Slide 1: Third Quarter and First Nine Months Webcast and Conference Call
Third Quarter and First Nine Months Webcast and Conference Call November 2, 2007 NASDAQ: TDSC www.3dsystems.com
Slide 2: Welcome Webcast Viewers
Welcome Webcast Viewers If you wish to ask questions at the end of the conference call, you should register as "Interactive Teleconference." If you did not register as "Interactive" and wish to participate, please follow the steps below: Check the icon marked "Phone Connection" on the toolbar at the
Slide 3: Participants
Participants Chanda Hughes Coordinator, Investor Relations Abe N. Reichental President & Chief Executive Officer Damon Gregoire Vice President & Chief Financial Officer Robert M. Grace, Jr. Vice President, General Counsel & Secretary
Slide 4: Forward-Looking Statements
Forward-Looking Statements Certain statements made in this presentation that are not statements of historical or current facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, un
Slide 5: Business Review
Business Review Abe Reichental President & CEO
Slide 6: 3Q07 Operating Results
3Q07 Operating Results ($ Millions except per share amounts) Operating Results Third Quarter Third Quarter % Change YR - YR Operating Results 2007 2006 % Change YR - YR Revenue $38.2 $31.5 21% Gross Profit % of Revenue $15.9 42% $10.7 34% 48% Operating Expenses % of Revenue $15.5 41% $19.4 62% (20%)
Slide 7: First Nine Months 2007 Operating Results
First Nine Months 2007 Operating Results ($ Millions except per share amounts) Operating Results First 9 Months First 9 Months % Change YR - YR Operating Results 2007 2006 % Change YR - YR Revenue $111.6 $92.2 21% Gross Profit % of Revenue $45.3 41% $30.2 33% 50% Operating Expenses % of Revenue $51.
Slide 8: Materials Revenue Traction
8.1% CAGR 17.1% CAGR 2000 2006 2001 2002 2003 2004 2005 2007 First Nine Months +22% Millions Materials Revenue Traction 5 10 15 20 25 30 35 40 45 50 60 0 Notwithstanding third quarter slowdown due to seasonal trends, expect materials revenue to resume its double-digit growth rate in the coming month
Slide 9: Financial Review
Financial Review Damon Gregoire Vice President & CFO
Slide 10: 3Q07 Gross Profit Margin
3Q07 Gross Profit Margin ($ Millions) Gross profit margin increase due to: Higher revenue in the third quarter Relatively lower increase in cost of sales Absence in the 2007 quarter of the business disruptions that reduced 2006 margins Higher service revenue and profit margin in the period 2007 2006
Slide 11: First Nine Months Gross Profit Margin
First Nine Months Gross Profit Margin ($ Millions) Gross profit margin increase due to: Higher revenue in the third quarter Relatively lower increase in cost of sales Absence in the 2007 period of the business disruptions that reduced 2006 margins *Columns may not add due to rounding 47% $ 39.8 TOTA
Slide 12: 3Q07 Revenue By Product Class and Geographic Area
3Q07 Revenue By Product Class and Geographic Area ($ Millions) $ Millions Asia Pacific Europe North America Services Materials Systems & Other 30% 42% 28% 38% 38% 24% 42% 40% 18% 42% 40% 18% $31.5 $38.2 $31.5 $38.2 2006 2007 2006 2007
Slide 13: First Nine Months Revenue By Product Class and Geographic Area
First Nine Months Revenue By Product Class and Geographic Area ($ Millions) 2006 2007 2006 2007 Services Materials Systems & Other Asia Pacific Europe North America 32% 40% 28% 36% 40% 24% 47% 37% 16% 44% 42% 14% $92.2 $111.6 $92.2 $111.6 $ Millions
Slide 14: Third Quarter 2007 Operating Expenses
Third Quarter 2007 Operating Expenses ($ Millions) SG&A R&D $11.9 Restructuring $ 3.6 (20%) Total Operating Cost $15.5 $19.4 2007 (14%) (6%) (100%) $13.8 $ 3.9 $ 1.7 2006 Yr-Yr % - - Expect SG&A expenses to be in the range of $11-13 million for fourth quarter of 2007 14
Slide 15: First Nine Months 2007 Operating Expenses
First Nine Months 2007 Operating Expenses ($ Millions) Revising R&D expectation upward from $12-13 million to $13-14 million for full year 2007 2007 2006 Yr-Yr % SG&A R&D $41.6 Restructuring $10.2 3% Total Operating Cost $51.9 $50.5 20% 1% (100%) $34.8 $10.1 $5.7 - - *Columns may not add due to roun
Slide 16: Working Capital Management Progress
40 60 80 100 120 140 160 Days Working Capital Management Progress Days Inventory On Hand Days Sales Outstanding Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 68 57 136 101 105 68 78 74 78 93 68 65
Slide 17: Inventory Reduction Progress
Inventory Values ($000)'s Turns Inventory Reduction Progress Inventory Value Turnover Ratio
Slide 18: Cash Position 9-30-2007
Cash Position 9-30-2007 ($000's) Netting out the $8,200 outstanding on the SVB credit facility at the end of Q2, which was repaid in Q3, cash increased by $4,499 during Q3. Net cash provided by operating activities was $6,199 in Q3 versus a $7,592 use of cash in operating activities through the end
Slide 19: Progress Report
Progress Report Abe Reichental President & CEO
Slide 20: State of Business
State of Business We believe that: The significant business setbacks and disruptions we experienced in 2006 are now completely behind us Healthy sales of our systems and materials suggest that the demand for our new products is strong Repeat sales of Viper(tm) Pro and Sinterstation(r) Pro systems to
Slide 21: Announced Rapid Manufacturing JDA with 3M for Digital Dentistry
Announced Rapid Manufacturing JDA with 3M for Digital Dentistry 3M selected our Viper(tm) Pro as its digital manufacturing platform Digital dentistry manufacturing process is being developed under joint development arrangement Digital dentistry material announced during World Conference Expect to re
Slide 22: Launched V-Flash Desktop 3-D Modeling System
Launched V-Flash(tm) Desktop 3-D Modeling System System launched at World Conference Reseller training underway Commenced system shipments to select locations Demonstrated HA production systems at Nuremberg HA conference Expect to Launch V-Flash(tm) print-a-part E-Commerce site during Q4 As part of
Slide 23: Successful Inaugural World Conference
Successful Inaugural World Conference 400+ global attendees Representing 18 countries 48 renowned speakers 25 partners and exhibitors 52 learning sessions to choose from 33 hands-on sessions 7 new product launches Broadest industry and academia representation
Slide 24: Expect Business Fundamentals To Improve Profitability
Expect Business Fundamentals To Improve Profitability Execution Working Capital Average selling price and cost of goods sold remained relatively unchanged Abnormal operating expenses reflect remaining relocation, ERP, restatement, SOX Gross profit expected to continue to return to and exceed histori
Slide 25: Improving Revenue Mix and Profitability
Improving Revenue Mix and Profitability Revenue Basket Expectations Growth Drivers Expectations Materials: Highest margin in the mix: resumed double-digit growth Service: Lowest margin in the mix: stable with improved margin Systems: Installed base is growing: Greater recurring revenue Rapid Manufac
Slide 26: Long-Term Target Model Remains Unchanged
Long-Term Target Model Remains Unchanged Assumptions: Business In Our Space Revenue ~ $150 million Recurring revenue from materials ~ 55-65% of total revenue
Slide 27: Always Looking Ahead
Always Looking Ahead Transitioning From Restructuring To Profitable Growth 53 Meeting customers' needs Leading in innovation through technology Improving financial strength and flexibility Developing new products and categories Growing globally Creating new markets Rapid Manufacturing 3-D Modeling P
Slide 28: Question and Answer Session
Question and Answer Session Out of respect for other conference call participants, please ask one question and then return to the queue to ask additional questions. All questions must be directed through the teleconference portion of this call. Questions via the web will not be accepted.
Slide 29: Thank You For Participating
Thank You For Participating A recording of this Webcast will be available two hours after completion of the call. To access the recording, dial 1-800-642- 1687 (or 706-645-9291 from outside the United States) and enter the conference call ID number. A replay of this Webcast will be available approxi