3D Systems Corp. Q4 FY2024 earnings call

• A change in accounting estimate for the regenerative medicine program led to a $9 million reduction in Q4 revenue and gross margin. The program's testing methodology update, including in vivo human decedent testing, influenced this. - 2024 was a challenging year for top-line performance, but the fourth quarter showed stabilization and strengthening in customer demand for new industrial printers. - Dental applications have four pillars (straighten, protect, repair, replace) with addressable market sizes estimated for 2029. - 2024 was a year of innovation with new printers, materials, software, etc. Launched NextDent 300 printer and showcased Figure 4135 solution. - Announced cost reduction and restructuring actions targeting over $50 million of annualized savings, including site closures and headcount reduction. - Divested Geomagic Software platform for $123 million, with proceeds to be used for operational improvements and organic growth.

In the fourth quarter, Industrial Solutions generated revenues of $71 million, marking an 11% growth. Healthcare Solutions had revenues of $40 million, a 21% decline from the prior year. For the full year, consolidated revenues were $440 million, down 10% year-over-year. Industrial Solutions full-year revenue was $250 million, down 9%, while Healthcare Solutions full-year revenue was $190 million, down 11%. Dental materials saw double-digit growth, and the personalized health care business grew nearly 12% for the full year.

• 2025 revenue is expected to range from $420 million to $435 million, essentially flat to modest growth. - Non-GAAP gross profit margin is projected to be in the range of 37% to 39%, and non-GAAP operating expense is expected to be between $200 million and $220 million. - Adjusted EBITDA is expected to improve in every quarter of 2025, with the goal of achieving breakeven or better EBITDA by the end of the year.

• Macro-economic uncertainties causing hesitation in customer capital expenditure. - Unclear tariff situation impacting customer spending decisions. - Risks associated with managing costs of long-term R&D activities such as bioprinting, including potential slowdowns or partnerships for certain initiatives.

Q: Jim Ricchiuti inquired about the industrial vertical's performance in Q1.

A: Jeffrey Graves stated that Q1 is typically seasonally weaker, but the overall trend is flat to slightly up due to increased capacity utilization, though customer capital expenditure is hesitant due to the macro environment.

Q: Troy Jensen asked about cost cuts in bioprinting and Q1 seasonality.

A: Jeffrey Graves mentioned focusing and possibly slowing some bioprinting activities; Jeff Creech noted that Q1 will have Geomagic sales initially, followed by a decline in subsequent quarters as Geomagic revenues fall off.

Q: Greg Palm questioned cash flow expectations.

A: Jeffrey Graves said the goal is to be EBITDA positive late in 2024, and aims to flip to operating and free cash flow positive in 2026, depending on cost takeouts and demand. Jeff Creech concurred, emphasizing the plan is tied to cost execution and demand.

Q: Trevor asked about dental market penetration.

A: Jeff Creech discussed aligners, dentures, and Night Guards markets, including FDA approvals in the U.S. and the potential for European market expansion once approvals are secured, highlighting the growth potential in these dental segments