DDD earnings call transcript, November 4, 2026

And welcome to the 3DC. System's third quarter, 2026 earnings webcast. At this time, all participants are in a listen-only

mode. A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone... To require operator assistance, please press star zero. It is now my pleasure to turn the call over to Monica Gould, Investor Relations. Monica, please go ahead.

Hello, and welcome to 3D Systems' third quarter 2026 earnings conference call. With me on today's call are Dr. Jeffrey Graves, President and CEO. and Phyllis Nordstrom, Chief Financial Officer. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those following along on the phone who wish to access the slide portion of this presentation may do so on the Investor Relations section of our website. The following discussion and responses to your questions reflect management's views as of today only and will include forward-looking statements as described on this slide. Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in our latest press release. And our filings with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. During this call, we will discuss certain non-GAAP financial measures. In our press release and slides accompanying this webcast, you will find additional disclosures regarding these non-GAAP measures. including reconciliations with comparable GAAP measures. With that, I'll turn the call over to our President and CEO, Dr. Jeffrey Graves, for opening remarks.

Thank you, Monica, and good morning, everyone. Our third quarter showed clear, continued progress. Revenue grew at double-digit rates. Over a year, excluding the impact of the enterprise software divestitures we completed in 2025. Gross margins expanded, operating expenses declined significantly, and we again delivered positive adjusted EBITDA. Phyllis will walk through the financial details with you shortly. What is most encouraging to me is not simply the numbers, but the source of the growth. Accelerating penetration of our four strategic markets. These are medical technology, dental, aerospace and defense, and data center infrastructure. Customers in these markets are choosing us for the design flexibility, additive and data center infrastructure. Manufacturing uniquely provides together with the park quality, regulatory rigor, and very importantly, the production economics required for true manufacturing at scale. We're winning significant new business on the strength of these capabilities. At the same time, in an increasingly unpredictable global environment, customers in both the United States and Europe are placing greater value on localized supply chains. With established operations in both of these regions, we're well positioned to be a long-term partner wherever they choose to manufacture. The past three years demanded hard priority decisions and discipline. Through a prolonged industry downtrend, we reduced costs while protecting the technology and application investments that matter the most. We concentrated those investments on markets where additive manufacturing creates meaningful, durable value. The four key markets we focus on today. As the headwinds now begin to...

As we succeed, the benefits are becoming clear. Revenue is growing. Margins are expanding. Profitability is strengthening. And most importantly, customer adoption is accelerating. I want to thank our employees around the world. Their commitment has made this progress possible. Turning to slide four... Five, let me put the quarter in the context of those four key markets. Medical technology, dental, aerospace and defense, and data center infrastructure, which includes, by the way, semiconductor equipment, advanced GPU cooling, and energy applications. In medtech, demand for both standard and... Personalized orthopedic implants continues to grow, driving both parts revenue and printer sales. We're expanding production capacity to meet it. Titanium remains a central focus, and the quality and economics of our titanium printing are compelling. An accelerating trend is medical grade peak. for personalized bone replacements. A material that combines biocompatibility, bone-like mechanical properties, and radiation transparency for x-rays and cancer treatments. We also continue to see steady growth in our personalized health solutions business, where we work directly with surgeons to plan procedures. and deliver custom FDA-approved cutting guides and increasingly custom bone replacements. MedTech continues to deliver solid growth and with new technologies and improving economics, we expect that to continue. In dental, material revenue recovered in the third quarter as aligner volumes returned.

to their longer-term run rate and adoption of our denture printing technology by labs across the United States and Europe continue to rise. We expect these trends to strengthen as 3D printing becomes the standard manufacturing process for dentures. In aerospace and defense, revenue grew more than 50% in the quarter. Excluding our Air Force development program, led by printer sales in the space launch systems and a range of other defense applications. This is a large and exciting market, though growing exposure to defense program timing may make quarterly results somewhat lumpier as we grow. On a rolling 12-month. basis, however, we expect a clear upward trend. Near term, rocket propulsion applications remain the most compelling opportunities. In data center infrastructure, semiconductor and high performance computing revenue grew significantly. Our metal printing technology is already producing components for semiconductor maintenance. Manufacturing equipment and advanced computing systems. And customers added printer capacity in the quarter to support that work. We expect this area to grow and become a material revenue stream for our industrial business over time. These four markets are at the core of our growth strategy and will continue to receive the majority of our investments. The underlying technology also applies to select consumer-facing markets, allowing us to participate opportunistically in them.

Moving on to slide six. Looking ahead, we see two important complementary drivers of growth, both centered on the manufacture of metal parts. Our ability to address both of these opportunities with differentiated technologies and deep applications expertise gives us a unique position in the industry. The first of these is the continued expansion of direct metal printing for production applications. As the technology advances, customers can manufacture larger, more... complex, and higher-value metal components at scale. For us, the cornerstone is titanium printing, leveraging our deep expertise in printing for the human body. Those volumes are rising, and the rapid expansion of titanium applications in aerospace has opened entirely new markets. Our quality system... ...and infrastructure built for human applications are now a powerful advantage as we extend into the industrial markets. The second driver is the growing use of additive manufacturing within investment casting. Here, the opportunity is not to replace an established process, but to make it faster, more flexible, and capable... ...producing increasingly complex designs. I'd like to cover each of these in greater detail. What's driving the market, how additive fits into the workflow, and why we believe we're well positioned to capture the growth. So moving on to slide seven. Investment casting is essential for many high-performance...

metal components, particularly in aerospace and defense, from rocket propulsion systems and turbine blades to complex structural parts. Industry estimates place the global investment casting market at approximately $20 billion annually, with the U.S. representing a significant share and benefiting from strong aerospace and defense. demand. For decades, the casting industry has relied on hard tooling to create molded polymer patterns. Hard tooling is expensive, slow to produce, and creates barriers to design changes once production begins. Additive manufacturing changes that equation by producing casting patterns directly from digital designs. Customers can avoid tooling costs, dramatically reduce lead times, accelerate design iterations, and manufacture geometries that are difficult or impractical with conventional tools. The transformation of the commercial space industry illustrates what becomes possible when advances in propulsion, reusable launch systems, and modern manufacturing come together. Over the past decade, launch cadence has increased dramatically, while the cost per kilogram of reaching low Earth orbit has fallen by more than an order of magnitude compared with earlier launch systems. Additive manufacturing has contributed to this progress by enabling complex propulsion components to be developed and produced faster with fewer parts and greater design freedom. Importantly, when additive manufacturing is used to produce casting patterns, foundries can achieve these benefits while continuing to lose

the alloys, casting processes, and manufacturing expertise they already trust, minimizing the need to re-qualify finished components. Now turning to slide eight. As shown on slide eight, we address the investment casting market with two core printing platforms. Our new SLA 825 Dual serves large format casting applications, while the MJP 300W Plus provides high-resolution wax patterns for smaller precision industrial and aerospace castings. While our focus today is aerospace and defense, these systems also serve a number of other high-value applications. Some of which are actually illustrated on the slide. Turning to slide 9, let's look more closely at each platform, beginning with the SLA-825 Dual. This is our flagship large format system, with roots that reach back to the invention of 3D printing in the early 1980s. The SLA-825 is designed for large format cast components. Its scale, precision, speed, and ability to produce lightweight, stable patterns allow customers to create large, single-piece designs, reducing assembly times and lead times. Equally important as the print material and process that we use. Historically, as production volumes rise, the economics at some point favor a transition to injection molding with hard tooling. Through our quick cast technology, lightweight patterns that are strong and leave virtually no residue during burnout can be printed using up to 50% less resin.

That savings meaningfully means changes in the economics, raising the volume threshold at which hard tooling becomes attractive, thereby favoring 3D printing and the design flexibility that it enables. These factors are rapidly transforming the investment casting industry as new designs. and improved manufacturing economics drive higher adoption rates. Moving to slide 10, our newest multi-jet printing system is highlighted. While the SLA825 is ideal for large components, the MJP300W Plus brings high-resolution wax patterns to smaller precision investment castings, such as those used in smaller turbine engines that are rapidly expanding in use on drone aircraft, long-range munitions, and portable power systems. The high-throughput these printers enable delivers excellent economics while retaining the precision and design flexibility inherent in three be praying. Because the wax patterns integrate directly into a customer's established lost wax casting process, the technology can be adopted without changing the metal alloys or manufacturing methods they've already qualified and trust. Together, the SLA and MJP platform position us to participate broadly in the casting market, with a strong emphasis on aerospace and defense applications that are growing so rapidly. Turning to slide 11, let me next turn to direct metal printing, where we see some of our most significant long-term growth opportunities.

Across aerospace and defense, energy, semiconductors, and healthcare, customers are moving rapidly to adopt and expand the use of direct metal printed parts. The reasons are straightforward. The technology can now reliably meet the highest standards of quality and performance while reaching the throughput rates required in production. Parts that previously required multiple processing steps, each with their own scrap, rework, and then precision assembly costs, can now often be produced in a single printing operation. Combined with design flexibility of additive manufacturing, this is becoming a compelling value creator. And with AI... With programmatically accelerating design iterations, customers can adopt higher-performing, lower-cost designs much more quickly. With advanced metal printing systems we're now fielding and our application engineering teams, we've focused intensely for the last three years on aerospace and defense. On the equipment manufacturers essential to semiconductor chip production. These markets together with our traditional orthopedic applications represent outstanding growth opportunities. The investments we've made are now producing clear results with increased shipments of large frame metal printers and growing parts volume. Both of which I'll touch on shortly. Turning to slide 12. Our metals business has several important sources of differentiation built over many years. We've maintained a consistent, strong focus on metal printing technology, even through the recent industry recession. As a result,

we now have systems very well suited to printing metals that are either highly reactive, such as titanium, or extremely difficult to process conventionally, such as nickel-based super alloys for flight systems, copper nickel alloys for naval applications, and tungsten and other refractory metals that withstand extreme temperatures and stress. environments that are common in advanced energy systems. This progress requires more than hardware. It required application specialists who developed the print processes needed for high performance, high reliability components. We do not simply sell equipment. Our application engineering group works closely with customers. to develop and optimize applications and then help transition them into repeatable production workflows. The combination of platforms, materials, application expertise, and strategic partnerships with key customers gives us capabilities that are highly valued and very difficult to replicate. This positions us well as additive manufacturing moves towards scaled production. Moving to slide 13 for a brief overview of two of our key metal platforms, the DMP350 triple and the DMP500. The DMP Flex350 triple laser platform provides... productivity, process control, and material flexibility required for many of the most demanding production applications. The larger DMP500 replicates this capability for larger parts. These systems are renowned for their ability to print the most difficult materials. Lightweight, high-strength titanium alloys as well as extreme performance...

nickel, copper, and refractory metal alloys. These materials are extremely difficult to process conventionally and therefore derive the highest value from additive manufacturing. While the printing systems and application expertise provide clear value as customers qualify new components, a remaining barrier to... large-scale adoption has been the availability of production parts to bridge the period from qualification to high-volume production. For targeted markets, we now offer this capability, allowing us to move customers smoothly from the initial concept demonstration through process qualification... and into low-volume production. As volume demands then grow, we can provide printers and process knowledge for them to continue scaling at the pace they desire, or with third-party manufacturers, while preserving the qualified processes and production parameters developed during the initial manufacturing phase. This approach has resonated very well with customers within aerospace and defense and AI infrastructure that value both our technology and our quality systems, which have deep roots in our medical device manufacturing experience. Taken together, this approach reduces the adoption barriers, generates a... attractive parts revenue, and creates future printer opportunities as customer demand expands. From a financial standpoint, the returns are sufficient to support the ongoing R&D required to maintain a leadership position in metal printing and to create growing value for our investors. Nowhere is this...

...approach more relevant than in defense. The defense industrial base faces well-documented constraints. As an example, lead times for critical naval castings often run from 12 to 24 months, and production capacity for key munitions, propulsion components, and others remain limited. High mix, low volume production... of complex alloy parts is precisely where additive manufacturing excels. It does not require new foundries or long-lead tooling. It can add capacity quickly and effectively. The same model is highly relevant to semiconductor equipment manufacturing, where supply chain constraints, long quality... modification cycles, and limited production capacity creates significant opportunities. These markets remain central to our long-term industrial growth strategy. In support of these efforts, we continue to work with the U.S. government, both on the development of new metal printing technology and on the application of metal additive manufacturing to next... ...generation energy and other national security applications. As I wrap up the section on metals, I want to turn to slide 14. The growth I've just described is already translating into increased demand for production capacity. To expand our capacity for manufacturing metal parts... We recently celebrated the grand opening of our new facility in Littleton, Colorado. Building on the extensive fleet of metal and polymer systems already located there and the quality systems we have in place for our medtech business, we cut the ribbon on an additional 50,000 square feet that will house printers and post-print processing equipment.

for metal parts in our key markets. We'll add print capacity at the rate needed to support growing demand for industrial metal parts. By focusing this new facility on our industrial markets, we'll simultaneously free up capacity for our medical implants where demand is also growing quickly. We were grateful to the key customers and the local, state, and federal representatives who joined us for this event. It was a terrific day. Before turning the call over to Phyllis, I'd like to briefly comment on my planned transition. As announced in August, the independent directors of our board continue to lead the search process.

for my successor. I remain fully committed to supporting this process while maintaining our operational momentum and positioning the company for long-term success. The strategy we have discussed today remains the right strategy for 3D systems. We're committed to it, and I remain very optimistic about the company's future. So, with that, I'll turn the call over to Phyllis in slide 15.

Thank you, Phyllis.

We'll be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we... Call for your questions.

Our next question has come from the line of Greg Palm with Craig Hallam. Please proceed with your question. Yeah.

Good morning.

Thanks. Maybe just to start in light of the news on the DDDX. Exchange, you know, on the surface, it looks like the holder's got a pretty lucrative deal. So maybe this is a good opportunity for you to sort of flesh out some of the details on the, you know, why now and why does it make sense and all that.

So, so Greg, do you, do you ever know a case? We're a lot of debt holders. Don't get a lucrative deal. I think, I think that's their business, but no, we've got, we have, I got to compliment it. We have tremendous debt holders. They're, they're great people. They have spent a lot of time understanding our business and I could not ask for better partners from a debt standpoint. Now they're in the business obviously to make money and, and. And we are too. So it was a timely time to, to redo that structure, not only to push it out in time, but to make sure it was the most flexible debt structure we could have. Because again, our, our, my biggest concern right now, Greg, I would tell you is making sure we have the capital for investing in growth right now, because. Because the opportunities are, are going up by the day. And I, I think we have good line of sight on the, on the healthcare side. So it's, it's, it's very predictable, both, you know, the denture growth and the, and the orthopedic growth, our med tech business. The, the, the volatility, and it's a good thing, the potential volatility is on the industrial. The side, when you look at the, the, the progress that additive is making now in metals for both AI infrastructure and for aerospace defense, it's enormous. And so those markets, when they hit can be very large and we want to have the capital available to us and flexible enough to invest for that growth is that's really where the payback.

So yes, you always wish these deals were cheaper and better and blah, blah, blah. I think this was a very fair exchange. I appreciate our debt holders being willing to do it. The timing was driven by the opportunities we see coming over the horizon now and approaching us pretty quickly for CapEx investment. We've just got to be ready to do that. And on the ATM side, that's why it's a flexible instrument. We don't have to use it. But if we have an opportunity and we need the investment, we can make it and capture that growth. Anything to add?

Nope, that's helpful, Collar. It sounds like you're sort of doing this on on the offense. I mean, I think it'd be helpful for for all of us to understand kind of how you see things playing out over the next couple of years, because, you know, we haven't really been accustomed to growth here from recent past. And I know you've returned to growth. But, you know, as you look ahead, I mean, given the capital. The capital structure, given all these opportunities that are out in front of you, the Littleton expansion, what's going on in metals, like how do you see that translating into growth over the coming years? So there's two factors that you've got to weigh against each other. And time will tell, you know, the timing on each one. But for our four key markets that we're in for growth. You know, again, two in health care, two in industrial. I think the health care side, very, very solid double digit growth going forward and fairly predictable. Okay. It may not be linear, but it's fairly predictable over the next two to three years. The industrial side, I think, is going to come in waves because there's so many good applications. that are opening up right now. And our customers are going through the procurement process with the federal government on everything from munitions to drones to flying aircraft, manned aircraft, and on the rocketry side, enormous potential as the demand for space access.

Explodes. So the opportunities are there. The hard thing to predict is timing. If you look at our aerospace defense, I think the number we put out was 50% growth. Now, that may not happen every quarter, year over year, but it is clearly a market that's growing really fast and additive not only for us. But for others in the metal business, additive is going to have a key role in that because of the economics, you know, they're earning their way in right now. It's earning its way in, but the added design flexibility they have to change designs are, you know, it's an unfortunate thing that the world is so. You know, war-prone right now. There's many fights going on all over the place. If you look at the headlines, the weaponry used and the reconnaissance vehicles used, all of that has changed so much in the last couple of years. That wouldn't be, well, it wouldn't be nearly as easy without additive manufacturing, and that's why I think we're positioned really well. So in that environment, you just want to have a fair bit of dry powder, because when somebody comes along and says, hey, I need 100 of these, or hey, I want 100, then I want to buy three printers, you've got to have the cash to say, yeah, I'll put in the capacity, and I'll buy the raw materials to build the printers for you, because when they need it, they need it. If you're there, it's really sticky business. If you're not there, you miss the window, then you open it up for someone else to come in.

So I love our model right now. We invested through the hard years, especially in metals. I would tell you, I'm really proud of our metal technology, and it's built off of titanium. And into other materials. And our big SLA system for supporting castings of metals, those two are highly differentiated areas that I think are going to really drive our growth in those two industrial markets. So we get really solid growth, double-digit growth, I believe, on the healthcare side. And I think we'll have strong double-digit growth in those markets. Now, one last comment, and I apologize for going on. But the only thing working against us right now, Greg, are the markets we're exposed to on the industrial side that are more consumer-facing. So things that we've traditionally been pretty big in, like jewelry. And service bureaus and stuff. Those guys, number one, they're under pressure from the war in the Middle East. So that hurts that business. The inflationary pressure on consumers in the Western world, at least from buying jewelry, things like that, clearly there's a lot of pressure. problems in that industry. We have some exposure to that industry. So that exposure will go down quarter by quarter, year by year as the other industrial markets grow, but it's a headwind for us. Now, nicely, our printing platforms apply equally well to those markets. So, hey, if they're opportunistically if they're growing, it's great for us. If they're shrinking, it's a headwind, but it's now outweighed by, clearly, it's being outweighed by the growth in the industrial, the high-end industrial markets, defense, aerospace, those, because overall the company's growing. If you look at the difference, though, between those markets, it's quite.

high. The consumer-facing ones are shrinking. The high-reliability ones are growing fast. The net result is modest growth for the whole company, but that will increase over time because the headwinds on the consumer side will go down as we get bigger in the other markets, and that's the way we look at it. So I'm really pleased. Our cash burn is dramatically reducing. As volumes come through and the margins come through on these high-end systems, we will flip to positive cash flow, operating cash flow, and then ultimately support our CapEx investments. We've got to bridge that period, make sure we've got the cash to invest. That's what brought this whole timing together. I'm super excited about the opportunities. I feel much better now about our balance sheet that we are poised to exploit those opportunities as they open up ahead of us. I'm out of breath, Phil. Anything else?

Did that answer your question? I think that covered it. All right. And then I guess last one, and you kind of alluded to this, but you did announce this large scale order for investment casting on the Q2 call. It's maybe hoping you can just update us on the progress there and maybe the broader opportunity with that customer and others. Yeah, Greg, that was in the rocketry space. That order is filled and flying. I mean, it was a tremendous opportunity to get, and that's more to my point about being able to exploit these opportunities. We were able to take an order, ship it within a series of a few months, get the unit. It's running and operational. Today, they're making parts that are flying into space, and that's the pace that industry is moving at, and I think we are very well positioned to continue supporting that. We clearly have a lead in additive manufacturing for rocketry for castings, okay? Direct metal printing, I'm very proud of our capability, too. It's a smaller opportunity, and we're not participating heavily in that, but we are in the casting arena, which is the big opportunity, and the margin potential there is very nice with the consumables, as you know, so the order's filled. They're very pleased. with the product. I think we're the recognized leaders in the field, and the growth potential there, Greg, as you look at public, these are publicly announced numbers, as you look at the planned cadence for rockets going into space, you know, regardless of the customer that's sitting in there, you just look at the total global.

Rocketry launch pace today, it is moving so quickly. So it will move from measured in months to weeks to days to hours over the next several years. And I think we're perfectly positioned for growth in that business. Okay. All right.

Thanks for the caller.

Thanks, Greg.

Thank you. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.

Thank you so much, ladies and gentlemen. This does now conclude today's teleconference. You may disconnect at this time. Enjoy the rest of your day.