Slide 1: Fourth Quarter & Full Year 2019 Financial Results
Fourth Quarter & Full Year 2019 Financial Results February 26, 2020
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: Making 3D Production Real
Making 3D Production Real Customer Needs > Production Workflows OOOo — MANUFACTURE INSPECT MANAGE >» 4 PARTNERSHIP.
Slide 6: Accelerating Adoption of Additive Manufacturing
Accelerating Adoption of Additive Manufacturing
Slide 7: Rapid Market Transformation
Rapid Market Transformation
Slide 8: Adoption of Production Parts Expected to Grow
Adoption of Production Parts Expected to Grow
Slide 9: Production Workflows
Production Workflows DIGITIZE p MANAGE Application Driven Fully Integrated Solutions Assets for each phase 200MM+ production parts in
Slide 10: 2019 Highlights
2019 Highlights • Commitment to operational excellence = keenly focused on cost structure and cash flow ◦ Lowered operating expenses by 9% YoY ◦ Expanded manufacturing partnership with Sanmina for plastics ◦ Generated $21.5 million of cash from operations in Q4 • Stabilized the company and strengthe
Slide 11: Fourth Quarter Summary
Fourth Quarter Summary • GAAP revenue of $164.6 million ◦ Decrease of 9% YoY ◦ Materials grew 7% YoY • GAAP gross profit margin of 43.6% and non-GAAP gross profit margin of 43.8% • GAAP loss of $0.04 per share and non-GAAP income of $0.05 per share 11
Slide 12: 2020 Growth Drivers
2020 Growth Drivers • Metals: on track to begin shipping factory metals platforms in April • Healthcare: medical device manufacturing, medical simulators and professional services will continue to grow • Software: incredible assets, new product introductions and go-to-market enhancements will drive
Slide 13: Todd Booth
Todd Booth Executive Vice President & Chief Financial Officer
Slide 14: GAAP Operating Results
GAAP Operating Results Fourth Quarter Year Ended Y/Y Y/Y Better/ Better/ (in millions, except per share amounts) 2019 2018 (Worse) 2019 2018 (Worse) Revenue $ 164.6 $ 180.7 (9) % $ 629.1 $ 687.7 (9) % Gross Profit 71.8 82.6 (13) % 278.0 324.4 (14) % Gross Profit Margin 44 % 46 % (200) bps 44 % 47 %
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures Fourth Quarter Year Ended Y/Y Y/Y Better/ Better/ (in millions, except per share amounts) 2019 2018 (Worse) 2019 2018 (Worse) Non-GAAP R&D Expense $ 17.1 $ 23.5 27 % $ 80.5 $ 94.8 15 % Non-GAAP SG&A Expense 49.2 52.2 6% 199.8 213.1 6% Non-GAAP Operating Expenses $ 66.4 $
Slide 16: Revenue
Revenue Printer Revenue Materials Revenue 43.5 45.0 42.0 33.6 (22.8%) 7.3% Q4 2018 Q4 2019 Q4 2018 Q4 2019 Healthcare Revenue On Demand Revenue Software Revenue 58.4 27.7 28.7 54.9 25.8 23.0 (5.9%) (17.2%) (10.2%) Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 16
Slide 17: Gross Profit and Margin
Gross Profit and Margin • GAAP GPM was 43.6% and non-GAAP GPM was 43.8% in Q4 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 18: Operating Expenses
Operating Expenses • GAAP operating expenses decreased 14.6% and non-GAAP operating expenses decreased 12.3% compared to the fourth quarter of the prior year with decreases in both SG&A and R&D • R&D is focused on innovation in materials, software and healthcare in 2020 See appendix for a reconcilia
Slide 19: Balance Sheet and Cash
Balance Sheet and Cash • Ended 2019 with $133.7 million of unrestricted cash, after paying down $10.8 million on the term loan • Generated $21.5 million of cash from operations • Working capital performance improved sequentially, as we reduced inventory by $11.6 million • While cash use and generati
Slide 20: Vyomesh Joshi (VJ)
Vyomesh Joshi (VJ) President & Chief Executive Officer
Slide 21: Conclusion
Conclusion • Spent the last 4 years improving product, processes, cost structure and culture ◦ Improved quality and reliability ◦ Net promoter score increased to 65 ◦ Confident that we have the right products and team to execute strategy • Committed to working with the board to find appropriate succ
Slide 22: Q&A Session
ZN 3D SYSTEMS Q&A Session 1-201-689-8345
Slide 23: Thank You
ZN 3D SYSTEMS Thank You
Slide 24: Appendix
ZN 3D SYSTEMS as so) c o lo” 2 =e
Slide 25: GAAP Revenue Summary by Category
GAAP Revenue Summary by Category Sequential Y/Y Better/ Better/ (in millions) Q4 2019 Q3 2019 Q4 2018 (Worse) (Worse) Printers $ 33.6 $ 30.4 $ 43.5 11 % (23) % Software Products 14.5 13.3 17.1 9% (15) % Other Products 10.9 9.4 10.5 16 % 4% Total Products 59.0 53.1 71.1 11 % (17) % Total Materials 45
Slide 26: Non-GAAP Reconciliation - EPS
Non-GAAP Reconciliation - EPS Fourth Quarter Non-GAAP Earnings (Loss) per Share Quarter Ended December 31, Year Ended December 31, (in millions, except per share amounts) 2019 2018 2019 2018 GAAP Net loss attributable to 3D Systems Corporation $ (4.7) $ (4.1) $ (69.9) $ (45.5) Adjustments: Amortizat
Slide 27: Non-GAAP Reconciliation - Revenue
Non-GAAP Reconciliation - Revenue 2019 Non-GAAP Revenue Quarter Ended Year Ended (in millions) March 31 June 30 September 30 December 31 December 31 GAAP Revenue $ 152.0 $ 157.3 $ 155.3 $ 164.6 $ 629.1 Adjustments: Legal, acquisition and divestiture related (1.8) (0.9) (0.2) — (2.8) Non-GAAP Revenue
Slide 28: 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 December 31 December 31 GAAP Gross Profit $ 65.7 $ 73.3 $ 67.3 $ 71.8 $ 278.0 GAAP Gross Profit Margin 43.2 % 46.6 % 43.3 % 43.6 % 44.2 % Adjustments: Amort
Slide 29: 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 December 31 December 31 GAAP R&D Expenses $ 21.9 $ 20.8 $ 20.9 $ 17.1 $ 80.8 GAAP SG&A Expenses 65.1 71.7 58.3 59.3 254.4 GAAP Operating Expenses 87.0 9
Slide 30: 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 31: 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 32: Thank You
ZN 3D SYSTEMS 3 > a4 Cc © — _