3D Systems Corporation

Greetings and welcome to the 3D Systems third quarter 2020 conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Melanie Solomon, Investor Relations for 3D Systems. Thank you. You may begin.

Thanks, Jeffy. Good afternoon, and welcome to 3D Systems Conference Call. With me on the call are Dr. Jeffrey Graves, our President and Chief Executive Officer, Jags Harna Rula, Chief Financial Officer, and Andrew Johnson, Executive Vice President and Chief Legal Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those following along on the phone who wish to access the slide portion of this presentation may do so in the Investor Relations section of our website. For those who have access to the streaming portion of the webcast, please be aware that there may be a few-second delay and that you will not be able to pose questions via the web. The following discussion and responses to your questions reflect management's views as of today only and will include forward-looking statements as described on this slide. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. During this call, we will discuss certain non-GAAP financial measures. In our press release and slides accompanying this webcast, which are both available on our investor relations website, you will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2019. Now, I'm pleased to turn the call over to Jeff Graves, our CEO. Jeff?

Thanks, Melanie. Let me start by saying thank you all for joining our call this morning. I hope everyone's bearing up well and staying healthy in these stressful times. While the challenges of the COVID virus continue, I'm very proud of our employees for balancing so well their needs and those of their families with the commitments we've made to our customers. As businesses become more efficient in dealing with the effects of the COVID-19 pandemic and as the economies around the world begin to open, we're pleased to see rising demand across the markets we serve. We're hopeful that these trends continue as we move through our fourth quarter and as this momentum is sustained in the new year. On our last call, which was my first since joining the company in late May, we talked about the importance of clarifying our strategic purpose and how it would drive our actions moving forward. As a reminder, our 3D Systems purpose statement is as follows. We are the leaders in enabling additive manufacturing solutions for applications in growing markets that demand high reliability products. We developed this purpose statement to provide the strategic focus needed in order to simplify our operations to improve our operating efficiencies, while prioritizing our investments to deliver greater value to our customers. These actions will lead to improved profitability in the short term, while enhancing growth and margin expansion in the future. Having defined our purpose statement, we moved rapidly forward in our transformation journey, which can be described very simply in four phases of activity. Reorganize, restructure, divest and invest. We're moving forward on each phase with parallel efforts, and I'd like now to update you on our progress with each. Let's begin with reorganization. As we briefly touched on last quarter, one of our first actions was to reorganize the company to focus on two key market verticals, healthcare and industrial. Within healthcare, our primary focus is on dental applications, medical devices, medical simulation, and virtual surgical planning. Industrials include aerospace, defense, automotive, and durable goods applications. These growth markets all place a premium on performance and reliability for key components, have engineering and technology cultures that seek innovation as a way to deliver value to their customers, and processes that tend to be highly controlled or regulated. As our company has an established, strong foundation in these markets, our goal in this reorganization is to focus our full efforts on acceleration of our customers' adoption of additive manufacturing for specific application solutions within their new product offerings. With our exceptional technology portfolio that encompasses hardware, software, and materials, our application engineers are uniquely positioned with tools and expertise needed to support our customers in their adoption of additive manufacturing, while our global service team supports their ongoing needs in the field. It's a unique and winning combination that we believe will enable exciting growth and profitability in the years ahead. As validation of our capability to deliver this value, you need look no further than our current success. Today, our technologies are delivering over a half million production components for our customers each day, translating to over 180 million components on an annual basis, a number that dwarfs all other competitors in this industry. It's this foundation that we will build upon moving forward with an intense focus on our customer success and adopting this exciting manufacturing technology on a much greater scale each year. With the appointment of our two business unit leaders this quarter, along with our new Chief Financial Officer, Jack Tartanarulo, who I'm very pleased to welcome to our call today, our management team is complete and we're fully focused on executing our game plan. Having described our reorganization, let me now update you on our restructuring efforts, which we introduced in our last earnings call. Our expectation is that we will deliver $100 million of cost savings on a run rate basis by the end of 2021. We also stated that $60 million of the savings would be achieved by the end of 2020. I'm pleased to tell you that we're on track to deliver to our plan. Actions being taken include a combination of restructuring our workforce, consolidating real estate and facilities, and optimizing non-employee spend. In executing these plans, our leadership team created a set of operating principles to guide their efforts, which included a high-level prioritizing employee safety and ethics each day, working as one team, always acting with the customer success in mind, being bold and decisive in our decision-making, and focusing on quality in all aspects of our business. These operating principles help ensure that we're moving forward rapidly through our restructuring efforts while ensuring the long-term success of our customers, partners, and employees. With the focus embodied in our purpose statement and parallel to the reorganization and restructuring efforts, we were able to identify certain assets that were no longer core to the company and begin the process of divestiture. As a result of these efforts, earlier this week, I was pleased to announce the sale of our Simitron and GibbsCAM software businesses for $65 million. These businesses were focused on subtractive technologies rather than the additive manufacturing, and while highly valuable to their customers, was not core to our future additive manufacturing business. The proceeds from this sale will further strengthen our balance sheet, leaving us in a net cash position, and will be used in the completion of our restructuring efforts and for investment in future growth initiatives. We expect to continue to vest your efforts over the next several quarters. Jagtar will comment further on our plans for the balance sheet and specifically around our plans for the ATM equity program in a few moments. However, let me add that with the prospect of further divestitures of non-core assets in the next few quarters, we'll be evaluating in parallel investment opportunities to enhance growth and profitability of our core businesses. As with our divestiture actions, any investments we make will follow a rigorous and disciplined process with an unwavering goal of creating shareholder value, in this increasingly exciting industry. We'll keep you updated on our plans and progress in future earnings calls. With that, I'd like to end my opening comments with examples of how our focus and expertise is bringing value to our customers and delivering exciting new growth opportunities for the company. As many of you know, the pandemic has changed the operating environment for organizations around the world. and there's a keen interest in the application of additive manufacturing to create a more flexible and versatile supply chain. In healthcare, this is especially true for hospitals, as illustrated in our recent experience with the Veterans Health Administration. The VA is the country's largest integrated healthcare system, providing healthcare through 1,255 facilities for over 9 million veterans each year. Earlier this month, we were extremely proud to be awarded a multimillion dollar contract to help the VA establish an additive manufacturing production capability for medical devices. As a part of this program, 3D Systems will establish the required workflows, medical grade quality systems, and regulatory approvals, deploy our additive manufacturing printers, and then fully train and staff the operations. This turnkey capability will be operational by the end of 2021. after which the VA can independently produce medical devices for their own in-network use. The pilot application is COVID nasal swabs, which we're enabling with our SLS platform and medical grade nylon powder, which will be followed by several other medical device applications. The experience gained with the VA and other early adopters positions as well, positions us well to support other hospital systems in the future. While we enjoy the business opportunities we see ahead, The best part of this is the fact that we get to support the wonderful mission of the VA and the critical support it provides to our veterans, all while allowing what our team at 3D Systems does best. Next, let's turn to technology. Enabling our application's progress in both of our business units are our continuing technological breakthroughs in hardware, software, and material systems. As an example, a year ago, we announced a new $15 million program sponsored by the U.S. Army create the world's largest, fastest, most precise metal printer. This groundbreaking nine laser system, which builds upon our newly expanded DMP family of printers, will be able to manufacture aerospace quality one meter by one meter by 600 millimeter components using a broad range of high temperature and lightweight aerospace alloys for a range of advanced flight and ground vehicle applications. In spite of the challenges of COVID this past year, We've made substantial progress in the program, successfully completing our first test print in late October. We'll be sharing more updates on this program and the exciting applications that are enabled by it in the near future. With that, let me turn the call over to Jagtar, who will now describe our results for the third quarter and our current market outlook. Jagtar.