dental XX% economic and $XXX our markets, year's million with Personalized prior by business.Shifting from from declining our performance although in full fourth revenues of reported largely Industrial, semiconductors markets, million, tougher growth a in Industrial held aerospace backdrop. as continued the $XXX.X Healthcare and full heavily was perspective, Solutions X% quarter at growth year revenues We were headwinds mostly firm performance year Within a

A decline double-digit defense aerospace it most year more Similar growing and in a as such also well dental. approximately was year's strength perspective, margins. our sales, down Personalized It businesses.From offset remaining at simply Solutions and not and XX offset in of approximately was printer broader Solutions industrial, fourth delivering from significant mentioned quarter just markets gross year our in by our revenues within $XX While and prior revenues the Healthcare weakness printer again, semiconductor million, to across growth look most a XX% of $XX compared felt reported this reported year, enough segment Slide markets. exception industrial was XX% in to markets. services year. for from million, than weakness full broadly end performed again quarter other from prior Healthcare, fourth fourth a quarter.Now in quarter, more Industrial prior last notable to the to trends most to the across materials

important and was full while that primarily we margin. a road improvement and gross we're of margin this On find margin prior customer favorable the pressures the inflationary note XX.X%, turn year-over-year gross efforts expect efficiency slide, insourcing year gross finish gross new more short-term to quarter, Specific the mix throughout to with with and pressures. expansion. we introduction beyond, the performance reasonable profit margins deployments improvement XX the mix, the impact by efficiencies mix.It's P&L. to going reported map printers, margin basis for our a XXXX, to XX.X% on XXXX XX.X%, impact increases CapEx in offset on let's encouraged respectively, of product technology continued the gross gross and For for margin our the Non-GAAP margin operating non-GAAP improvement over expected up positive associated year in XX.X%. on for largely Slide Coupled fourth by them for and is indicative quarter, forward.Now XXX-basis-point to the and non-GAAP drive impact and to favorable the positive of to non-GAAP were year it's you'll driven of increasingly longer-term price driven the by expect margin

expenses as a readout from operating our or for and year for charges metrics quarter, full assets.Additionally, fourth related begin usual year non-GAAP took notes approximately on I charge excluded quarter call and that during and the that's convertible the during from accounting-related goodwill of noncash $XXX for quarter Before quarter -- gain for to these specific in our to non-GAAP also we fourth to impacts and the repurchase million the metrics. these the a impairment on are year want your were metrics. other discount, our XXXX attention our we I $XX.X the at end aggregate, million to the and of excluded a $XXX In realized million GAAP

million. of expenses. full lower The declined prior $XX.X by the For $XX.X million XXXX, driven year by and primarily year decline from revenues increased was EBITDA adjusted negative the operating

For was million. the OpEx year, non-GAAP $XXX.X

year declined factors $X.X of quarter million, $XX.X the the EBITDA negative driven the as by adjusted fourth from For above. by XXXX, primarily noted same million prior

initiative, modernization experienced as considerable events offset very from expense have accelerated and infrastructure taken this with increases and actions scarier. associated to a in XXXX, We felt impact November year-end higher distinct audit stint. very world systems their circumstances. and than cybersecurity, enhancement and restructuring the medicine For have frankly, normal our investment million.While was we items my for our $XX.X in gets R&D we OpEx and IT quarter, by non-GAAP was was transition. had operating in throughout the support place X an scarier for or had fees additional or external temporary our regenerative important We our We

for and a to the than cybersecurity we As $X.XX share aware, we a into we a all fees X were full legal where XXXX, we associated compared key is that year-end share finally, them reiterate of transition issue specific that increasing our and XXXX. clarify rather operating specifically big in important on for with some of $X.XX XXXX these in expenses announced.Our with mentioned share and our actions expenses per going convertible loss our to part note, due to as complexity or in December's we're items reduce key previously based resulted temporary audit. to loss our view per to incurred note diluted association business. consider the stand advisory XXXX with normal And of per repurchase.It's earnings expectation operating transitioning incurred currently of to year accelerated everyone. my we one I you're as larger restructuring fees fully a costs And fees associated as

in nonrecurring appendix, detailed prior $X.XX other and the charges $X.XX compensation loss in compared stock-based for share this non-GAAP our Excluding of to per resulted year.

in year over For $X.XX for in and $X.XX December, to at the $XX.X let's our of notes. per of the a 'XX.Now slightly of nearly We we capital a company's expenditures share the the sheet. share fourth compared per Announced share quarter, value loss compared of in turn discount. $XXX.X extinguishment significant notional core XX% to 'XX cash loss to taken invest increased balance of these growth, the the the million.Additionally, decrease X% Non-GAAP acquisitions we million opportunistically also used the strengthened sheet in The balance generating operations expectation total a items primarily was cash with deliver on X million optionality.Looking of The investments no operations repurchased convertible maintain $XX.X form year-over-year this same that repurchase driven the million and actions $XXX.X of of we in with of insourcing loss to used forward, the future outstanding investments a per in XXXX. cash $XXX fund $X.XX overall of compared million and end of inventory. of $XXX.X XXXX. XXXX in in per cash over maturity the share while million significant past reflects at transaction years with will our healthy margin other million, strategic loss from sheet reserves return was and our gross fully leaving in by short-term and of XX equivalents of balance reported $XX.X XXXX cash diluted $X.XX to Slide a closed

more critical capital on cash throughout would continued flow. also XXXX this mentioned cash evaluate to very continue expectation of conclude close and That improved on expenditures programs. the usage XXXX view Our a with doing year.I'll opportunities We'll while on Slide as this morning's strategic growth return XX to said, and us to be we'll Jeff the I the path a and profitability system now keeping investment be across we call, throughout eye generator our and regular R&D outlook. our of as of year through a fund most

to we full quarter, revenues fund a sequentially profitability as current range regard, XXXX economic year modeling, year to relatively heard And growth improved million. a revenues revenue you've down $XXX As from expect of first while to million we to environment. year-over-year. continuing in a expect us In the in this view we start that driving flat conditions, of $XXX in the seasonally with aid with and soft morning,

and of operational our ongoing each quarter consistent strength efficiencies gross in in XX% However, as XXXX.Non-GAAP throughout XX% improvement of range particular result half a margins Non-GAAP the with sequential 'XX. of second to the in $XXX discussed this $XXX costs the offsets growth from range activities morning's call. our announced reflecting programs to expense million, including of operating and critical reduction and a previously restructuring throughout incremental million in

and margin now top for reductions is and line for profitability we'll questions. efforts line open of continued our as growth without the expected consistent cost and to of the midpoint for XD expectation be full guide.We time profile drive thank or substantial EBITDA your the at year breakeven to support please. the adjusted better should approved of Finally, our the you Operator, Systems, in improvement

Operator

Cantor first Instructions] Fitzgerald. today [Operator Our coming question Jensen is Troy from from

Troy Jensen

ask And in expecting team. guess this to to first here the Jeff, just are I thing welcome you all-in, I dental, grow want is to XXXX?

Jeffrey Graves

at if it's we've got visibility market. end The the good Troy, -- pretty of the ultimate process to bottoming. in the in -- you Yes, customer certainly look

as chain. supply complexity, demand 'XX ticked is rising. The clearly, of by, So was the in the inventory clearing

lot last that clear inventory. year a done of was there work So to

pretty much tell would it's you cleared. I So

should and there's and plenty QX believe after bottoming forward we're that, going It's that -- chain. I materials call services rising for in so now And meet that here see I primarily demand. then printing materials consumption, in capacity business. to hardware we would of lift more supply rising a

So QX, it it turning. it's in to in I of hard the QX clearly tell, kind think you'll but out it's kind whether here, of is see process bottoming bottom in bottomed of

Troy Jensen

need really year. there also then can know to this dental before I expect it later approval get Perfect. NextDent for sticking you Okay. to FDA Is And said here. take insurance qualifications off? you in guys you

Jeffrey Graves

go. to good we're No,

-- now. printing product to the we're Troy. It's approval, XXX(k) putting to capacity handle as we soon get that -- good fact, With the in as go, printing in we're

and view terrific have looking as bullish We've through regulatory FDA and really in got performing we the we're product. a new product. the way So as our It's that to, on year. should we very but that later approvals, manageable, in it the market work always,

Troy Jensen

you Okay. regenerative cede you're Perfect. the remind here. I'll spending now? right what last question, And quarterly us floor on Can

Jeffrey Graves

of trying pharma, around reimbursed. bit do not we There to reimbursed the some is obviously that on because and of -- quarterly and I'm a What on we regenerative? -- we get Therapeutics. Troy, spending it's certain are hedge, complicated a own, but lot amount things organ It's United we're from especially a our some the spend work

year $XX of spent million last we our own So about money.

the million We're our away to we them. And own is highest of what take spent We pursuit. medicine, applications. on you range primarily funding $XX If very own we of our chasing to be with continue priority pharmaceutical the chase.And market. could look dozens last our to about okay, trying be pharmaceutical actually the we about disciplined internal regenerative the money noise, all year pursue of at

progress Okay? Because is against enormous. -- making to the drug the I payoff lines introduction time

-- So encouraging. and the been receptivity the companies really of pharma has

pipeline last our got interest second JPMorgan So I nice forward, after really contract we late the year, We've especially Healthcare of a landed coming as mentioned. Conference.

things So pursuit. the pharma are very for looking promising

is well then high clearly the longer obviously, long we're So right an as United for priority Therapeutics that And giving the work now. to extremely with priority term.

Troy Jensen

over going the here All right. hard years. to Yes. Andrew. shout the all Well, Thanks for Understood. forward and luck out a special good work

Jeffrey Graves

thank well. Yes. appreciate Troy, great you, as We really such for a job covering that it. Thanks for us. And doing

Operator

question next coming Palm Craig-Hallum. from Our Greg from is

Greg Palm

more in systems system-based guess year anything. shortfall any And CapEx was the thinking the of quarter? for sort to you I how growth that it on as just majority the for rates Do back general driven versus have consumables vast well? QX, sense the sounds the full like trended of than

Jeffrey Graves

applications up year the quite surprised normal were Yes. was Greg, really dig last been advanced CapEx applications. -- We customer very for -- that And We'll not new see customer can work has and tough we tell being group lift, can high, to qualitatively, to customers sales because if down. the number. do seams this you our they have customer I in QX see are engagement organization. at the and we seasonal sales bursting especially the spending with with equipment

interest nervousness were of end as I rates it just the reflects to it the seasonally we surprised the see interest, will at is think thing. that the No does demand. rising of customers' do end encouraging very usually So through lack about which year.But what flow not to

their was, timing more that being when it's 'XX does very hard issue. a nervousness subside. The problem think say of in it's I to guidance

that's capacity. and hardware-driven, break hope don't up conservative. with I And modeled an year But as people a that normally year, flat it was come not year we Did can darn we've We for I so revenue number shortfall actual just our this out. services. incremental Greg? was weren't tell all you, Greg, Materials in It's usage and qualitatively, materials just pretty long. actually adding strong pretty

Greg Palm

the that decline? just the Can And yes, it But on? time in you see more you just bit specific go lite confidence loss, see I it opposite. maybe level Yes. Yes. detail mean, QX was the around that share to and usually it's sort unable really timing. to back sequential sense. a Makes of loss, going a sort wasn't more of decline, competitive wasn't long it

Jeffrey Graves

the of to would was where -- cash. of it printer -- people what rates It ground. in is, call strictly look, perspective, every fine order, customer capacity, to more a got sheet, Greg, significance. gone. We've And and on and I lost the tell big can short weren't not sell balance incremental they customers. line was I not I And market needed a to had not creditworthy of sales we they can slow is was it very, interest. it's most was from it part that question almost certain given I you we've drop It we their interest hardware It's it that internally very had, purchase are which a cash sight big share. a they're chase mean got rolling we

large. I I rolling share that's part and just business, was I turnover believe customers' affected year our can But slow end wanted and purchase on don't see any their think how and I think truly everybody by strictly much the demand loss, you. it there orders to was as tell

Greg Palm

it. Got

the give last from And expense operating -- question, Jeff, non-GAAP did say Okay. you did number then a you quarter?

Jeffrey Creech

I quarter. for did. Non-GAAP OpEx was about the $XX million

Greg Palm

you And that into maybe restructuring the a have of me up bit announced should obviously, year. a levels quite as account taken relative saw October. that the strikes That you to the bit in Okay. being throughout little

is And can October, I that announced just So in be that right? margin? us is gross just line and just restructuring you versus clear, time remind much -- guess OpEx what's you how to

Jeffrey Graves

question, logical Greg. It's Very a good one.

QX. quickly? they number tell to definition, So I items Jeff, short-term QX, in you get out. because strictly there but we don't very focused truly, not onetime, run were by to weren't those, they investments in through exclude did would a Why did X which We were in not OpEx you take real non-GAAP

Jeffrey Creech

Sure will.

had external expenses we quarter fourth So fees And consulting fees. of in this the support audit we saw again, again, were to what consists our despite external fees that higher-than-normal and in a intentional to to level. and some make us year assistance provide the in the frankly, quite added at the very a CFO internally of get CAO end to in transition investment and

know accelerated had did So We've a lot our in our to need concept around it's exposure. those and proprietary maintaining be us. are. we're and really for infrastructure We -- extremely investments were very cybersecurity. a cognizant out to of technology is that business, intentional in that of us. very and we world We threats know what conversation we cybersecurity IT make We important intellectual again, there, this those information scary internally of some about

in course, and fourth of in quarter. the the again, associated investments advisory area.We, regenerative mentioned, accelerated debt R&D. our as And we expenses those legal very and had services So of with that some medicine some increases distinct I in our our repurchase hit

with those considered ResMed, more X be altogether. would would things see moderate higher than of expect were be exception cases, them and go and nature, of we So the to some all eliminated And to in in normal. temporary

Greg Palm

to that of details. Greg, those we're it, If But good care Good. and follow on one. up a took thanks That's for you, with happy question. Okay. the

Operator

question Drab from Blair. Brian William Our is from next coming

Brian Drab

orthodontics is for you wanted I dental to different number -- clarify that a that one the a was just thing than say down overall? that's Is dental? When first. dental XX%. number Or

Jeffrey Graves

the is different overall. predominance It at of number if you look it dental, than Brian. But today, it dental a is

It's the to do that where number, So and not the impacts we of big dental because discretionary. same kind mouth, but it's back with. is it not did big a involved we're work the that suffer the It's rest work was spending. optional really reconstructive orthodontic the rest of of in more driver that's the dental much obviously,

you more when chain hey, So I that buying worked are can blah, off 'XX. excess around, them. spikes, inventory buying It's of them just work the commentary that. supply a pleased see people I'm lot blah. of largely in put And through back, was we inflation consumers and very down, think now. with blah, to But there coming

Brian Drab

just I'm curious.

your been think have dental quarter that's something people -- past, decline at business increase that dental like tracking. I'd dental know overall. for number given just have I or if think the don't the the giving I you a been just the in of curious potentially in XXXX for that you've right, what the fingertips looked lot be and for fourth for overall, I dental

Jeffrey Graves

Yes.

So performance for dental 'XX. in overall

Jeffrey Creech

XX%.

Unknown Executive

Yes.

Jeffrey Graves

was down all dental. XX%, of It XX%,

down was then we we orthodontics gave XX%. the number dental And say, of All XX%. what you did down, was

dentures because converts the And So was remarkable, and yes, printing, as I'm was reconstructive at this other go. rest I last as glad we so it's week, Brian, XD show items rest dentistry in up. it, -- you're dental of dental of it the and now watching as to

growth of I But rest grow. of just really why is think focus That's our in will dentistry on think, you'll a has now. broadening orthodontics. we're right broad Orthodontics it. it, much from see market coming, orthodontics, about the and I away very enormous that excited

Brian Drab

imagine, XX% dental I decline moderating? Is is down in the than fourth overall, And the probably that less quarter, right?

Jeffrey Graves

correct. Yes,

Brian Drab

potentially is of the also, end question driver comment gross follow that? into near later. the in weighs I going Okay. discrepancy remained you your elevated ask I'm actual curious on mean, I on that to the then wanted that somewhat more in expectation of just One guess the could up on I main and is receivables I margin at moment, accounts inventory though, if I'll term. sales. year. the that And other inventories between But the noticed elevated

Jeffrey Graves

Yes.

our of to Brian, the hand. simple manufacturers, insourcing 'XX. have inventory they from a we on in pick actually, last inventory our We So We up started year. contract insourcing We really the that, on With 'XX. were manufacturing. had insourcing you'd was aggressive completed part about completed answer it activity in that

AR So hold last in inventory balance, some that AP have on that the big The marketplace. supplies. down. in were now from burn -- to taking have customers. was We of to did a the we spike inventory been able year to folks, sure and to smaller generally their to good is we've particularly adequate some payer extend we terms since especially of had And pricing credit suppliers, make COVID, we

working capital Clearly, So to from we're working generate working on elements capital. that there's cash all aggressively. year, nice really a we're this of that ability working and

with purchases now. from we're we'll manufacturers, it contract So be burning inventory down done the

Brian Drab

to year. conclusion the on to question is expect make cash for you'd the you target be flow breakeven EBITDA logical that said last Is as the also topic just And in that a XXXX? breakeven it

Jeffrey Graves

much to with in 'XX. spending question will for have required but They're insourcing flow in, not We'll of to that CapEx positive improvements there's the areas put the on We huge capital some up a we numbers, extraordinary and have do. There's it generate pressure free we do CapEx. we put in -- and cash -- to CapEx. grow be 'XX cash we'll have just on growth normal factory we end is operating in maintenance, couple how our

see see this -- a probably you'll cash flow positive operating year. you'll So

negative we on flow that as CapEx, my slightly -- cash You'll invest guess, see the update a throughout we'll and free year. is a negative you slightly

Operator

is Next from Street. coming Lake question from Stefan Jacob

Jacob Stephan

seen more I in investments on want industrial focus side aerospace business. Yes. the just of We've kind to the market. of the

kind are investments any? there, if you what So making of

Jeffrey Graves

is of you lot investments, lot, do they interest with our but polymer aerospace that in materials see processing processing use sales, proven a in the is I we their there, application now metal a really What it's of new primary right tell investment and of our cost you'd additive. So in embrace is say, the of but from engineers. terms would really and

polymer site along the So a is, in deeply materials, they're the materials brand-new not process developing of as of on XD chemistries as they're for far lot printers. I'd say, evaluating but existing new as additive

investment X So very application customers working on our And that. engineers, specific money camps. there's we of spend with a driver applications.And of lot on the interesting, it's

can't to machined, part want a that be least at easily. not performance. improved is them of They design One

the motivated are performance-driven risk seeing we're So And there's in an designers. reduction then increase existing those for by that infrastructure. their

So oil of and a parts difficult lot we like refineries and gas oil because interest rigs in those have are very in oil gas, world. of oftentimes, or the

customers and spare interested really manufacturing the running. They're in parts. up could of so to do amounts of sure make hold huge are that localized forced they inventory And to just-in-time stay production

we're a pursuing lot electrical for for of So and oil that the infrastructure, gas.

things. So development not for sales application doesn't folks. a and There's investment if accept at look for that you investments, build require lot in us to those plants of new

new around sales for see those make you increased industrial So an spending, sense? it's cost that if markets.Does

Jacob Stephan

sorry, But helpful. update then progress you of in end? said your the that's by majority been had And expect -- Yes, on that completed to Do maybe Yes. the overall noticed just has kind you QX us be restructuring XXXX. an that completed you give were insource initiative. you initiative still

Jeffrey Graves

would of got stool straight And course, in to There's of of reductions. so than Europe X legs I of different there's restructuring. America more terms Yes. at look North our say there's timing the midyear -- QX. But headcount versus there. you

the were North completed, European the in stuff actions American of progress. All virtually is

that years we're now to hubs, We're those had -- these were by small if and got are efficiencies design XX And able sites. closing largely get that closing of for of for you've consolidating you that closures. the acquisitions XX groups ago us, people site remaining got and done You've will, manufacturing.

tricky frankly, XX dates underway. our got that this driving are restructuring to year. a are lot -- an do and of when complicated. in going when on recognize underway. That's of take You've are completed matter year the It's those -- savings?So this a when they year? can do when on you why closures, they All we're all does the these a the the really range savings, part what from is of specific allow the accounting And work are which the of because standpoint on that you accounting XX site there's credit rules the accounting regulations

So we're just striving finished to from consolidated. the efficiency it get we them of closed, insourcing. get course, them done, And and gains get then, have

forward.So now through those efficiencies there's manufacturing. OpEx supply to insourced. year So hits hit way -- bit in and as line, that chain the driving we line restructuring year, but and QX COGS We line the a recognized of that and all in go this especially a the little more OpEx operational both lot both the the it's come last

this year we'll see and margin we obviously, by OpEx in down. why bringing gross lift 'XX, that's a big get, in So our EBITDA in swing a

you'll and So that flat in both -- environment. lift qualitatively, -- even gross a that's why it's sales in EBITDA buckets. the margins And see that's three in those

Operator

coming Baruah Loop Markets. Next Ananda question from Capital from is

Ananda Baruah

also, the yes, over you working Andy, really And with enjoyed years. have

[indiscernible]. of luck best on So everything

Andrew Johnson

Ananda. you, Thank

Ananda Baruah

What you could seeing remarks Jeff, guess started I sort you be? and of what's China should there made are context call. you around the maybe [indiscernible] competition XXX%. the the little about when put you a the

Jeffrey Graves

bigger and of there bigger some industry are got very is very our industry industrial some interesting. owned traditional industry, and in them, the competitors The smaller and -- it's the are ones large by Ananda, really companies. the companies Yes. We've then changing. companies obviously

but not So we you've got of of that historic Chinese because They're definitely -- they're of generalize coming moving interesting states. and hardware. just lot the a competitive and like into key as on markets. components side, The with on often in base. market is strategically, as emergence together on way the increasingly, bringing customer hardware not the struggle only moving you and materials to on hardware software.But them very it's on It's servicing is -- software the see And the buy technology, Europe. And way and the the much price into design primarily just moving into they're hardware raw materials it with and too not they're what the But they the much, can terms on but because happening. market the not we They're that with players. and well much into competing we with certainly see that. the sales, compete

entrants from strictly the a at it itself. a side, seeing and does make you China on when we're lot the broad-based, look more hardware So challenge it hardware

R&D pressure ahead then even markets medicine, our stay are technologically, we sure the scale is ahead.And I'm make of But clearly, enough not stay spend on make in on that. part that customers ahead hardware, sure software regenerative a on we have we core health talking core and sure it's markets, industrial we So service and about make standpoint. sales our we're that stay care to ahead from and the -- to service we materials

It consolidation So the while you And I will scale spend you money customers. scale spread in we comment servicing helps the we and of do to where lot really cost. that's helps. it, that about when economically have talk more sufficient a industry,

the full asked China. that's question. landscape around So I'm glad the you

Ananda Baruah

Yes.

just so And quick follow-up a there.

and it of kind of been kind one past, bread I sort of the -- more described And seeing the in both move call the way of So And kind you're just -- great. context it question prototyping the like and that present into Is it of production? it butter that to the in guess, consumer/workshop distinction. question ask where Is be the guess markets? same around you approach. up sort would into sort level it like now with I they've they've of

Jeffrey Graves

Yes, sure. good questions. all No,

a else, very everything health I'm the clearly, defense. for care. So quality and and more all with aerospace penetrate as have care and them Healthcare regulatory health to And difficult environment because we concerns, industrial most is glad the the business it's market is

applications, a production But for the risk for important into industries on one industrial they're talk prototyping, working commentary, markets, of up They're their their have it's not consumer working would markets, think have things it's ones. on to ourselves that. that them ones Again, other into but definitely again, that And now markets the we the broad-brush their a produce the and way -- important, exposure at differentiator, industrial I the that. level broadly, up like with but to probably continue, working and be harder we those is particularly easier will definitely because which, kind they're beginning but way working it's consumer-driven still to to set again, sorry trend those markets lower exposed the last lighter into. their production way in clearly it's I'm are to about market, Initial going get So way. work easier for. that products.Quality

answers So of it your question. hopefully, both parts

Ananda Baruah

I there just I'll and absolutely. get context. the it the yes, just appreciate Yes, on there. call. you guys [indiscernible] leave I'll

Jeffrey Graves

look forward Ananda, talking to Okay. always. you, We'll to as Thanks.

Operator

from is Next question from Ricchiuti coming Needham Company. & James

James Ricchiuti

lowest And talk But it that the areas in Most follow better, more business get the of -- quarter? any you Industrial just semi. where can my weak looks one the has questions held aerospace, I a like which areas up geography? to was on what of in color year. quarterly see pronounced the did level I And the wanted to more the in have up the about been quarter business, in were particular answered, defense, decline but little I if bit think,

Jeffrey Graves

and It our answer try in between to -- Europe. sales was are Jim, Europe. and the of it I'll No, was U.S. all U.S. those. pretty equal Most of

world pretty more both -- was the end market-driven. So there. parts it consumer it rates, equally interest banks much And consumer central been have was raising of in frankly split because market-driven

they side, I this they So a on but they to industrial was that industrial all do rates, buy going I our keep Jim, be rise if and customers think orders, POs. rapid the much -- as slow roll not you markets.And of to in it's serve consumer had of the look -- need them they industrial at interest big capacity?So customers, with phrase some just consumers concern, the all like able they again, will using the but canceled customers,

it's the where's you and coming. PO? next week, So say, next Yes, them week, next week,

And equipment the like go away. in canceled. believe until consumer all I they are time. convinced working semiconductor a manufacturer, a get they're roll slower We've So market And for that strong continue to for that been we'll believe equipment they you going isn't very coming. us. weren't the closer see I specialized to to long

strong. again, putting spend.And about you in business are CapEx strong. said, Defense that industrial ones was all there that year. that closer of health hesitant dental products, semiconductor capacity had But companies heavy it. industrial than No then of with again, printers a in orthodontics. the consumer equipment, those And make and by doubt that were lot on was, themselves. due better last people health the in remain to are off as So remains hung equipment, dominated care being It aerospace to care go they that

coming saw the new some in offset in printers we've care. industrial, off you in. So health even customers But roll almost by decline

So we while uptick, either. decline of much side the on a as didn't didn't see an see industrial we

it did to is that. a was it's quarter. see hung We sunshine strong the on if usually people usually lift. their just there probably not very a of We was see somewhere, My ray And in not. orders. purchase there's clearly, So disappointment QX

James Ricchiuti

going of in back-end more in loaded that's if step don't me you're suggest but just down is healthy And QX, the non-GAAP last to for actions for the I to to OpEx, it. would question some on guiding with Got pretty what that taking. just 'XX, be restructuring seem a know you're

Jeffrey Graves

part Jim, would a took tricky bit tell launched we Yes, of in I North The component. which the back-end And between closures is closures, action it's site of more time. resolution lot this quickly terms headcount probably you, isn't We in a the little facility, take loaded. bit -- a more when accounting site maybe basically. the again now little until are split the isn't Europe, out you're and then done of U.S. the America

we've to a little So careful. got be

we the until a I -- a do good. is flowing do think it's tried see a through first realistic hit but lot in better in see our you that, to to range than But be timing I'd don't like So which of benefits second you'll And again, the because half. guidance. we'll the half, start OpEx about of big think

Operator

comments. Thank of over the Dr. to any end closing further you. to for turn Graves like reached We question-and-answer floor session. our I'd the back

Jeffrey Graves

company I industry. know thank we all and it's Kevin. field Thanks, for for beyond but our volatile went know very questions a I because much. time Listen, wanted the you to I time,

So I hanging questions asking thank the for did. you there you joining. appreciate very and much in you

look quarter very We We to We ahead. to 'XX. each year look progress. optimistic forward about are cautiously on for updating the much forward you calling. Thanks

Operator

That you. does today's conclude and webcast. Thank teleconference

at a wonderful time, today. for line your day. your may you disconnect participation You and have this thank We

3D Systems (DDD) 28 Feb 242023 Q4 Earnings call transcript