Stratasys, Ltd.

Greetings, and welcome to the Stratasys Q3 2024 earnings conference call and webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. We ask you please ask one question, one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jonah Lloyd, Chief Communications Officer and VP of Investor Relations.

Please go ahead, sir. Good morning, everyone, and thank you for joining us to discuss our 2024 third quarter financial results. On the call with us today are our CEO, Dr. Yoav Zaif, and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the investor relations section of our website. Please note that some of the information provided during our discussion today will consist of forward-looking statements, including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes, and other future financial performance, and our expectations for our business outlook. All statements that speak to future performance, events, expectations, or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys' annual report on Form 20F for the 2023 year. Please also refer to that annual report along with our reports filed with or furnished to the SEC throughout 2024 for additional operational and financial details. Reports on Form 6K that are furnished to the SEC on a quarterly basis and throughout the year provide updated current information regarding the company's operating results and material developments concerning our company. Stratasys assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav?

Thank you, Yonah. Good morning, everyone, and thank you for joining us. Last quarter, we shared that we were taking decisive actions to better align our business with the realities of today's market. Importantly, beyond these actions, we remain agile, financially strong, and well-positioned to benefit from the eventual turn in the cycle. We are committed to the financial execution of our plan and have transformed the company by removing costs and streamlining the business to focus on the largest industry targets where we see the most opportunity for growth, particularly in manufacturing applications across automotive, defense, aerospace, medical devices, and dental. For example, the F3300, our most recently launched technological innovation, has generated excitement from the market and is expected to help us expand our presence in factory floor manufacturing across multiple industries. In dental, where 3D printing is already a standard method, our proven true dent solution is highly regarded for its groundbreaking disruption in both cost and fit when it comes to dentures. Additionally, Our suite of specialized software offerings is starting to gain traction, which we believe will drive increased high margin revenues in the coming years. Our key target industries demonstrate not just the greatest growth potential in our opinion, but also the most significant overall TAM for additive manufacturing, and they are in the early stage of adoption. While we appreciate that we now must deliver on the initiatives we have put in place in a sustained manner and that it will take time, we are pleased to share that we are already starting to realize benefits. Following 10 quarters of positive adjusted earnings per share, as challenging market conditions persisted further, we incurred only minor losses on an adjusted basis in the first half of this year. Now, as a result of our transformative action and without the tailwind of any market recovery to this point, we quickly return to profitability on an adjusted basis in the third quarter. These results demonstrate our team's ability to execute a comprehensive undertaking, an attribute that continues to set strategies apart. Now let me dive a bit deeper into our results for the third quarter. Our business continues to demonstrate its fundamental strength through improved margins and our ability to maintain a robust balance sheet. we were able to deliver our eighth quarter in a row of year-over-year growth from our recurring revenue consumables sales. And similar to the second quarter, the resilience in consumables was primarily driven by FDM technology utilization. This underscores two key takeaways. The stability of our recurring revenue model and our customers accelerating transition from prototyping to manufacturing applications. As customers increasingly leverage our solutions to optimize cost and enhance operational efficiency, we are well positioned to expand our manufacturing presence with upcoming product innovations. We believe our focus on furthering customer enablement through additive education and investment will make a big difference. As our customers enhance their understanding of how to fully utilize additive manufacturing design and workflow benefits in tandem with other traditional processes. Our strategy for driving long-term shareholder value centers on targeted innovation across materials, knowledge, and workflow solutions in high growth target industries that benefit from emerging megatrends. Those include addressing supply chain risks, on-shoring, new mobility, customization, sustainability, and a non-stop drive for greater efficiency and lower costs across the manufacturing spectrum. Through disciplined ongoing investment in technology, and material development, coupled with a focused approach to key end users, we are laying the foundation for strategy's next leg of growth, once the current down cycle inevitably subsides. During the third quarter, we achieved a number of milestones and new product introductions. We continue to drive demand for our new flagship F3300 industrial platform, which we showcased at the International Manufacturing Technology Show in Chicago in September. Designed for superior performance, the F3300 delivers high-quality, durable thermoplastic parts with unmatched accuracy. It delivers faster print speeds with industry-leading repeatability and significantly reduces downtimes. making it the premier offering in its class. We continue to generate interest and order for the F3300 and our already shipping system to key customers, leading companies across automotive, aerospace, and defense sectors, along with commercial and industrial manufacturers. During the third quarter, we launched our new Origin 2 printer, along with the Origin Cure post-processing system, While our primary focus is on expanding additive manufacturing at scale, this solution helps a subset of our customers focus on the growing demand for injection molding quality for short production runs. A great example of a target industry for this technology is connectors. Where manufacturing costs are high and the production runs are in line with what this particular technology can deliver. This is one of many compelling opportunities for us and for our customers, such as TE Connectivity, who serve the aerospace, automotive, and other sectors. We also launched our Stratasys NEO build processor for investment casting, a unique solution designed in collaboration with Materialize to accelerate the production of high-quality investment casting master patterns. Developed for the Neo 450 and Neo 800 SLA printers, the new build processor delivers up to 50% faster file processing and significantly enhanced print speed. Streamlining the 3D printing workflow for manufacturers and service bureaus in the aerospace and other demanding industries. Given our focus on returning value to shareholders, in September, our board of directors approved a $50 million share repurchase plan, which we have already started to execute. We are committed to maximizing shareholders' value while maintaining a strong balance sheet and are taking additional steps to unlock value including seeking to monetize certain high-value assets. I'd like to take a moment to provide additional details on the critical strategic initiatives that we have implemented recently. On last quarter's call, we unveiled a plan designed to reinforce our industry leadership and ensure sustainable profitability across market cycles. Our action plan centers on on two critical objectives. Realigning our operational costs with current market dynamics through a workforce reduction of 15% and intensifying our focus on accelerating customer adoption by eliminating implementation barriers. These measures aim to create a more resilient business model that consistently generate profits and positive cash flow. Our implementation of the restructuring plan is ahead of pace, as evidenced by the improvement in operating margins that Eitan will discuss in a moment. We are on the track to achieve our target of $40 million in annual cost savings, starting in the first quarter of next year, while also enhancing our go-to-market strategy to focus on the highest growth products, materials, and software solutions. These actions are designed to help us align costs with current conditions, build a long-term profitable, cash-generating business, and stay agile during downturns, while being ready to respond quickly when customers' spending returns. Importantly, we are committed to delivering increased profitability and cash flow in 2025 that we discussed on our last call. We are confident that once current headwinds subside, renewed access to capital will spare customer spending to more accurately reflect the expressed high demand for our solutions. Over to you, Eitan.