Slide 1: Third Quarter 2019 Financial Results
Third Quarter 2019 Financial Results October 30, 2019
Slide 2: Welcome and Participants
Welcome and Participants Vyomesh Joshi President and Chief Executive Officer Todd Booth To participate via phone, Executive Vice President and Chief Financial Officer please dial: Andrew Johnson 1-201-689-8345 Executive Vice President and Chief Legal Officer Melanie Solomon Investor Relations 2
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation contains certain statements 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 include statements concerning plans, o
Slide 4: Vyomesh Joshi (VJ)
Vyomesh Joshi (VJ) President & Chief Executive Officer
Slide 5: Third Quarter Results
Third Quarter Results • GAAP revenue of $155.3 million and non-GAAP revenue of $155.1 million ◦ GAAP decrease of 5.6% YoY ◦ Excluding Entertainment business, the decline was 3.6% YoY • GAAP gross profit margin of 43.3% and non-GAAP gross profit margin of 44.4% • GAAP loss of $0.15 per share and non-
Slide 6: Third Quarter Highlights
Third Quarter Highlights • Returned to growth in Materials: 3% YoY • Introduced 8 new production materials for Figure 4 platform since last earnings call, which will enable us to open up new production workflows in our target markets 6
Slide 7: New Production Materials for Industrial Figure 4 Platform
New Production Materials for Industrial Figure 4© Platform Figure 4 TOUGH-BLK 20 Tough, durable material with industry- leading environmental stability Figure 4 RUBBER-BLK 10 Durable material for hard, rubber-like parts Figure 4 Modular Scalable 3D production solution Figure 4 HI TEMP 300-AMB High t
Slide 8: Third Quarter Highlights (cont'd)
Third Quarter Highlights (cont'd) • Healthcare grew 6%, and 15% excluding large enterprise customer • Committed to operational excellence and keenly focused on cost structure ◦ Reduced inventory by $11.2 million sequentially ◦ Generated $6.5 million cash from operations ◦ Reduced non-GAAP SG&A by 5%
Slide 9: Todd Booth
Todd Booth Executive Vice President & Chief Financial Officer
Slide 10: GAAP Operating Results
GAAP Operating Results Third Quarter Nine Months Ended Y/Y Y/Y Better/ Better/ (in millions, except per share amounts) 2019 2018 (Worse) 2019 2018 (Worse) Revenue $ 155.3 $ 164.5 (6) % $ 464.5 $ 506.9 (8) % Gross Profit 67.3 77.8 (14) % 206.3 241.8 (15) % Gross Profit Margin 43 % 47 % (400) bps 44 %
Slide 11: Non-GAAP Financial Measures
Non-GAAP Financial Measures Third Quarter Nine Months Ended Y/Y Y/Y Better/ Better/ (in millions, except per share amounts) 2019 2018 (Worse) 2019 2018 (Worse) Non-GAAP R&D Expense $ 20.9 $ 22.8 8% $ 63.3 $ 71.3 11 % Non-GAAP SG&A Expense 48.3 50.8 5% 150.6 160.9 6% Non-GAAP Operating Expenses $ 69.
Slide 12: Revenue
Revenue Printer Revenue Materials Revenue 36.8 40.3 41.4 30.4 (17.2%) 2.8% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Healthcare Revenue On Demand Revenue Software Revenue 56.4 26.3 24.6 24.6 53.1 23.1 6.3% (12.0%) 0.1% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 12
Slide 13: Gross Profit and Margin
Gross Profit and Margin • GAAP GPM was 43.3% and non-GAAP GPM was 44.4% in Q3 2019 • GPM impacted by factory utilization, mix and inventory adjustments • Driving supply chain optimization, manufacturing efficiency and process improvements 50.0% $80 $ in millions 47.5% $60 45.0% $40 42.5% $20 40.0% $
Slide 14: Operating Expenses
Operating Expenses • GAAP operating expenses decreased 10.8% and non-GAAP operating expenses decreased 6.0% compared to the third quarter of the prior year with decreases in both SG&A and R&D • R&D is focused on materials and software development in 2019 See appendix for a reconciliation of non-GAAP
Slide 15: Balance Sheet and Cash
Balance Sheet and Cash • Ended the September quarter with $127.6 million of unrestricted cash on hand, after paying down $21.0 million on the term loan • Generated $6.5 million of cash from operations • Improved working capital performance while also reducing inventory levels • While cash use and ge
Slide 16: Vyomesh Joshi (VJ)
Vyomesh Joshi (VJ) President & Chief Executive Officer
Slide 17: Conclusion
Conclusion • Spent the last 3 years stabilizing the company • Excited about our traction with new Figure 4 production materials • Confident we will ramp metal factory system solutions by the end of first quarter 2020 • Structuring the company to be lean and profitable • Our focus on innovative produ
Slide 18: Q&A Session
ZN 3D SYSTEMS Q&A Session 1-201-689-8345
Slide 19: Thank You
ZN 3D SYSTEMS Thank You
Slide 20: Appendix
ZN 3D SYSTEMS as so) c o lo” 2 =e
Slide 21: GAAP Revenue Summary by Category
GAAP Revenue Summary by Category Sequential Y/Y Better/ Better/ (in millions) Q3 2019 Q2 2019 Q3 2018 (Worse) (Worse) Printers $ 30.4 $ 30.0 $ 36.8 1% (17) % Software Products 13.3 13.7 13.6 (3) % (2) % Other Products 9.4 8.9 9.3 6% 1% Total Products 53.1 52.5 59.6 1% (11) % Total Materials 41.4 41.
Slide 22: Non-GAAP Reconciliation - EPS
Non-GAAP Reconciliation - EPS Third Quarter Non-GAAP Earnings (Loss) per Share Quarter Ended September 30, Nine Months Ended September 30, (in millions, except per share amounts) 2019 2018 2019 2018 GAAP Net loss attributable to 3D Systems Corporation $ (16.8) $ (11.6) $ (65.2) $ (41.4) Adjustments:
Slide 23: Non-GAAP Reconciliation - Revenue
Non-GAAP Reconciliation - Revenue 2019 Non-GAAP Revenue Nine Months Quarter Ended Ended (in millions) March 31 June 30 September 30 September 30 GAAP Revenue $ 152.0 $ 157.3 $ 155.3 $ 464.5 Adjustments: Legal, acquisition and divestiture related $ (1.8) $ (0.9) (0.2) (2.9) Non-GAAP Revenue $ 150.2 $
Slide 24: Non-GAAP Reconciliation - GP and GPM
Non-GAAP Reconciliation - GP and GPM 2019 Non-GAAP Gross Profit & Margin Quarter Ended Year to Date (in millions) March 31 June 30 September 30 September 30 GAAP Gross Profit $ 65.7 $ 73.3 $ 67.3 $ 206.3 GAAP Gross Profit Margin 43.2 % 46.6 % 43.3 % 44.4 % Adjustments: Amortization, stock-based comp
Slide 25: Non-GAAP Reconciliation - Operating Expense
Non-GAAP Reconciliation - Operating Expense 2019 Non-GAAP Operating Expenses Quarter Ended Year to Date (in millions) March 31 June 30 September 30 September 30 GAAP R&D Expenses $ 21.9 $ 20.8 $ 20.9 $ 63.7 GAAP SG&A Expenses 65.1 71.7 58.3 195.0 GAAP Operating Expenses 87.0 92.5 79.2 258.7 Adjustme
Slide 26: Non-GAAP Reconciliation - GP and GPM
Non-GAAP Reconciliation - GP and GPM Full Year 2018 Non-GAAP Gross Profit & Margin 2018 Quarter Ended Year Ended September December December (in millions) March 31 June 30 30 31 31 GAAP Gross Profit $ 77.9 $ 86.2 $ 77.8 $ 82.6 $ 324.4 GAAP Gross Profit Margin 46.9 % 48.8 % 47.3 % 45.7 % 47.2 % Adjus
Slide 27: Non-GAAP Reconciliation - Operating Expense
Non-GAAP Reconciliation - Operating Expense Full Year 2018 Non-GAAP Operating Expenses 2018 Quarter Ended Year Ended (in millions) March 31 June 30 September 30 December 31 December 31 GAAP R&D Expenses $ 25.9 $ 22.7 $ 23.2 $ 23.5 $ 95.3 GAAP SG&A Expenses 69.5 71.2 65.6 66.1 272.3 GAAP Operating Ex
Slide 28: Thank You
ZN 3D SYSTEMS 3 > a4 Cc © — _