3D Systems Corp. Q3 FY2025 earnings call

• Launched the MJP 300W Plus printer for jewelry at the Istanbul Jewelry Show, improving productivity by 30% and reducing metal waste by 20%, with positive customer feedback and orders being accepted.
• Full commercial release of the NextDent Jetted Denture Solution in the US, with the European regulatory approval targeted for mid-2026 and expected growth in the denture market.
• Progress in the Saudi Arabian Growth Initiative with partnerships like the Saudi Electric Company investing in NAMI and Lockheed Martin collaborating with NAMI for additive manufacturing in defense and aerospace.
• Focus on MedTech with PEEK materials for medical applications, used in real-life patient cases like spinal reconstruction, and MedTech growing 8% year-over-year with trauma as a fast-growing element.
• AI infrastructure and aerospace/defense as emerging growth opportunities, with 3D Systems participating in semiconductor, data center, and gas turbine engine components, and Lockheed Martin collaboration for defense components.

Consolidated revenue for the third quarter was $91.2 million, down 19% year-over-year or 14% excluding Geomagic. Industrial Solutions revenue was $48 million, down 16% year-over-year or 4.5% excluding Geomagic, with aerospace and defense growing nearly 50% year-over-year. Healthcare Solutions revenue was $43 million, down 22% year-over-year, with dental down but MedTech up 8% year-over-year and PHS up 10% year-to-date through Q3.

• The financial impact of the disposition of Oqton and 3DXpert on Q4 results is expected to be approximately $1.2 million in revenue and $1 million on gross margin.
• Gross margin is expected to be flat quarter-over-quarter, with offsetting factors like volume increase from new product launches but mix effects from printers vs. materials.
• Cost savings initiatives to continue through H1 2026, targeting OpEx reductions, with expectations of continued OpEx declines through year-end and into 2026.

• Macro environment challenges affecting customers' CapEx spending for new production capacity due to tariffs.
• Regulatory timelines for dental products in different regions (Central/South America, Asia) taking time to navigate.
• Volatility in the aligner market due to consumer spending patterns in different geographies.

Q: GROSS MARGINS DROPPED SEQUENTIALLY. WHAT'S THE REASON?

A: Thanks, Troy. Looking at gross margins quarter-over-quarter, there's 2 main components: a RegMed milestone recognized in the prior quarter and manufacturing variances in the current quarter. The RegMed milestone was about $2 million of revenue, and there was scrap and slower-moving inventory cleaned up. Going forward, gross margin is expected to be flat quarter-over-quarter.

Q: CAPEX EXPECTATIONS FOR NEXT YEAR?

A: Our CapEx can be meaningfully below historic levels. Traditionally, 4% of sales is a long-term average, but for the next couple of years, it can be substantially less than that because our manufacturing operations are not highly capital intensive.

Q: WHY IS THE DENTAL BUSINESS STABILIZING?

A: The aligner market is volatile due to consumer spending, but dentures are an essential product. The NextDent Jetted Denture Solution is a 3D-printed product that is durable, aesthetically beautiful, and cost-effective. Regulatory approval in Europe is targeted for mid-2026, and once adopted, dentures are expected to be a stable and growing revenue stream as the manufacturing process transitions.