Slide 1: Second-Quarter and First-Half 2004 Conference Call and Webcast
\ 3D Bptatk Corporation i et Cal and We 4 z “en, Second-Quarter and First-Half 2004 Wednesday, August 4, 2004 www.3dsystenis.com é 4 EXPERIENCE THE DIFFERENCE Customer-driven solid imaging solutions
Slide 2: Welcome Webcast Viewers
Welcome Webcast Viewers » If you wish to ask questions at the end of the conference call, you should be registered as “Interactive Teleconference”. « If you did not register as “Interactive” and wish to participate, please follow the steps below: » To the right of your screen check the icon marked “
Slide 3: Participants
Participants « Elizabeth V. Goode Director, Corporate Development » Abe N. Reichental President & Chief Executive Officer » Fred R. Jones Vice President & Chief Financial Officer « Robert M. Grace, Jr. Vice President, General Counsel & Secretary Experience ‘CUSTOMER-DRIVEN
Slide 4: Forward-Looking Statements
Experience Forward-Looking Statements Certain statements made by the Company in this Webcast are forward-looking statements. These statements include comments as to the Company’s beliefs and expectations as to future events and trends affecting the Company’s business. These forward-looking statecarr
Slide 5: Business Highlights
Business Highlights Experience oY CUSTOMER-DRIVEN SOL
Slide 6: Quarterly Revenue
Quarterly Revenue ($ Millions) Experience 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2002 2003 2004 ay ‘CUSTOMER-DRIVEN
Slide 7: Revenue Highlights
Revenue Highlights ($ millions) Highest 1st Half, Second-Highest 2" Quarter Revenue Revenue Change vs. 2003 2nd Quarter First Half 2nd Quarter irst Half systems $ a7 § 19.7 (13) 96 $14 9% Materials: Bo 17.6 bees +14 Services 10.3 20.1 +16 +17 TOTAL $_ 279 57.4 +4 9% +15 % FX Impact $ a9 $ 2.8 43% 46
Slide 8: Operating Results
Operating Results » Gross profit improved by 15% to $12.3 million from $ 10.7 million in 2Q03 = Operating expenses reduced by $1.6 million: » Lower legal fees, depreciation expense and health care claims reserve » Expect legal fees to remain high until resolution of legacy legal matters Experience t
Slide 9: Cash Management
Cash Management = Cash outflow of $4.0 million for first half, 04 >» Net cash declined to $20.0 million » Net improvement of $4.5 million in receivables and payables » Net increase in inventory investment of $4.6 million related to the timing of the commercialization of InVision™ HR 3-D printer and
Slide 10: Products & Services
Products & Services = Products » Encouraging growth from newly introduced products » Discontinuing quarter-end discounts on systems adversely affected Q2 sales « Materials » Volume up for each technology platform » Expanded portfolio with DSM resins and Bluestone not material to Q2 results » Service
Slide 11: Products & Services
Products & Services » Frequent new product introductions » Accelerate growth from newly introduced products » Expand 3-D printing participation and portfolio » Broaden Digital Manufacturing adoption » Improve customer service quality & response » Enhance service productivity & margins » Create new s
Slide 12: Outsourcing Equipment Assembly
Outsourcing Equipment Assembly « Strategic re-direction of resources » Utilize others’ core competencies in assembly » Focus on our core capabilities & unique expertise. Deliver tightly integrated and optimized system solutions by combining: = Systems = Materials = Process know-how = Expert field se
Slide 13: Outsourcing Equipment Assembly
Outsourcing Equipment Assembly » Materials blending and customer service operations in Colorado facility are not affected » Expect to complete transition in 12-18 months » Enable access to a broader range of experiences and expertise, resulting in faster time to market and enhanced quality Experienc
Slide 14: Expected Impacts of Outsourcing
Expected Impacts of Outsourcing «= Neutral P & L impact for 2nd half of 04; improved margins thereafter » Higher working capital investment during 3rd quarter 04; lower thereafter Experience « Improved cash flow beginning in 4th quarter 04 Anticipate no asset impairments as a result of this move ‘CU
Slide 15: New product introductions
New product introductions Sa >» InVision™ HR 3-D printer, second printer introduction within eight months... « Fine-featured, highly detailed parts = Jewelry, dental, medical implant and precision alloy parts’ applications « Affordable @ $59,900 Experience eg ‘CUSTOMER-DRIVEN
Slide 16: New product introductions
New product introductions > Distribution Agreement with DSM Desotech for Somos® Resins = Expanding 3D Systems’ materials solutions portfolio = Continuing to sell 3D Systems’ Accura® SL resins >» Software products for the SLS system » LS 3.3 software - improved SLS system performance = SinterScan™ so
Slide 17: New product introductions
New product introductions Designed to Improve Our Customer’s Bottom Line Voor | > InVision™ Finisher for ) i automated support removal Vo el >» ProClean™ SL part washer to reduce post-processing time & labor Experience ‘CUSTOMER-DRIVEN
Slide 18: New product introductions
product introductions >» Manufacturing-Capable Sinterstation® HiQ™ SLS® system Mass production of high-quality end-use parts Improved part quality, user friendliness, set up, productivity and material usage Experience the difference... >» Engineered Nano-Composite Bluestone™ SL material First commer
Slide 19: Experienced Management Team
Experience Experienced Management Team » Abe Reichental, President & CEO (Sept. 03) = Fred Jones, VP & CFO (Dec. 03) = Robert Grace, VP & General Counsel (Nov. 03) = Chuck Hull, EVP & CTO (Oct. 03) = Kevin McAlea, VP Global Marketing (Oct. 03) = Ray Saunders, VP Global Customers’ Success (Oct. 03) =
Slide 20: Financial Highlights
Financial Highlights Experience oY CUSTOMER-DRIVEN SOL
Slide 21: Quarterly Revenue
Quarterly Revenue ($ Millions) a5 | i — —_ 20 15 10 5 ° ; ; , ist Qtr 2nd Qtr 3rd Qtr 4th Qtr = 2001 2002 2003 = 2004 Experience eg ‘CUSTOMER-DRIVEN
Slide 22: Q2 Operating Margins
Q2 Operating Margins ($ Millions) Second Quarter First Half ‘04 ‘03 ‘04 ‘03 Cost of Goods Sold - Constant FX $15.1 $16.2 $31.5 $31.8 FX Effect vs. '03 Period Os - 16 o-- Cost of Goods Sold $15.6 $16.2 $33.1, $31.8 Gross Profit Margin $12.3 $10.7. $24.3 $18.1 Gross Profit Margin as % Revenue 44.1% 39
Slide 23: Operating Expenses
Operating Expenses ($ Millions) 20 AN 1Q. 2Q: 3Q: 4Q: «119: -2Q: 3Q: 4Q: Qs 2Q 2002 2003 2004 Experience Note: 1Q02 shows $1.8 of legal expenses off by Vantico setlamant amount, 2003 quarters are adjusted to reflect retroactive effect ‘to 1/1/06 of accountng principle changes adopted in 4Q03. Expens
Slide 24: Operating Expense Elements
Operating Expense Elements ($ Millions) Second Quarter First Half ‘O4 ‘03 ‘o4 ‘03 Legal expenses - Patent litigation and subpoena responses $1.0 $14 $2.7 $2.5 - Other os o.4 og 0.8 Subtotal $1.5 $1.8 $3.6 $3.3 Other SG&A B.1 3.0 16.7 19.1 Ke R&D 2.6 2.6 5. 5.2 S Severance & restructuring - 03 O14 0.
Slide 25: Net Income / (Loss)
Net Income / (Loss) ($ Millions) Second Quarter First Half ‘04 ‘03 ‘04 ‘03 Net Loss Before Accounting Change ($0.9) (4.8) ($3.0) ($12.7) Cumulative Effect of Accounting Changes - 7.0 Net Loss ($0.9) ($4.8) ($3.0) ($19.7) Preferred Stock Dividend a4 a2 a7 0.2 Net Loss Available to Common Stockholders
Slide 26: Cash Flow
Experience eg Cash Flow ($ Millions) Net cash used in operations Cash used in investing activities Cash provided by financing activities FX translation impact on cash Net increase/(decrease) in cash Beginning Cash Ending cash ‘CUSTOMER-DRIVEN First Half “04 ‘03 $ (3.2) $(3.0) (0.5) (1.1) He 10.8 (0.
Slide 27: Capital Management
Capital Management Cash Freed/(Used) in First Half from: d GMillions), c 100 Receivables $43 a Days Sales Outstanding Inventory (46) a 90 Payables 03 3 Pa $= 3 80 o $ 70 i 9 g ry VA : ia Te, fo 2 i A 50 & 40 30 r r a 1Q_ 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2002 2003 2004 CUSTOMER-DRIVEN SOLID IMAGING SOLUTIO
Slide 28: Revolving Credit Agreement
Revolving Credit Agreement Effective July 15, 2004 $15 million availability for 2 years >» $7.5 million letter of credit sub-limit » Foreign exchange facility » Prime or LIBOR-based interest rates Secured by certain domestic assets Experience . No borrowing usage anticipated; prudent liquidity backs
Slide 29: Outlook
Outlook Experience ‘CUSTOMER-DRIVEN
Slide 30: Expected Near-Term Outlook
Expected Near-Term Outlook Exiting system assembly operations > Low transition costs; P&L benefit beginning in ‘05 >» Near-term working capital increase, reduced levels thereafter Accelerating new product development >» Higher R&D expenditures for second half of year > Faster new-product introductio
Slide 31: Longer-Term Outlook
Longer-Term Outlook » Leading industry position and technology = Privileged assets, core capabilities & unique expertise » Clear priorities, comprehensive strategy & strong execution » Energized, experienced management team » Improved results from outsourcing of assembly operations >» Improved opera
Slide 32: Question & Answer Session
Question & Answer Session All questions must be directed through the teleconference portion of this call. Experience Questions via the web will not be accepted. CUSTOMER-DRIVEN SOL
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Searchable text section of graphics shown above 3D Sys tems Corporation Conference Call and Webcast Second-Quarter and First-Half 2004 Results Wednesday, August 4, 2004 www.3dsystems.com EXPERIENCE THE DIFFERENCE Customer-driven solid imaging solutions [LOGO] Exp erience the difference… Welcome Webc