3D Systems (DDD) 10 May 222022 Q1 Earnings call transcript

Good morning, and Welcome to 3D Systems Conference Call and Audio Webcast to discuss the Results of the First Quarter of 2022. My name is Kevin and I’ll facilitate the audio portion of today’s interactive broadcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure Relations. the my Melanie over now Investor Solomon, is to call turn to It ahead. go Please

Thank you, are a Legal following slide during and morning. webcast on presentation Jagtar the Officer; we do our With our The call Kevin. and Good and of Officer. portion Narula, me conference wish to XD President Executive and on call. Executive Systems Those Andrew this Vice the so website. section will slide this who Chief the phone Executive Johnson, contains call. the Chief call portion Chief along of the Dr. President refer on Graves, access presentation Relations And Jeffrey that to Investor Officer; welcome of Financial to President Vice may

and have For few be may streaming your Actual results include not be post the that materially. discussion the able described that will slide. forward-looking portion a this aware be following will The webcast, you on accessed to those responses statements via and who please there management’s seconds web. questions views may and of only delay to of the questions as today as reflect differ

our factors quarterly reports with release on Form financial about potentially on night’s and XX-K our report Form SEC, is that information most last could including and included in Additional the results filings impact press our recent annual XX-Q.

non-GAAP financial of press find comparable measures. call, will Investor both our regarding website, and our non-GAAP reconciliations this these GAAP accompanying discuss disclosures which In Relations certain additional including with this are on During measures. these available we will measures slides release webcast, measures, you

the our of this be against comparisons comparable otherwise call unless results stated, all in period Finally, XXXX. will for

to I turn our Jeff? to CEO. call Graves, the am over Jeff pleased Now,

good morning, and everyone. Thanks, Melanie,

our pressures, of supply entire Whether all no the unfold the be With at continued you ongoing the proud same already of the continued well the our this what for has Ukraine, and serve. how make XD impact term, we’ve economy difficult Systems of significant stay factors longer period. rise focused that XXXX these the has it’d very beginning in today that seen portion the customers to in team our significant the life matter executing has Ironically, are of more pandemic future As unpredictable. chain in as to the future. increasing our and with thrown supply invasion market, and chain the environment you I’m inflation, opportunities element know, additive in of challenges their consider said, continue of strategy or that a largely reevaluate difficult the operating key of production manufacturing rate Russian been as for tragic critical customers growth the strategy circumstances our increasingly the throughout

of our now year to customers where exciting two brief solving of with challenging years to gives market, we brought value organized Solutions. digit double structure of two infrastructure, application our that calls, our increasing after the the needs creation as from foot, combining I’ll a we us quarter. say To as industry. the Investor all the additive now to started few and we on for key Day to today, perspective manufacturing into and future. discussed to us growth expect and most off our products difficult XXXX I’m future. Systems demand in investment technologies meet next teams on financial we’ve core rigorous engineering share Despite Today, on hard additive in our business now portfolio that allowing you making my key distinguishes year overlay strong complete work, the production detail and a validates have even Company together I’ll do our continue approach As plan of an Industrial application in confidence business we XD of the with for core stakeholders. and most we’re by share our experiencing, growth valuable happy previous keep comments and strengthen highlights we strategy in others more for the fully creative the This the we’re the we’re future what of future. strongest facing, industry, a new in vision units, the strategic from the best. offering operating discipline and first The this investments be most execute has in Namely, that us on manufacturing week, our in on knowledgeable macro with we’re our and backdrop, Healthcare

On of line, QX over year, a while challenges were the double chain digit last headwind, we adjusted top delivered supply revenue growth for divestitures. significant when

Solutions proceeding business Industrial reflection developed over complex, We additive only our continue observation printing highly the unique a accelerate casting adoption deep technology the increased segments. in solutions. At a solutions our and both, noncore that structures, Dual, our unit understanding has healthcare but qualifying introduction than and Healthcare anticipated takes and XXX, we community. these excluding continue dual case, new of in excluding to in X% later of level, platforms XXX sales DMP laser our among recent economics for XXX of These both workflow well-proven are which we’ve high careful see fine the productivity growth plans of year, version was part in formal are started very enable of business the their driven system now customers well, being Particularly production materials initially for divestitures a growth of This of their These of would’ve of the in Europe and increasing Healthcare is procurement assets. validates across many manufacturing by delivering and demand new our of we of strengthening for expect the for mainstay XX%, for printer, approximately demand our our softer been to we business DMP when a increased planning U.S., approvals. optimum products of customers world’s the micro-castings. this year. workflow, a itself, of the high-precision metal not was This strong the continued divestitures years. both the acceptance which qualifications this optimize to updating

postponement Healthcare, and optional than addition, and certain anticipated in procedures COVID are impactful growth purchases resurgence particularly resulting experienced In of delayed as customers, capital rates. the elective slower

fruits double information scale first even really we new year, for The technology, accounting, will finance, quarter, the technologies, and seeing demand on the support will as to we portfolio lessen several in see invest announced the growth these customers from and in become To investments broadly, engagement for that including to these Given ahead. expect digit us we’re apparent the as in market increasingly the about both, to we the as business strong through future. our excited that well investments we’re customer fundamentals we’re and underlying move that factors as but efficiently opportunities conditions, feedback our move and of product enable infrastructure, through core we we that continuing our year.

and personalized the position. solution intelligence, our devices planning In First of improving in delivery have the artificial the patient market this efficiency unique us for by business market will treatment the medical automating long-established systems. was for capabilities. is through solution and solutions, which brings short, software directed investment of another solutions healthcare unique personalized software called, scales core software leading streamlines further to of use More Healthcare a use outcomes, increases that our healthcare company further These design reducing specifically, which for in strengthen costs growth patient-specific at our enhanced and the Enhatch, and the hospital design a will process. we

of of radiation the To radiotherapy are to or of often can in the may diagnosed such to plan. in location investments that’s anatomy. skin, our while solution undesired our XD Dussur, the a conform very healthcare oil efficient This XXX(k) Saudi addition, or dual-laser the material With year. the both, applications, flexible the XX% Arabian Middle in our gas up growth portfolio business, goal treatment and within outcomes treatment effectiveness treatment, announced of which by healthcare solutions. our our demand bolus during position receive We’ve the leading speed provider stereolithography, In increasing of Africa capabilities additive for venture a treatment are company. are domestic designed the industrial strong bolus often this device this strong joint the about Arabia. of the this help worldwide the fundamental meant by that in Saudi customized very begun with a in procedures toward new millions for healthcare addresses the driver in and high-quality This in focus global treatments. to for with unintended this taking the first bring of to platform in sector, a Bolus, accelerate radiotherapy quarter, and gas. the a which we’ve mass design venture production and printer large shelf levels, polymer for key as clearance times fourth in seeing begun product Systems productivity This the decades to uses can key world’s that and patient’s largely treatment printer and healthcare particularly capability. case, manufacturing and bolus, and our family A unique VSP our patient-specific This solutions all of demand to It We Specific partnership opportunity market additive end we of technologies, large software dosing Bolus leave for highlights to of printing the the off is translates recent This VSP with for manufacturing, reinforces quarter devices between we patients believe manufacturing target SLA The leading expose past and improving begin investment sectors their result also of of constructed production quarter, on our X anatomy healthcare. products orders pleased each scale This markets. market new finally, We’ve materials and boluses designed the is patient’s mass utilizing then advanced from and a And is industrial, This is solution, and the radiation throughput business new this and polymeric enabled one poorly broad enabling all in requirements our cost printer. over important and which metal desired addressing Healthcare the into additive markets. both, example customization patient’s for production center. to announced marketing scale future. insufficient the of year. to costs, in will for the such North production customers leveraging FDA manufacturing. the adjacent our by Approximately had radiation. adoption oil for I’m XD verticals, customization the cancer trend plan, to East gaps across our platform, can of improved venture’s this specific provider a exciting the solid is delivers to the of market expect see twice part untapped as synchronous and industrial deliver and patient a solutions. expand and a of the ramping organizations the time, through expected and additional anatomy first aerospace as healthcare radiotherapy

of to for apply Kumovis able clearance addition the of reconstruction our the for use were of to days the indications. acquisition within end quarter, PEEK for bolus In XXX(k) FDA the polymers at closing on product, the we our XXX(k) craniomaxillofacial new printed of to

to XD implant polymer Kumovis this are medical treatment business, leader as which the later will undoubtedly the We our solutions, will our FDA is range growth product Customer orthopedics full serve adding optimize and expect complement Systems orthopedic polymer in of believe by these existing over indications and this our we this metal to interest as very will surgeons technology advanced clearance, healthcare we solutions. business. patient solution FDA, device. will solutions driving individual into that printed PEEK Once craniomaxillofacial initial XD FDA follow, further titanium brings be which to in cleared strong. exciting And these years the plans. first allowing grade XD expect a Kumovis year, a following ahead implants for solidify printed line others approved

slower was quarter last the were revenue quarter clearly solid So, a deliver by for able to significant the growth still and seasonally I first adjusted double-digit impacted divestitures. again, is mentioned we headwinds us while to when previously, typically for summarize, versus year, quickly

ahead, remaining quarters results. seasonality the be Supply to Looking similar remain stronger, our inflation last have we the to year. pattern chain and costs a expect and impacted we even following levels clearly experienced elevated

we’re to the will a macroeconomic geopolitical we hope In year. as their especially speak which abate However, the effects, which through Jagtar moments. given will quarter taking steps move continued reasonably mitigate events, first with few total, to ongoing the results, we’re pleased conditions and in we

as additive industries conditions, and of recognizing demand to that manufacturing can grow. show continues these Even the the call results results Jagtar our Importantly, and that additive less over them is describe risks environments such benefits chain me quarter manufacturing now With production skyrocketing turn ideal resilient protect who in the Jagtar? to current, help detail. our costs. financial in disruptions for let more are than and supply from first will that,

Good momentum. revenue good Jeff, morning, off everyone. Jeff. we Thanks XXXX with started Echoing

continued headwinds, which year. macro a Revenue compared quarter of quarter results the discussion This of validates due the the the and solid $XXX increased challenging the demonstrates to divestitures top-line XXXX. compared The I’ll results. efforts first million, non-core of through first I’m quarter again decrease the quarter has divestitures, as for decrease delivered our adjusted first to once revenue. deliver begin businesses. a we team’s was first prior our guided with Given the for especially with growth was execution, of X% When have transformation revenue to starting the to ability Company XX% environment. numbers proud those in

utilizing first per combined providing first of quarter, on solutions quarter growth, adjusted the for share materials a expertise our divestitures. XXXX. customers, portfolio when for $X.XX the decrease primarily manufacturing additive of GAAP continuing to with compared of and In was solutions non-GAAP in due the primarily on focus applications gains share The $X.XX to loss in on of per profitable, share to infrastructure in deliver and recognized divested healthcare in loss we GAAP is the earnings of result of of had new $X.XX The combined investments and revenue hardware, Our businesses broad per industrial the printer double-digit of software compared including XXXX. reported year-over-year development share XXXX. XXXX, software, spend decrease of quarter future divestiture but per earnings non-GAAP essential in We our was a to businesses non-core and $X.XX with our core higher growth. business, general administrative to support first consistent

bad Russian one-time reflected FX had $X.XXX our impact debt strengthened saw earnings that including business In currencies, other FX of to Combined, exit with addition, geopolitical from the associated the share. the a debt against related impact environment, we business and bad dollar primarily impacts in and to impact decision per and an Russia negative euro. as challenging approximately

by me market. discuss revenue Next, let

strength strong organic quarter continues to by pellet-based And the Our Healthcare revenue Titan we of this to QX. XX.X%, Adjusting first the result in the and Industrial and and Robotics, are With of examples which opportunities be last the the fifth Industrial growth the closed a strategic of quarter to investments Healthcare and QX increased quarter through of segment in the in rebound demand highlights revenue subsequent for have This Industrial segment. our XXXX, made. is and direct segments. printing year-over-year year. acquisition The began printers to the systems strong growth of using as including market acquisition, we by X.X% consecutive our the growth. in new Titan increased both, the divestitures, for for for We Industrial believe portfolio, large business compared format, ample into continued entered quarter Industrial opportunity first our offers from XXXX continued driven XD Robotics extrusion. have first making in and XXXX in Industrial

to Healthcare. turning Now,

XXX purchase We due that medical and earlier, produce QX will in our that a of new of decline customers. devices, operations our manufacturers in believe as revenue printers about slower Healthcare delaying partially use would impacts chain supply resurgence growth mentioned. and anticipated, device spoke end enhancements a a these call our Dual although segment year-over-year. result is quarter, printers. segment Jeff Jeff to continued devices. as particular, delays non-dental manufacturing our first declined to than ex-divestitures initially for Flex which to Healthcare Customer COVID provide XX% we approximately purchases printer also the strong productivity Healthcare, Factory result we at medical In new This Our pace have partially qualify laser of

As new products. once customer result, demand complete, expect qualification we robust a is for these

we XX% gross profit divestitures related margin. in XX.X%, Now, factors, decreased profit inflationary product profit XX.X%, year. gross fix to quarter the Non-GAAP due compared turn costs. to XX% the particularly in year. was including QX first the was prior and to and Gross multiple margin, pressures, in for profit Gross margin to freight margin prior compared

or expenses were divestitures expenses a companies operating offset higher margins as $X.X was production operating as to areas with period the by year gross profit multiple of was ago. our XXXX Russia. increased revenue. period mentioned infrastructure, portfolio with spending as the administrative divestitures. and $XX.X targeted year increases price product XX% XXXX, of from previously XX.X% in increase investing quarter acquired bad first a the we higher lines. volumes support EBITDA, $XX combined due in mix the and depreciation, compared plus the year-over- basis, expenses improve On of exit GAAP the with margin debt of million by XXXX same $X.X% year million and associated expect of in non-GAAP in the move including the of non-GAAP of to quarter research through revenue year future Adjusted The product first quarter of in decline defined our as in focus and compared operating a We of ago. primarily million and announced million, well impact to development improves non-GAAP expenses continued business the XX.X% to and reflect across first expense to on impact recently $XX.X operating from the combined as The growth or general areas same impact growth, a incurred to

We the and with on of quarter to investments million let’s the sheet. balance ended Now, $XXX.X hand. turn cash short-term

were to short-term settlements declined Our on end compensation. cash announced million the higher share Kumovis net our The payments, closing related of customary quarter-end, acquisitions investments our and and with Subsequent million inventory of and our of payments QX primarily as approximately a our of for previously cash adjustments. stock-based Titan tax levels, $XX cash, operating Robotics of funded approximately we $XX since Enhatch net sheet. XXXX, loss, in balance on investment advanced to in acquisitions cash result closed

Industrial a believe ample we segments. We expenses. We additive growth non-GAAP operating non-GAAP manufacturing our balance and growth both, and on revenue provided higher and in have both investments, we to full-year for Beginning profit potential have expanded XXXX, guidance strong of last acquisitions. very of gross opportunities adoption and driving through with revenue margins, guidance continued to recurring include organic year, cash the to our acquisitions Healthcare support fund sheet organically and strategy and

in our and reflect to guidance full-year quarter the our expectations narrowing year. first the are full for performance We

tightening reiterated expect the million, outlook, million of be our of range now a few to Given weeks that strong within $XXX have range a a we and we $XXX ago. demand revenues

our events turn on chain. back events impact, XX%, between take no gross to impact million. margin us your upcoming demand significant COVID-XX, that of before I’ll be now will to supply believe our to investment to our profile We This macroeconomic Day, comment our Jeff guidance that we negatively could operating it additional non-GAAP geopolitical a or our range factors assumes questions. and Jeff? such planned million $XXX business, either XXXX are to $XXX leads non-GAAP that and other disrupt expenses Investor narrowing as XX% or now guidance

before for Thanks, Systems, thank and here with leadership Jagtar. at us Jagtar. to And dedication that, I I want your XD do you your and time

role. and to organization. and on in our by plan additive entire the executed me we’ve manufacturing, been growth you has And very the leadership improved refocus business strengthening and As balance transformational on operating Systems performance, XD well appreciated driving contribution portfolio greatly we significantly new sheet, while wish our your your

applications we’re the the it’s thrilled We’ll company spend afternoon sharing think and Investor including XXth week one look efforts, + plans discussing driving of and a and event. find provide business, the lunch our RAPID Day on very presentations future. Monday tradeshow, Industrial prior of opening technology business a On our and additive medicine Finally, special with The are May be held Healthcare which evening, leading regenerative vision more manufacturing We I elements event key our to our you on we’ll more both, detailed that be forward begin Detroit, within will will dinner fascinating. to presentation of for the conference. Solutions about on our and our to TCT our in Monday, growth.

our will our SLA from including our well filling at to to of XXX Relations And contact there’s excited there, questions. as open and are see Kumovis. that, will forward for from event. hear but to information. folks our as and team an printers our new event up that for follow and We’re Investor you products having executive about fast, the in-person the Titan the registration days many Please for Seats more this be extrusion look Kevin it time RAPID, with still in

Group. Craig-Hallum from first Capital Instructions] is from Greg coming question [Operator Our Palm today

live. line is Your now

the pretty guidance. a still It’s I large with here. range start want to revenue

of lower point? are baked of you end range are of the levers or get that end this that high help understand some into still more at maybe So, importantly, And that. to us call the the either what assumptions kind the

We’ve story fill, issues Yes. can demand chain we face. given we got Greg, the a right now. than more simple that supply it’s pretty

and in So, being we -- estimate our be to supply of revenue. best it’s continue limited anticipate -- hitting chain really

year. our at rest for guess best the the it’s So, of how looks that

very the strength we reason range supply hopeful we customers. that demand, issues is happy similar we fully it and Jagtar, of midpoint. can’t bit top table, slightly Greg QX add? of to just to the to revenue that on us we’re quarter, have would which Given general it to is easing our breadth easing of have year, again And the last chain off. right disappointing chain. quantify. -- else That We the The you drops and the up raised only left this And tighten so end our we supply that take of were of range. the have us a to significant now, -- do anything to

think would’ve XX%, It’s gotten revenue, well. supply Had on we this to revenue left I year-over-year captured -- Greg. just $X at we I’ll No, quarter. had you divestitures. about that table looking mention, would’ve for XX% we chain, primarily been the of million growth million we $X adjusted

So, the frustrating. are constraints supply chain

And Our teams work are end guidance as we’ll it. range. higher move we the hopefully to of improvements, heroic up to working the see through efforts

interest exciting the see to breadth manufacturing in what’s production environments. additive for is Greg, of really

of So, given industry, how for at for true true sure certainly customers the breadth are our looking really it’s it’s -- aggressively but us, I’m they very use could technology, additive. entire

exciting be inside that And chain. It’s positive. in are supply looks I to opposite. the to there the But not. opportunities very from see end than general, condition limited by a real adopt, much frustrating out some standpoint I’d Now, rather some some now, demand right no growth. have will drive may

Is chain It’s you either be are supply if to everybody that’s certainly chains? a exactly. the that are as Yes. into mean, give this onshore about. talking at to, that discussion way customers maybe sense maybe I few technology a bit new further. can about digging mean, looking I that there supply good. seeing something you little are But, a or us your what transform seems examples

Greg, disruptions? the -- broad at supply is -- about true. at are to money? what absolutely same is And it’s of based. older variety exactly sensitive tell no lessen it about was doubt we looking Yes. exactly of And in it’s thing. But it driven in a to the it’s like I They -- customers the customers our reasons how very And and and There chain. you they for do we general, days, are can our company looking onshore. want it do is supply home just How our bring do risk for are How closer performance we doing save about parts.

rate have now better that big in You top made we And part a with the really in supply the limiting it’ll the perform the additive, that and The reducing we make system. chain on cost. driver is, reason of in step, investments de-risking particularly believe. is, is last we’ve the software the XX months

to the at, software in into and for fleets is factory. much moving products, field is the rate technology limiting printer in going materials the that the be step the more pace the of of printers Given bringing

a because have. And as what customer many are standpoint, to I efficiently. can in materials fleets we from bring our obviously, providing as for that’s want printing how talking So, lot are think they then, we we new customers about

it demand it The see suppliers technology components demand. what great key multiple and is so, And but in forward the in is printers manner. looking And you at and guess do especially in cost-effective the the would is U.S. supply bring read how a Europe in It’s in we all meet can demand sure very always their moving But, I to standpoint, world, make on a as to see. from we’re we company newspaper. industrial has, quickly. exactly derisk what every home, Greg, qualifying they would chain you closer

fleets, the automated are all that labor of to in So, up. obviously applied content. order And systems, labor costs to AI minimize

house got to bring to So, down in they’ve and which to they’ve home, gets it again, to cost drive closer by automation in production not only got back software.

So, long-winded answer helpful. the color to I hope is your question.

appreciate forward. here. you to with Yes, working so. you of very Enjoyed And that. Jagtar, luck much going best I

Thanks Greg.

you. Thank

Blair. William Our next Drab question is coming from from Brian

is live. now line Your

morning. Good Hey.

First, just best of and with echoing was it there. good you. comment working Greg’s Jagtar, luck

Brian. Thanks,

Yes.

customer. at has there slowdown your in So, largest been volume

You record had a year.

in XX%, you XX% for dental today, I think up first are terms dental you’re that materially? wondering the dental revenue. know adjustments there aligners And any don’t having like said the was up like range -- I quarter given was growth I’m the to for if or XX% in but in costs for XXXX. backing you just there are somewhere of in -- make have into And revenue volumes we production declined dental

changes supplement Brian. and more a Brian, our the difficult long-term sure comment here, more that things may good we’re general. back tell unfortunate you, is optional demand to shift them take strong. or little a fluctuate that our are over and a may question. I we’re I’ll in supply outlook but the it’s Very of still future. to the on little can not how bit customers bit, for well world become numbers have would they as And that holding time, and in not mean, part viewed managing It’s our I but as to significant invest it chain. Jagtar environment, things, demand Maybe terms procedures, growth. and in view very any in of for of want led become unfortunate product terms difficult in dental We it’s that’s a supply make demand their things but

their market publicly years share growth look prospects to they’ve said penetration come. tremendous things, what Given and and about for years their

scale. run changes So, quarter-to-quarter, be real It’s significant. plan all on us. of fluctuations nothing a but There customers to may game with pretty long-term -- we that no

into I really in stance on is reiterate us opportunity. penetrated or customers with focused their long potential infrastructure in think I what question. and as short mean, they much market a may in I still big term have see of as we more we Greg’s impacts market the that while sure themselves ‘XX, I’ll they think support And term our widely indicated it. the see that Jeff it in And to said. reiterated -- making

dental does guidance it demand. segment. than reflects our include perceptions And chain of more range would Our supply that the customer

Okay.

question on one follow-up So, topic. just that

XXXX, customer this the I their material sell. of in on in CapEx spending, type that guidance equipment guess and seeing not So, any your decline you’re in you spending your -- reflects

careful, about customer them. talk about Brian. -- sorry. I sensitive not input information make you and general, our in all guidance Yes. would that want But obviously fully sorry, I’m talk not be to tell I sensitive I sure and -- information want Greg, in to I’m others. from to to or bakes to

view and feel and fluctuations, that this but needed keep good And customer individual their we we’re profile it’s very be to they along. revenue a great a our long by suppliers moving year. have appreciates So, with to takes the that about term large, There’ll really relationship. happy

think gross You Where you can Okay. just year. do where And exiting it be the think as said Thanks. then, the should the Got the you do last would margin? improved questions, it. to have goal? you’re margin gross throughout ‘XX, get what

we I think, mentioned you I’m correct wrong. if and me, Well, script, in the Jagtar,

lower have was and it The anticipated, year. for the throughout rising -- primarily cost it see the we lower would both than with reasons. in we supply cost for materials QX labor chain, reasons think I

see pricing, continuing rise. driving we to we’re Now, volumes

less get the should the to it rise throughout economics But a Brian. shot it range. had top But, at of became back. expect we so say think realistic some we would So, very prior I I end the year, to

now, when you pretty be could thing I to could is chain a think So, that guys. we going supply want it’s knows, brought flip. point. And could God suddenly, clear But The realistic we It with clear. it things happen. to down always

So, if we every going a to -- forward anything Jagtar, was else? revise bringing to we down that And you view. that will give and quarter important our point best top end hope us.

for year. we year. don’t margin. we give where We guidance moving for I’ll give feed the guidance is, there’s parts the think exit gross that we’ll Yes. What into Brian, obviously say various

we saw the takes went those solve kind we QX what to range. increases And costs If to gross We’ve price anticipated. than I X probably it is we at little into saw combined guidance than that. higher anticipated help so, points. of look implemented leads about higher margins we of in puts Both impacted and as effect and that our parts QX, costs a freight result by a

and further prepared year see for should be look to accordingly. expect the we to respond if continuing to We’re increases

We production the impact volumes. also of have

did volumes production our tremendous QX margins. our what saw in gross You to

seasonally -- light As we our quarter. go QX expect obviously through the is year, we revenue

to as in volumes production well margin more expect expect sell help we software therefore side. we changes we and increase as the on So, And mix materials.

So, around guidance all why where annual ups ups on based those downs we’re guidance. downs. an are of and we don’t of an exit provide We those the kind sitting and and margins, gross is provide more which

Bank [Operator Mohan Instructions] Wamsi from is Our coming America. question next from of

now is line live. Your

behalf Hello. want to Thank you John taking guidance question. the about OpEx. just I for Wamsi. talk is the for of on This

it So, at slightly went seems it midpoint. up like

ramp wondering where throughout in OpEx should invested incremental OpEx being Just to the to? expect And is how year? the we this

product let Jagtar I’ll driven ramp. is spend, more may increased the see We to down couple great demand that gets a speak ramp going we a I’m both to because and spend of have the but and I’ll polymer to steady additive. The and speak folks be And make particularly let software. the not metal Jagtar need fundamentally want it by state we being till technologies of -- forward factors. materials and that sure I for

sure And double organic our going -- is Because to continue got for believe see demand to heavily to to we infrastructure we’ve have robustness, with we has sustained deliver growth. to here infrastructure. R&D spend the the there’s on be certain we double the of scale able this we and digit capability we’re a deliver digit for profile -- So, come. going years several really growth need make forward to

do You need to that.

we in, scale automation, all need investing we’re the IT, the infrastructure, at our at finance and all to as grow basic mentioned foundational you double-digits. be So,

spending ramp? see So, by. this that’s Jagtar, year And, where in the of driven terms you increased level

we John, Kumovis, them. in now the then, Kumovis. any of And QX. ramp don’t but baked talked spend, And spending don’t the doesn’t necessarily we’ve increase in -- partially ramp further we Yes. Those the outside extent QX, don’t or we’ve that and acquisitions product of the the the on that year. pushed and We of hit part of are expect for a that in infrastructure the significant balance development expect Titan spend to to range, board QX and is the fully the get over We things of had that’s about. the plans result begun QX. because things Jeff Titan

So, we are really expecting it to be kind three of flat over the quarters.

Thank I Okay. follow-up. you. And if may, a Got for it. quick

chain et the impact? logistic seeing sourcing, supply Thank what the the you. you mean, are just I’m issues. referenced most areas cost, Is the You’ve the cetera? it freight, wondering specific I

you is It Freight issue Yes. I and componentry, fuel. driven, give the ongoing by and then freight changes by it’s general an I The John, in day. cannot I’m sure answer. an utilization obviously you, tell

componentry. in world think of is the mouth a hand -- lot I is around everybody to

So truly, networks, I of heard one it yesterday the news on somebody whack-a-mole, truly the call is.

are qualifying the deploying supply you we on will, sure out excessive just can meet suppliers, resources, So we there. our chain, demand working if new that’s suppliers, with making

as So, that it embedded labor content freight is components a board costs, that to from the and costs challenge. are And well. embedded like labor in our across things

think worst true And problem than right have days now, environment. is I’d challenging companies. all on a just this that But, it’s myself So, challenge, see, of remind lack demand. I for rather we I’d the

that freight. I’ll is now because freight Part ship roughly were costs. slower for add, sea. as more. component because shipping We rates as We part at Yes. it’s piece a had but Jeff higher of of said, longer our shipping million we will we is We’ve are plan go in up also freight year, costs model to sourcing, air component times. that year-over-year adjusting John, $X through expect times to improve it do the hopefully of

we will could. are costs, as reacting quickly and as higher moving inventory so, slightly we means see to back freight And adjusting more shipment, our which help levels, but

amazing. or Machines don’t But the that. in not made you thousands in hundreds times, can cause John, in times, it. components and be up normal about you of anything are constraint supply by can chain you ship to of it’s machine think hamstrung that

to I an all don’t want short the companies for be for risk truly in short it think I day, So, believe really it’s leadership manufacturing additive that demand even what people really And is to right at education being a look now on fundamentally didn’t around. industrial they driving realize is supply. component of left process is teams every was at

So, should with look And they at and the at more for as then, It more bring and it maybe additive. in the economics, make you look process. I say door additive. you opens you things this

place, us growth challenge to grow of giving that to and of backwards. not they it’s is That’s exciting side, go But and in lot this it. they’ve it’s it terms tremendous. one will on once -- want ongoing a -- really that’s demand. in opportunity And truly got it’s So, delivering an

same it’s of So, sides two the coin.

Thank you.

coming Troy question Next Lake is Jensen today Capital. from from Street

is line Your live. now

solid the tough on congrats in gentlemen, a environment. Hey results

Troy. you, hear Thank Good to your voice.

guys. Hey

Jeff guess, for So, maybe I you, couple.

months new over think week about next XXX. talked SLA product ago, line wondering And be the we’ve a I’m was I one, think just XX it I you product with to introductions. for week’s right, big if, three going months. refreshing the

Troy, next we the have -- for XX product a what lineup months. I think really exciting is

to hear launched. going you’re new being products of So, regularly

reveal there’s issues are more one about? get debate really will -- that. on so a things well time, you’ll you of telling you and It Monday, we’re go through do talking You be competitive internally much any about little judicious you I it. at can how and like about that a excited because information

you we’ve guarded. is I a deal. forward And a big really is So, backward Troy, this appreciate you upgradeability got with in XXX knowledge, would a to and industry tell bit little be would the But you, your particularly compatibility see theme release. the

or you laser this dual a buy new system. like a single can XXX, system it So, as laser

modularity. in That’s it technology folks working upgrade in can the of new platforms. that got toward our field. our kind theme You the It’s product are

have do with significant also not can So, compatibility They having sure the make they incremental customers reinvest to backward and stuck capital. are products. investments

we roadmap a you much going next off as and can. can possibly I bit you We’ll of would about XXX tangent. a I’m at as do. you We’ll in questions, which So, as you we’ll as the RAPID, tell on a always tell week. please the have booth we lot of a encourage And ask much little

Okay?

Okay. event? at will Perfect. be Jagtar, the you

I event. be the not at will

have will We the CFO interim new our event. at starting

follow-up I But good luck. question. wish quick you one maybe

like Forward this in seems administration every AM it applauding So, Biden the CEO’s initiative.

are So, incentivize any seen curious, you adoption? going details, what to to they exactly and just do have I’m Jeff, more

manufacturing It’s a reducing the It’s -- discussion what But, it. point component I any there’s component based Troy, resiliency, long sensitivity overseas on around to of and down been a the of the don’t reflects brought in Washington direction. couple that plans would additive, and in rarely and U.S. Washington was of to you, resiliency federal the I dependence printing, And it great ago, actions weeks there’s sources benefits a and is countries I factor I XD it. And by -- to make economy, be additive can want a tell the you, a national intent do definitive I that. interest to enough. don’t and discussion, Troy. of things. and our would pandemics do around There’s on tell I think for it and the on robustness other of everybody’s things lips. defense we like

of is interpretation layman, help intended adopt is additive. bill, strictly it’s which to businesses I smaller think it’s great. My

know driving helps thing. I that to additive particularly certainly, don’t so, think it’s it I helps it’s small I them think companies, adopt our of grow, will not demand need in OEMs for benefit a I’m great But us, if directly. sure additive, directly. that terms the customers And of we fantastic. benefit

So, to meet in but rarely they’re what be applaud and plans it’ll we’re to I investing what it, We what are. it’s consistent doing with anyway. see interesting directionally, they modify

great industrial So, an all there. in sentiment the and I’m it, see to for direction

Thank you.

is from Stifel. question from today Kieran [ph] Next McCabe coming

now is line Your live.

kind demand update have or if on on with of since question, the you next and adoption Oqton a the that’d a really Oqton and -- And you be kind of had using great. now lot back in kind the an could continued Thank but of week, of update the and can of wonder of acquisition the given could about manufacturing. of of kind drive with acquisition anything of a software sort that any additive for had to you kind would just that provide you into you. and I of, further that. customers production give Probably need resilience maybe touch with conversations kind environments I details you September. sense adoption software

to thousands we’re use in to phone, a make and the Day I’ll it labor. in future process our be talk couple quite about event as the Oqton where and software for honestly of -- Sure. in it’s of production and to matter at fleets factory, talking would It environments. the you all a had the use I the and Oqton’s bringing a of large important so put of software smart, a platform avoid to be and into variability easy And did Ben us you, headed. was machine. put an Schrauwen, a tell it’s Again, one-off to that folks Investor comments, to in it didn’t printers of will Yes. long but additive that -- hundreds laboratory, amounts to guys wanted on really is machine about important leader issue as incredibly they the a machines. of use

Oracle, into it, robotics. a then print when about It what install You Oqton. SAP the plug not have them, system printers, run to environment can you to only a absolutely processing, have system. operating software but cannot which disrupt is and love operating robust ongoing that manufacturing post plug you factory can And or we

all that plug of APIs the in into Oqton through can You platform.

been enormous. interest So, I tell platform, has you, that in customer would

dialogue in large companies. about it, companies every with day We’re

field. it’s think a I new

to do, do but has interest high. they So, it, need with trying learn can everybody’s to it what been what quite

the production, So, and that. demand adopt somewhat for will industry, up and firewall I it And is additive with why set -- help meet business our pleased entire the in separate, help entire I’m independent to this we will to think customer wanted which manufacturing. base entire help increased it we Oqton as continue industry a very additive is

person. time we’ve leader So fair discussion. the bit next And software that you’ll for in of the of week, hear business a on agenda from staked out

interesting. quite it find you’ll think I

is today from coming Maymon Berenberg. question Next from Jared

is live. line Your now

of demand. lot been That’s I supply the ask helpful. Thanks questions want did a to around couple for a just on side. commentary But

I’ve So, in mainly some from like risks, like hearing it’s orders And been geopolitical increasing to rate then they’re interest rate cases it sounds and slowing. inflation, just uncertainty. due interest that other rising companies some and seeing generally

CapEx either, some it decision, or So, orders. -- cases CapEx sounds so their or like they’re stalling in delaying slowing or

effective that see and you any is actually seeing you on then, months? some flip if are to indication could more there up the some additive I’m a shift it this you to a side, this the ramp start -- any of easier wondering, And of -- in customers making a that I’m So, cases guys, little in more be of for think coming is and because or quickly. and you cost in curious down this be tailwind ramp bit can might

risk seen Yes. profound. recession rates. customers -- based and on looking It toward they’re There’s a rise all, recessionary our coming, are a in And but with I’ve on gone And only tell only positive at difficulties pressures. the my and we this itself spending. that those risk if rise and about and The believe have in at starts already -- in the -- just that manifest starts I’d real not in the it, environment, inflation CapEx at the is in we their interest is you, by Fed everybody rise they’re corresponding tiptoeing finally detail The and opinion. the benefits all real and see drivers big true these drivers.

exploring risk it’s supply of Right no company, talked by eventually extended headwinds. demand is I is the new of especially all of about, into There supply you chain is production. now, tell our driven could there we So everything ways happening that. no that have now. right And that become a in pandemic, chains, this of bringing headwind. high, would and disruption, very sign

we much industrial in they new needed if really an tremendous looking where to capacity driver at add, be, the slowed think negative more think underlying how now. the I bring to the the side, -- could other were have still to no and be to I our same and it economy one evidence will would closer point that whole see make think the that be that’s demand the the robust. But, thing you Jagtar, entire Again, there could of offsetting it On future, to that in is, started home, really to the any industrial that in economy. if only slowdown time, firms the if affect, views? sector. right profile a I capacity general At I whatever speculate, down

QX. The only to QX I looking thing economy where next do with right year, add, our for term, but is year now looks shorter predict this what is, going pipeline I’m I the quite or I’d obviously QX mean, in can’t pleased Jared,

seem to strong. So, still that that demand would indicate still out It’s there. is

Got it.

a as really That’s Okay. kind then, helpful, And guys. of just follow-up.

then, utilization sequential from And rest curious, QX any So, seen decreasing any from the or shift on outlook that I’m it sort you steady, standpoint? remaining a guys then, have year? or And of is consumables to the steady for increasing pretty subsequently, just of QX.

you comment want trends? the element to do individual Jagtar, on

Yes.

adjusted number. easier that give is I’ll a QX lower typically QX. So consumables do -- some It’s to divestitures. than you year-over-year are numbers for

So, XX% revenue year-over-year. XX% or about materials was up

revenue felt up Printers I to year-over-year. XX%, think product up closer was were -- or about systems XX% pretty good that. sorry, we --

the sales printers when revenue going there’s be in well growing for even were materials to but see I future strong, materials because stronger like it means I quite which printer So, growing bodes strong, revenue. that future. follow-up materials

color the size try Monday, scale impressive Jared, next bit we’ll our to more growth It’s talk. again, it. outlook frankly, of our a and the quite And numbers, on give little when installed really base we of you

So, interesting. it’s

first learning not but polymer, and and think, are machines and those elsewhere large metal from industry. the to manage fleets, I we of our in how machines, especially fleets of the among sell mixed and only

We’ll on So, some that fascinating times. to Monday. share insight more

Great.

good. Sounds

Jagtar, to in next. comes the And what wishes forward Investor best Day. Looking

Thanks, Jared. appreciate it. I

over of to end the I’d for floor further or session. We closing question-and-answer turn you. comments. reached any Dr. like the to back Graves our Thank

all for day. Detroit We week you and So, next hope thank great Thanks morning. you you on this our our and to in see quarter. call have again a updating next progress joining

you. teleconference webcast. does That today’s Thank conclude and

participation your for this today. you may and You your wonderful have line day. disconnect at a time, We thank