3d Systems Corporation · NYSE:DDD
3d Systems — Investor Presentation (September 2004)
43 slides from 3d Systems's investor presentation, Sep 2, 2004
Slide 1: 3D Systems Corporation, September 2004
3D Syst 113 Corpor , sD Sy a. j 9 A Septembeh2004 Nasdaq: TI ry _ www.Sdsystems.com EXPERIENCE THE DIFFERENCE Customer-driven solid imaging solutions SysteNs
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements made by the company in this presentation 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 statements are
Slide 3: Overview: Company Highlights
Overview Company Highlights A Global Leader in Solid Imaging Solutions $110 MM sales in ‘03 for HQ in Valencia, CA 407 employees 365 patents worldwide Pioneered RP&M industry 3 technology platforms Global presence Largest field organization i] & 4 o § 3 a $ a & 2 4 & /) Prototyping Supported by Expe
Slide 4: Experience the difference... Solid Imaging Solutions
Experience the difference... 33 Solid Imaging Solutions From Digital Input... L To Physical Reality iy 5 CUSTOMER-DRIVEN SOLID IMAGING SOLUTIONS:
Slide 5: Seamless Digital Integration
Seamless Digital Integration Comm Unication Manuifactiiing, CNC, CIM, EDM, traditional mfg. Scanning/3D CAD f f : a= 9 = * Fe SED) Manufacturing, Printing Prototyping, Tooling
Slide 6: Comprehensive Solid Imaging Solutions
Comprehensive Solid Imaging Solutions Stereolithography Selective Laser Sintering 3-D printing SLA® Systems SLS® Systems Invision™ 3-D printer Viper™ SLA system [isinterstation® Hig SLS system InVision HR 3-D printer SLA 5000 system SLA 7000 system a Broad range of SL materials: [| Broad range of LS
Slide 7: Presence
Presence ‘ ; invisalign GOODSYEAR PHONAK LOCKHEED maARnT ff " —_ CATERPILLAR ores AlliedSignal > 2M Unitek ITT Zia TELEDYNE WATER PIK er BP onovan Experience the difference... Nasdaq: TDSC
Slide 8: Experience the difference... Customer Value
Experience the difference... Advantage Time to market Time to volume Time to replacement Instant manufacturing Mass customization Broad flexibility Global reach Expert support Customer Value Pages CUSTOMER-DRIVEN SOLID IMAGING SOLUTIONS
Slide 9: Our Customer's Bottom Line: Gentle Giant Studios
Our Customer’s Bottom Line Gentle Giant Studios InVision 3-D printer Re-create real-world objects in digital form for the film, video game and toy industries Advantages and benefits Gentle Giant has gained with the InVision 3-D printer: Produces 20 to 30 models every week Reduced labor costs by 40%
Slide 10: Our Customer's Bottom Line: Medical Modeling LLC
Our Customer’s Bottom Line Medical Modeling LLC Stereolithography Successful separation of conjoined twins using stereolithography modeling Stereolithography models are used for pre-operative planning by a team of ten surgeons to successfully separate twin boys in October 2003 i] & 4 o § 3 a $ a & 2
Slide 11: Improving Our Customer's Bottom Line: Burton Snowboards
Experience ag Improving Our Customer's Bottom Customer: Burton Snowboards Solution: Selective Laser Sintering Application: Development and rapid testing of functional snowboard binding « Binding prototype was created and ridden on snow within 48 hours of the initial concept being discussed Prior to
Slide 12: 2003 Global Revenue
2003 Global Revenue $110 Million Europe By Region es ia Asia/Pacific o 15% & 2 a systems a Materials 37% ij ©6By Catego 29% Services 34% Page 12 ay CUSTOMER-DRIVEN
Slide 13: Industry Presence
Industry Presence Govemment/ military 9% Academic institutions 99% \ other Medical 9% 10% o & 2 = consumer i a Automotive/ a products a & 22% 26% Business machines 7% Aerospace 8% CUSTOMER-DRIVEN
Slide 14: Industry Growth Trends
Industry Growth Trends Unit Sales Growth & Forecasts No. of Models Being Produced sa ; 200 Al os = Hy, cre % cs of a = oe F a ra] te ee Double-Digit Unit Growth and Parts Volume oui: Wotlers Aaceles Page 14 CUSTOMER-DRIVEN
Slide 15: Addressable Markets
='0>)ca9° Addressable Markets » 2003 Total Industry Revenue: $528 Million _ 2003 Reported Total User Base: 11,376 - 2003 Total number of CAD Users: 4.8 Million 500,000 Qualified Prospects S20 Prin tines @QeQVererraccuring Experience f: oy CUSTOMER-DRIVEN
Slide 16: Industry Competitive Profile
Industry Competitive Profile Materials Service company | pri Americas Europe 3D systems stratasy= EOS zcorp sony lemer bse Huntsman Solidecape Jobiet Envision Tech NRE tegra jeeeeeee: Ceoee ‘| (0/@) eee eeeee a g g g 5 Direct = Employees Indirect = Resellers CUSTOMER-DRIVEN
Slide 17: Building Stronger Company
Building Stronger Company « Established clear priorities «= Developed comprehensive strategy » Recruited and realigned management team « Recapitalized the business « Settled significant litigation «= Introduced new products » Created strategic alliances « Effected corporate governance changes Implem
Slide 18: Strategic Priorities & Initiatives
Strategic Priorities & Initiatives » Improve our customer’s bottom-line = Develop key segments > 3-D printing > Digital Manufacturing = Expand range of customer services = Accelerate new product development «= Optimize cash-flow and supply-chain » Create performance and ethical culture » Develop peo
Slide 19: Experienced Management Team
Experienced Management Team » Abe Reichental, President & CEO » Fred Jones, VP & CFO » Robert Grace, VP & General Counsel «= Chuck Hull, EVP & CTO «= Kevin McAlea, VP Global Marketing » Ray Saunders, VP Global Services » Stephen Goddard, VP Operations » Robert Kayser, VP Global Sales » Assad Ansari,
Slide 20: Highlights: First Six Months
Highlights First Six Months (in $000 except for percentage) a & g RETHIGRITGES v ng Highlight: q € sales $ 57,408 $ 49,087 3 % of Sales 100% 100% a Gross Profit $ 24,337 $ 18,114 s % of Sales 42.40% 36.3% 3 a Operating Expenses $ 25,414 $ 27,869 4 ® of Sales 44.3% 55.9% a Net Loss available to Commo
Slide 21: Revenue
Revenue ($ Millions) Experience the difference... ist Qtr 2nd Qtr 3rd Qtr 4th Qtr 2001 © 2002 = 2003 5 2004 Page 21 = CUSTOMER-DRIVEN SOLID IMAGING SOLUTIONS Nasdaq: Tose
Slide 22: Q2 Operating Margins
Q2 Operating Margins ($ Millions) Second Quarter First Half ‘04 ‘03 ‘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 $18.1 Gross Profit Margin as % Revenue 44.1% 39.8% 42
Slide 23: Operating Expenses
Operating Expenses ($ Millions) 20 13 || 19. 20 3Q: 4Q: :1Q9 2Q: 3Q: 4Q: :1Q:«-2Q 2004 Experience 2002 2003 Note: 1002 shows $1.2 of legal expenses offat by Vantico setlamant amount, 2003 quattars are adjusted to reflect retroactive effect ‘to 1/1/03 of accounting principle changes adopted in 4QU3.
Slide 24: Operating Expense Elements
Operating Expense Elements ($ Millions) Second Quarter First Half ‘04 ‘03 ‘04 Hes} Legal expenses - Patent litigation and subpoena responses $1.0 $14 $2.7 $2.5 - Other Os 0.4 0.9 0.8 Subtotal $1.5 $1.8 $3.6 $3.3 Other SG&A 1 2.0 16.7 tat ae [R&D 26 26 5.1 5.2 fim | Severance & restructuring = 0.3 Ot
Slide 25: Net Income / (Loss)
Net Tneome / (Loss) ions) Second Quarter ‘OF ‘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 o4 0.2 07 0.2 Net Loss Available to Common Stockholders ($1.2) _ ($5.0) _ ($3.8)
Slide 26: 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 $4.6 million related to the timing of the commercialization of InVision™ HR 3-D printer and
Slide 27: Cash Flow
Flow ($ 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 ing Cash Experience the difference... CUSTOMER-DRIVEN SOLID IMAGING SOLUTIONS Nasdaq: TOSe
Slide 28: Working Capital Management
Experience Working Capital Management Cash Freed/(Used) 100 Receivables $ 43 Days Sales Outstanding Inventory (4.6) 90 Payables 0.3 $ 80 » 70 4 60 \ 50 Days Inventory on Hand Days 40 30 T T T T T T T 1Q_ 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2002 2003 2004 * Increase is temporary; expect prior inventory reduct
Slide 29: 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 No borrowing usage anticipated; prudent liquidity backstop Experienc
Slide 30: Fully Diluted Shares Calculation
Experience Fully Diluted Shares Calculation (Thousands of shares) As of June 30, 2004 Shares outstanding 13,198 Additional shares upon conversion of - Convertible subordinated debt 3,064 - Convertible redeemable preferred stock 2,627 - Options with strike prices of: < $10 / share 1,846 $10 - $15 69
Slide 31: Beneficial Owners
Beneficial Owners March 2004 o ‘The Clark Estates, Inc. 2,061,301 RSME | Coldemith & Harris Inc. and Principals 953,026 2 Seer eth 3 Dimensional Fund Advisors, Ine. 289,040 & [eres aa80 + Includes common shares issuable upon conversion af convertible prefered stack ane/or convertible subordinated de
Slide 32: Debt / Preferred Stock Maturities
Debt/ Preferred Stock Maturities & Operating Leases $ Millions bea "Redeemable at 42 ‘option after May 06, — 40 S yec00/sha 38 Conertble 1 36 “2eaao10 shares 3a 32 33 e Callable at 30's Callable at 30's option 26 option at 7% 24 premium after Dec eonnen a 22 ‘oar convertible to Si230,053 shares g 20
Slide 33: Outsourcing Equipment Assembly
Outsourcing Equipment Assembly Strategic re-direction of resources » Utilize others’ core competencies in assembly » Focus on our core capabilities & unique expertise to deliver tightly integrated and optimized system solutions » Materials blending and customer service operations in Colorado facilit
Slide 34: Expected Impacts of Outsourcing
Experience 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 » Improved cash flow beginning in 4th quarter ‘04 » Anticipate no asset impairments as a result of this move 5
Slide 35: Operating Model
Operating Model (Based On $120-130mm Annual Revenue) 2003. QTD 2004.QTD Long-Term Sept June Target a & 4 g Sales 100% 100% = = [Gross Profit 40% 449% .] o Operating Expense 51% 449% $ a [Operating Income (1196) 196 4 Net Income Available to Common Stockholders (19%) (9%) 4 Depreciation & Amortizatio
Slide 36: InVision 3-D Printer
Experience the difference. | 3: N InVision™ 3-D Printer Advanced user-friendly system Enhanced material toughness Superior finished surfaces Easy removal and clean-up Plug and play installation Point and print ease of use Fast and productive Two affordable models: > Standard @ » High-Resolution @ CU
Slide 37: Sinterstation HiQ SLS System
Sinterstation® HiQ™ SLS® System Manufacturing-Capable Mass production of end-use parts Mass customization Improved part quality, user-friendly set up Higher productivity Better material usage Experience the difference. | € Flexible, functional parts with rubber-like performance characteristics Compl
Slide 38: Products Designed to Improve Our Customer's Bottom Line
| Products Designed to new Improve Our Customer’s Bottom Line : 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 SL
Slide 39: Products Designed to Improve Our Customer's Bottom Line
Products Designed to Se Improve Our Customer’s Bottom Line = InVision™ Finisher for automated support removal = ProClean™ SL part washer to reduce post-processing time & labor Experience 5 CUSTOMER-DRIVEN
Slide 40: Bluestone Engineered Nano-Composite SL Material
Products Designed to Engineered Nano-Composite Bluestone™ SL material » First commercially available engineered nano-composite resin for SLA systems Delivers Exceptional accuracy and stiffness Excellent dimensional stability Very low shrinkage Very high thermal resistance Experience the difference.
Slide 41: 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 introductions
Slide 42: Bottom-Line
Bottom-Line « Leading industry position and technology » Energized experienced management team « Clear priorities... demonstrated execution = $tronger financial base and flexibility = Results from outsourcing of assembly operations » Healthy pipeline of growth opportunities » Improving operating res
Slide 43: Link to searchable text of slides
Link to searchable text of slide shown above Searchable text section of graphics shown above 3D Sys tems Corporation [GRAPHIC] September 2004 Nasdaq: TDSC www.3dsystems.com EXPERIENCE THE DIFFERENCE Customer-driven solid imaging solutions [LOGO] [ LOG O] EXPERIENCE THE DIFFERENCE Forward-Looking Sta