Slide 1: Conference Call & Webcast Discussion of First Quarter 2008 Results
Conference Call & Webcast Discussion of First Quarter 2008 Results May 9, 2008 NASDAQ: TDSC www.3dsystems.com
Slide 2: Participants
3 Participants Chanda Hughes Coordinator, Investor Relations Abe N. Reichental President & Chief Executive Officer Damon Gregoire Vice President & Chief Financial Officer Bob Grace Vice President & General Counsel
Slide 3: Welcome Webcast Viewers
5 Welcome Webcast Viewers To listen to the conference via phone and to ask questions during our Q&A session, please dial: 1-877-627-6580 in the United States 1-719-325-4884 from outside the United States We will not accept questions through the web site or "Audio Streaming."
Slide 4: Forward-Looking Statements
Leader Innovator Partner Builder 7 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
Slide 5: Operating Results
9 Operating Results Abe Reichental President & CEO
Slide 6: 1Q08 Operating Results
11 Operating Results First Quarter First Quarter % Change YR - YR Operating Results 2008 2007 % Change YR - YR Revenue $31.8 $36.9 (14%) Gross Profit % of Revenue $13.4 42% $15.9 43% (16%) Operating Expenses % of Revenue $16.7 52% $18.0 49% (7%) Net Loss ($3.7) ($3.1) 18% Depreciation & Amortization
Slide 7: Disappointment with first quarter revenue decline
I am deeply disappointed with the revenue decline that we experienced during the first quarter. A decline that impacted our entire operating results for the quarter Several independent events coincided during the period to counter the sequential progress we made in 2007. Revenue from our large-frame
Slide 8: Other Key Factors Shaping 1Q08 Results
Other Key Factors Shaping 1Q08 Results During the latter part of the first quarter, the company received several anonymous letters alleging wrongdoing by the company and certain members of its executive management. The Audit Committee of the Board promptly conducted a comprehensive investigation thr
Slide 9: 1Q08 Revenue Mix By Category and Region
1Q08 Revenue Mix By Category and Region 5 10 15 20 25 30 35 0 Millions 36% 42% 23% 25% 47% 28% 44% 44% 13% 38% 49% 13% 2007 2008 2007 2008 Services Materials Systems & Other Asia Pacific Europe North America $36.9 $31.8 $36.9 $31.8 40 17 Columns May Not Add Due to Rounding
Slide 10: Financial Review
19 Financial Review Damon Gregoire Vice President & CFO
Slide 11: Quarterly Revenue Trends
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 11 Quarterly Revenue Trends ($ Millions) $
Slide 12: 1Q08 Gross Profit Margin
23 1Q08 Gross Profit Margin ($ Millions) Changes in gross profit margin due to: Lower systems unit volume resulting in under absorption of overhead Modestly lower materials' revenue with higher gross profit Adverse impact of foreign exchange on cost of goods Supply-chain inefficiencies related to in
Slide 13: 1Q08 Operating Expenses
1Q08 Operating Expenses ($ Millions) SG&A R&D $13.1 $ 3.6 (7%) Total Operating Cost $16.7 $18.0 2008 (12%) $14.9 $ 3.1 2007 Yr-Yr % Expect SG&A expenses in 2008 to fall into the range of $44 MM to $52 MM Special Investigation - $0.6 MM Incremental Legal and Accounting - $0.7 MM 17% 25 Columns May No
Slide 14: Working Capital Management Progress
27 40 60 80 100 120 140 160 Days Working Capital Management Progress Days Inventory On Hand Days Sales Outstanding Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 78 68 64 131 101 100 68 74 78 93 67 65 116 90 95 73 Q1 2008 121 73
Slide 15: Cash Position 3/31/2008
29 Cash Position 3/31/2008 ($000's) Cash decreased by $7,757 during 1Q08 due to: Inventory and asset investments including: $5.3 Million purchase from Tangible Express $21,932 Cash at 3/31/08 Net Cash at 12/31/07 $29,689 1Q08 Decrease in Cash 7,757
Slide 16: Progress Report
31 Progress Report Abe Reichental President & CEO
Slide 17: State of Business
33 State of Business We believe and expect that: Independent events coincided during the period to counter the sequential progress that we made in 2007. Notwithstanding the uncertain current economic climate, we are well positioned to regain the lost ground from the first quarter 2008 in the coming
Slide 18: Other Significant Developments
35 Other Significant Developments During the first quarter of 2008 we: Began selective Shipments of the V-Flash(tm) Desktop Modeler. Opened the Japanese marketplace to our key Accura(r) materials, expanding our portfolio of proven, dependable Accura(r) materials in Japan. Launched two new profession
Slide 19: V-Flash Desktop Modeler shipments
Leader Innovator Partner Builder 37 We commenced selected shipments to hearing aid and general purpose resellers and customers. We encountered several technical difficulties that have slowed this phase down We anticipate resuming hearing aid shipments in June and general-purpose unit shipments in Ju
Slide 20: Gross Profit Improvement Plan
Gross Profit Improvement Plan Profit Leakage Source Inefficient third-party logistics and warehousing. Material weaknesses related to inventory management. Inefficient parts return system inflating inventory and cost of goods. Premature failures of warranty parts supplied by third parties. Correctiv
Slide 21: Expected Target Operating Model
Expected Target Operating Model Expected Target Operating Model $170 million $200 million Revenue in The Range of: Gross Profit SG&A R&D Operating Income Net Income after tax Depreciation & Amortization Capital Expenditures Materials Revenue New Products Revenue 55%-65% 41 46% 25% 8% 15% 10% 4% 2% 4
Slide 22: Bottom Line: Transitioning From Restructuring To Profitable Growth
Leader Innovator Partner Builder 43 Bottom Line Transitioning From Restructuring To Profitable Growth 43 Meeting customers' needs. Leading in innovation through technology. Improving financial strength and flexibility. Developing new products and categories. Growing globally. Creating new marketplac
Slide 23: 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 24: 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 1-888-203- 1112 (or 719-457-0820 from outside the United States) and enter the confirmation code, 1549121 A replay of this Webcast will be available approxi