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XONE ExOne

Participants
John Hartner Chief Executive Officer
Doug Zemba Chief Financial Officer
Monica Gould Investor Relations
Brian Kintslinger Alliance Global Partners
Sarkis Sherbetchyan B. Riley Securities
Jed Dorsheimer Canaccord Genuity
Martin Yang Oppenheimer
Noelle Dilts Stifel
Call transcript
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Operator

Greetings and welcome to the ExOne Company first quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require Operator assistance during the conference, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded. to conference like host, to now Ms. would turn over the your I Relations Company. The Gould, for Monica Investor ExOne Thank you, you may begin.

Monica Gould

yesterday ended Thank everyone. you XX, quarter ExOne morning close. XXXX March released results Operator, for the and after market good first

Officer. Chief of Zemba, me If release, call earnings be are on This the Relations today’s you you website Chief our Hartner, from press section it call ExOne’s our of Investor webcast a Executive obtain website. at being did Doug and receive on Investor archived not Financial Relations Officer, copy and may of investor.exone.com. section is John With will the

Before as I Any are reports and are in on company, no risks in the discussed of the these and contain to will those obligation by forward-looking assumptions recent like to turn on statements future risk XX-K the based on release. press and made uncertainties and most a or include uncertainties. I’d of These those update is the factors events. as as we risks filed over John, as discussed Form new result as that to today undertake discussion to note and today’s such XX-Q that statements call this well statements forward-looking information call subject

call U.S. release. between the to Reconciliations are in the We these performance. found non-GAAP believe and I’d to certain With over financial the to principles. accounting to of in that, like measures GAAP ExOne our included addition GAAP In reports tables non-GAAP conform measures reporting, accepted that press John. do turn the generally not these understanding measures enhance

John Hartner

to I’m and to which shows morning levels both our report pleased earnings quarter product revenue the and in Good XXXX offerings, first forward adoption Monica. quarter, our you recurring our our first of strength everybody model, momentum. backlog record of and order the machine welcome Thank call.

the start quarter, expected year. a last we soft forecasted to As

rebound that the environments where a saw first reflected from however, U.S. difficult seeing backlog of in quarter COVID-XX; are revenues first reflecting continue in performance related operating quarter and decline XXXX. we million, record a of result economic COVID decrease as market, a to in a Our driven The sales first results particularly an the recorded disruptions, persist concentration of higher during first we quarter slight of installation by Asia. quarter. We growth especially $XX was signs

towards revenue, associated future a largely funded a re-shoring strength development first opportunities, Americas the region, revenue the Our QX, particularly other with revenue year-over-year million base backlog of also model. sequentially strong to production a in was record expect achieved the production We aftermarket distributed $X.X million, revenue of reflecting printers led a trend continue demonstrating our XX% driven QX perspective, of was success chain. from $XX.X and strategic our Recurring in X% and and quarter emerge by XX% increase this growth recurring sequential in to initiatives in a supply equipment to an from we spread year-over-year growth. representing in and as support manufacturing From XX% they ExOne year-over-year global area, secular research adoption of more trend sales rose regions XX% This and to installed the the metal helped revenue pandemic. is geographical were services group. These from increase by in by services.

our model, differentiated an of expanding partnership in strengthened office. additional our materials sheet we invest will new external in such which position our further binder the in Rapidia total continue jetting. offering. During drive leadership liquidity will further across capabilities XX with to enable million $XXX balance This and as our including invest through public resulted QX, adoption production for underwritten to to us enhancing to March geographies, we of to Also, Metal highly qualifying a strategic expanded our prudently expand Designlab as growth, opportunities

to Additionally, metal printers. in we our all, mind: end, increase of during primarily the that meet new to the production-ready to for end talent of ExOne growing accelerate goals goal. technology to metal These higher team. customer and XD teams. are investment several increased way into our the are quickly a shift demands. bringing April, our revenue; development, workforce more increasing our us by production our backlog helping two-thirds of To we targeted plan demand to metal percentage printers, support will customer-facing units; the mix with organic to manufacturing of In XXXX manufacturing, global XX to our hires approximately people, convert Through we and a bringing added XX% to investment towards support in in

like highlights. recent I’d Now turn some to to

launched helped our Designlab parts attract Meanwhile, in partners metal we was quarter, has respected announcement differentiated printing has outstanding sales of North Manufacturers event, our in-person will binder ExOne’s in to market’s in star is of product and materials, print of is in titanium, leadership our raft excited and received QX. family to channel trade expect with include this to system doubt We’ve controlled of already our Metal XXXX, it today, nicely. to binder year. jetting the at a has first ExOne event tomorrow a track an ramp order this received in that reactive XD aluminum the to are including commitments an first bound the as company printer offering. new America. little be capabilities, shipping and diversified metal to reception, strengthened metal attended the strengthen. atmosphere its shipped first in and beyond jetting During portfolio continues XXXX. ExOne sales the such so We about printable largest materials through a our on our truly There the new the on new exclusive XXXPro, only be XX recent This platform AMUG this the This binder our model Rapidia. office-friendly begin that Metal about remain jetting Designlab recent partnership printer

applications of offers developed XX% is an AMclad, We to spending architectural Through method of for quickly. for applications. plastic-like Celwise. is transaction chains series Freshmade a diversity to quarter composite Ohio-based for final of porous by for method intends so printing on we up produce industry biodegradable often renewal many printed of technology industrial to looking parts. cost is a at patented art transform XD market products print studies typically XD’s for as supply into XX% great our We we format end asset also many pulp plan that shorten plastics aerospace tooling use includes to Subsequent provider them companies other with Manufacturing reveals their Celwise XD, on customers. start-up sand large have our customer our This these scale announced these global by are AMclad being savings Swedish products months to which who for metal in tooling of applications, acquired this ExOne’s production our jetting innovative and of a durable, jetting a the for have replacing we end, model, that layups process binder our sand look new solution work a to the new major excited a innovative to of which help printed start-up This get with Freshmade encourage creating that for for up design adoption binder a tooling and lined also to presentation, position single-use to our used XD the that ideal are to and metal or wood method forms an and to brands tooling plastics. disrupt case you products out printers. of the manufacturing time investor patented horizon. I tooling ExOne strengthens and expected approaches. weeks and form conventional the are products has waiting eliminates water-resistant, locally. enabled product. tools this the

four China ExOne in As jetting the system, the well as we as Canada. These Designlab industrial in F Innovent+, I are Metal continue and the sell as authorized the - the most and our sell U.S. capability. furnace across ExOne also XD partners now remains America, we consumables. offices General Taiwan channel in Asia. North also equipment mentioned, expansion and Last partners well XX week, we which expand advanced will metal installed Technologies partners network GIT such ancillary and as world’s solutions. continued new sales distribution as Aurora added to sales to Integration announced In with binder

brings traction the the are in additive to number conclusion, extremely and global long has ExOne Greater representation we term China the sales of manufacturing. over past and In additions, we partners these APAC in business doubled With about and year our the optimistic growth of fundamentals its region the increased XX. remain seeing in total

designs who improve with and about turn financial With the results execute. products anticipated will continue entering their and to new look over our details year-over-year revenue with to supports manufacturers supply the to industrial to de-risk require I’ll We new provide backlog of printing that, to our Doug, look pipeline period that solutions the XX% that call and We visibility to chains forward XX% our believe now sustainability our XD tailwinds growth. strong post-pandemic as outlook.

Doug Zemba

Thanks morning John. Good everyone.

For year-over-year, to given systems are million, we complete periods. revenue increase pleased first customer XX% contractual the are delayed XX% execution protocols quarter, challenges have offset highlights until the operating million, acceptance and were achieved installation of revenue These the on of faced an quarterly by and recurring environment, on recognition influence $X.X COVID-XX record quarter up future year-on-year. global to in first $XX.X we which XXX% record backlog of transactions the of

revenue XX% XX%, and macroeconomic we record response of quarter. U.S. conditions to improving affirming product new particularly which our year and generated sales first higher backlog, launches, growth XXXX As full activity John contract by expectations concentration market, our of driven the market stated, in are in a our to the

development that of research by aftermarket commenced service of driven growth of the driven on XXXX XD from a funded development higher and efforts increase application. increase our was XX% global in base installed new on $XX be an I year-over-year our for and funded a statement new record decline with in growth modest First from quarter disruptions by to mentioned, first million, encouraged quarter to revenue which as $X.X related Despite installation in The sequentially to the recurring XXXX, challenges, recurring continue totaled basis X% million. growth in in represented a we quarter revenue, due The associated revenue work research year-on-year our fourth largely a to in by rose revenue these was and machines. the a our revenues and, largely COVID-XX. contracts which printing healthcare

As customers. of model the of we have to types future are previously, production systems arrangements critical launching these serve pad by as our mentioned and acquisitions adoption strategy for

As relates as area and for includes we revenue this strategic a material revenue group, global which pool during our to funded periods us contracts, saw recurring an has service been our as to products, it bureau development research business the of quarter. and aftermarket as provides operations, of and growing volatility, first it focus in consumable of stability economic

Moving over in in by quarter to I first printing to to This particularly XXXX the in macroeconomic the systems declined shipping $X.X to on international mix be effects. in XD volume, a quarter offset our concentration will XXPro a which decrease of for due was our to a to to of first which $X.X a both domestic favorable XXXX. million machine of impacted systems, million and groups sold, compared comment Revenue of systems lingering revenue in COVID-XX, travel disruptions continues including and product greater metal printer. included addition negative of in moment, by

to Now for let’s period. unit machine move the sales

announced metal our machine our industry’s for printer soon the direct Innovent metal As as other ceramic XX well printer. our parts our we our as and a XD industrial platform, will and and XXPro to Designlab include such and Pro XX this XXXPro applications, reminder, print as Metal recently and office-friendly Innovent, group platforms, largest M-Flex, add components,

tools sand molds machines as print such and S-Max, indirect and S-Max include Pro Our and our cores platforms. S-Print,

higher indirect are average Our a machines footprint typically sales larger systems value. generate and

Those lower sales revenue platform, As have system; of leaned we our and our to have XXXPro from increased a and however, XXXX. for compared platform concentration entry this machine first the lower in quarter Innovent our of at mentioned, driver our to quarter in higher metal machines QX our machines. priced is of seven faced Persistent We machines disruptions recognized heavily consisted system direct this the continue our direct units binder dollars direct we primary we indirect revenue point of XXXX expect have COVID-XX level system trend in introduction. four a average sales has rolling the seven XXPro were XXXX recognized three jet that XXXX. to four XX and first our to following quarters compared of which system historically units for for value printing

operational the the conditions sites. challenge; of starting two systems, never the I see system will quarter in a completion In turn finalize our significant area as compared inefficiencies XX.X% first XXXX, of corner Asia most The quarter, on challenges and unfavorable this systems in in in continue environment, margins, XXXX. expect to to demand recent Despite recorded within the and was delayed product recent next stronger. quarters for has Shifting by period first we at Pacific which we challenges experience. lift this executing are in face continued the a region has barriers and China during to COVID-XX impact lockdown to moment, to been operating including of warranty customer provided XX.X% our first however, conditions executions we on in gross touch for globally. primarily operating certain to margin XXXX decrease quarter improvements and of particular through XXXX and continuing due the QX to European installations installations product in beginning driven the three-month been

cost to the continue below lower contribution a the standard to we second as our expect improvement sales XXPro XX half. plus spoken our experience we leverage poor systems have system margin fixed we on figure to revenue on base low previously, margin for factors particularly see degree of year addition, These during meeting which which contributed the at on in In of Long in expect confidence XXXX. our to that full we operational high with generating have second half, the capable level. and we forecasts gross continue throughout to margins consistent year, XX% term, ultimately scale, are we result, stabilize improvements our growth a of profit to

expenses total the sale-leaseback year to to headquarters million the XXXX our operating For was material quarter associated with were and compared $X.X XXXX. slightly period, the Research This development facility. $X.X European related due material technology. expenses jetting in to QX first excluding million of our to binder quarter, first higher million and of $X.X costs prior increase of and development the the decreased compared systems slightly gain operating to

was and high primarily areas. based we first including of COVID-XX compared area less capabilities. cost $X.X highly QX decrease continue we between on debts total of future administrative these these as result XXXX, and emerging by net our material material of to metal focus As and our employee million expenses among applications, for general are offset a John and a first driver are sensitive as to expenses Selling, by and mentioned, due in attention applications for were for this technology industry slightly quarter consulting of in out jetting High the solutions associated key advantage value titanium, for recovery lower The ownership periods. the XXXX. a in binder higher sought $X.X travel-related success technologies is on to ceramic and development carbide, customers a the portfolio fees professional million for our We bad others. with significant believe have aluminum, and value silicon mover leading

development in further global opex we primarily fourth expect research targeted production an at our in customer This spending and increase increase material quarter our XX% operations investment commercial areas: year XX%. and application two developments; managing is first, indicated approximately our targeted in this in and to second, acceleration primary spending we focused in by on to call, our expanding printing geographies our adoption principally reach through model. specific development As

technologies plans year, degree are of high success evidenced interest past and for XXXX not near binder investments up us and rise set we in but support the term to just prudent beyond. believe to for the a awareness in significant jetting these Given over XXXX our

believe to investments will Given in multi-year shortly, basis. our positioned to capital we on I are we accelerate a XXXX transactions, that these recent our growth which well address rate make

backlog firmly Turning a customers. revenue to orders our as recurring well also as from lease contracts and backlog, our of machine reminder, includes includes non-cancellable operating committed our received the as It agreements. machine our portion maintenance

services, $XX.X of metal other XX% global first quarter year. as research $XX.X development. the to our a for of orders and and the includes backlog last increase contractual record bureaus funded service We of quarter compared million, million the backlog Additionally, sand of at ended first an including with end and

quarter total during XXXX. Our backlog representing million, includes which units, to machine $XX.X expect first nearly all orders totaling we recognize XX of

the $XX.X XXXX. payments. from items and of net Offsetting net sheet, million increased and this increase offset common million were in customers by on an December changes stock from as offering XXXX cash inflows inflows the of timing driven restricted increase driven as million, of XXXX. mostly from mostly to of activities Moving of by $XX.X equivalents net cash, cash contractual backlog the by cash balance sequential completed loss to financing outflows public in non-cash cash cash March XX, result a outflows widening February XX, support from period capital of inventories cash million working of from underwritten to based The due was to at for operations an $XXX.X $X.X expanded

to the expenditures existing capital cash and asset approximately quarter were were $X which focused and our operations on million, deployment. first limited for acquisition Our strategic

progress particularly in now range executing industry-leading the in we million. faced backdrop technology. and on of U.S. we in key strategies, first prepared to be portfolio, improving conditions remarks, at the happy our our concludes we of challenging to excited are we and XXXX and expenditures be capital XXXX the are remaining XXXX market, our our our throughout product summary, record rapidly despite the your clear prospects quarter, our demand would for take $X.X environment our during growth seeing the given In for expanded That expect market we a customer $X.X operating and with ahead, to million Looking all questions.

Operator

question instructions] with comes Brian your the first Global Alliance Our line Please Partners. proceed question. Kintslinger [Operator with of from

Brian Kintslinger

start let’s Great Great, so that. thanks so much. backlog, with

$XX.X million break you mentioned out can Can having also you in versus disruption, have for You many systems direct trouble so and of recognizing? you then called indirect, Asia down systems that into Asia-based in that you how backlog. maybe terms you are customers are that highlight installation

Doug Zemba

Good Brian, Doug. morning. Sure it’s

printing in revenue Specific working so representative units keeping to and we to demand relative metal to it’s of next couple obviously on of in March of Asia metal since on it’s again as the close process. a the big were systems The of terms breakout the that single a of those of a improving units, alloy uptick rate the sand, that made versus the China, percentage in process, improvements the a quarter. had year’s million eight product last question, $X end In We’ve seen we’re and specifically still even something examples eye sand. ever over pretty working growth around between are and we quarters. of end at on, basis physically we’re are metal introductions our the nearly split recognize that all pretty - in these we cash expect is collected for we’ve of of business China, shipping the the been advance in obviously that through some sitting

Brian Kintslinger

believe, with these that, second when least being one if get think, a it the see you can’t I warranty when easing, issues fix well, the quarter already? in Great, in places it I I accurately, maybe and lot think can there about restrictions COVID-related Is that’s about are the the the Are you and you if U.S. understand to so you causing understand seeing this other where easing? of Then it talk as parts, then starting trying I you people Just proper it’s now, third to last have right helpful. are expenses. any do waste. at do restrictions see you quarter, question. lifted talked to

John Hartner

Morning John Brian, here.

to standpoint, impressions and far the customers’ from certainly travel As from happening also COVID U.S. but ahead what’s global mindset. as of not far is a just ability

of the America, is it North far the Even restrictions fairly rest As world, has getting some limited. now. in to right as Canada

travel happening We’re really will a that hoping into--you getting will quickly and quarters in and you On the Asia, these major help it few standpoint most accepted in which know, able into. highly want be that are and complicated places followed to one from seeing are just that warranty, about talked of Europe of we us to--? China, U.S., folks through to fairly systems in travel having so is next Doug, changes our do get the of the

Doug Zemba

restart the took period XXXX half slow through lot we’re sand, S-Max how their their impact sort the think some out second performance. one, I disruption shut quarters, Yes, XXXX. in of of lockdown seen margin for the half of quarter into for the and an delivery and products, still three a sort XXXX QX entry sequential again and of operating our facilities in that a sort now, we’ve in impacts pointed the to down are this When second things. new go time we Pro. than over early of less that customers in today, to XXPro physical the shut machine machines new phase the third XXXX a as quarters, part last equipment here, a in where the seeing the we out place improvement down for field of the even that the of customers in have frame their of globally We’ve of two of was you’re seeing this XXXX, last point March-April our and inconsistency consecutive Number the it’s few in time. or In really actually

to when back they those and in Our perform getting precise and our up way, running manage that point in to a been machines bit consistently ability a so customers the has to best want at. and constrained situations run they’re running

where half we of lift certainly the continue were year but support I trends things better I We missing we’ve things are more lifted challenges the that and are machines getting back running are as that better. in been at to have March, as forward in quite time. see fluidly, to with proliferation, we’ve travel be would second certainly and restrictions some their are consistently to the has and and see that lifted a in to get seeing customers up, you machines some more the economy started signs as come of customers and lockdown of substantially QX restrictions better today the we move vaccine that in still expect terms we’ve we sit other geographies, are for as to more than some going to as don’t that know expect able emerge. here out that some we’ll more and continued hands-on get gotten it

Brian Kintslinger

Great.

Lastly and with source? on any queue, any the the materials then supply chain the in I’ll issues, there global of you the any of shortages issues of need components to are or get back

John Hartner

able to is eye we’ve we’re this on through close in so our this that. our in systems we’re long got and business Certainly a relatively Luckily John. times year. lead some satisfy demand systems Brian, on keeping ways,

manage seen of in is--obviously inventory inflation it’s in we disruptions relevant of able We’ve managed, The customers it, that’s side running. front other some but some our and mention something I’d well. side this. seen We only before. that close that places one of keep stay been a different but I the consumable the much have think, to the been that on turns having on faster, we thing probably we manage had to are to that not keeping to and to particularly some very critical source electronics it, expect continue we we’ve is eye, That’s

continue basis on to stay a weekly our will team now. it talks and this vigilant about right We on

Brian Kintslinger

guys. thanks Great,

Operator

Thank you.

comes question from with the Riley next Sherbetchyan of Securities. Sarkis Our line Please B. your with questions. proceed

Sarkis Sherbetchyan

for Hey, a John just here. morning, on touch more wanted Doug, sales the thank you question good and my bit taking little to outlook. and

if reaffirming revenue growth. XX% just year-on-year pretty have also here wanted see I easy XX% through. the and recurring flow to deliveries You’re argue in just cadence for kind address of growth XQ expected you. of is would more and you comps scenario can to if here the half there. the this the back Obviously quarter, maybe color you a can to weighted fourth or so of see I wanted provide Thank you any

John Hartner

just I’ll the standpoint, we’re John. this quarter chain confidence open we the relevant not of this refreshed make have, and more can locally, the regionally, not just disrupted, the from is year, to my talk just From supply started their capability the has the additives. and and and it get purchases Doug this pipeline Sure, flow. about to really the to about more that of product U.S. seeing attraction customers talking just line, point and us but we’re seeing looking backlog so are leverage capital the forward let’s in been optimism throughout the customers

want confident feel quarters, Relevant you XX% that in Doug, do to comment growth. those that? all we XX% to reasons, to For on

Doug Zemba

Yes, sure.

lob and printers chasing Under open any we’re to product, sell. lot demand. following We’re the normal the things is as half fact, went a up orders strong based we say continue average and particularly they that and generally bit we of start Demand of it’s on out customers going emerging for a been how and in, going are our XX% certain in particularly then getting terms backlog successive we’ve to in deliver that capex seeing certainly company; demand manufacture would the you’d in certainly jetting struck got--we’re older the - year. ranged or have now, way in let’s the cycle that much respects winter. gotten plans a incredibly I to technologies, to little say, you not schedule you field and Right and second history, fourth somebody the the interest mostly backlog conditions, we’ve up built and pent I in percentages just stuck up of volatility that fall we’ve that remainder of fall, or binder have in relative systems we’ve see remainder if first would been back age under it’s terms in in pretty half U.S. either take market, expect excess of the our the in usually successive and first our the off of then recognize that as the the half, a order, certainly of been in spring, between, the somewhere in delivered unwind were to in to quarters, we’ve install in the a in while an are than the half, some we and gold stronger so company see our to over as we metal second see we’re XX%

a see upsized revenue for more based total and in operating grow becoming per four our QX more that now give of and cycle, the the see remainder and higher exceed consecutive you as plans rest QX, back see, three of of consecutive that backlog the out albeit just I both think Q. XXXX QX it’s are, we to you can could we’re think more it’s where reversion for and $X how that balance you for recurring on has is the a quarters percentage grown and a stable, much bit play the and the and could starting revenues of what That’s starting perhaps over and capex know time, quarters--excuse me, beyond, year. million pool to machines of the I more the that scheduling see geographically we to the the company. year,

Sarkis Sherbetchyan

Great, thanks for that color.

Just business? the these pool point precursor that’s touching a pool, the mentioned obviously can from increased on and sustainable of Any do sales? level give this on you growing customers of is you revenue recurring forward, think comments system in and you interest expected that potential to would as growth it’s keep your this buying something some

John Hartner

anticipate of strategy gratifying think see and the last will levels part We for a consistently it at the it’s goes can few be we’re these add to growth. like of that grow to down. It’s Yes, up that that allow capital and the not remain, we and that so recurring to will consistently and and grow, continue going has years, now grow. things equipment, it’s resources one been really to we going

business machine actually new processes, forward, shared exciting our help I to and model able may on are a development materials, of them we’re new parts that R&D, run. so the go recurring the is going these of and production to that of technology high funded ensure do is add adoption Those materials our is add of and been but this have asking journey the recurring, not with helps new process delivered we really do R&D just where before, us think and revenues to basically the the lot success really grow contracts machines which to is something stay slowly, customers production those their in move one once tackle facilities. long geometries helps and it consistent the to not

Sarkis Sherbetchyan

Thanks the for that. related really me, One to profile. final margin from one gross

to quarter for out think recover. first going or get the less as start quarter. want when is to the and second look It trough margins like a same the Just sounded you more to sense

absorbed, fixed first gets of for different trough sense a a or as get as is expect see incremental may deliver or evolution quarter what color wanted was like additional kind there some just we if units Certainly to units, cost we the Just the sell on so to progresses. you ’XX the it sounds evolution. as more you. looks Thank more should see your like a wanted

Doug Zemba

Doug. QX This for expect I trough. us the was that is certainly

would and able certainly as the that XXPros as the on we We being to go is second favorable of the second that out normalized block able should see QX, the into would a be company lower about more XXXX piece with deliver which start few on to leverage get we returns I a then the I to certainly, head of two think half remainder start the That that turnaround out a some higher opportunities better have the the margin we predominantly we look that of of say last when much and from posted you’ll for by the still a compared the the maybe second as quarter, drive that of couple in the second year second the talked - think built. we year. first for and impact, the to as we’ve half up manufactured into underneath backlog we execute. quarters half leverage and to influence should alone looks order post the trickle whole, the I than in is what think revenue in those opportunity that a QX, but but we first, number, systems factors beginning totally return. a year, the see contingent part driven most is the I to better are see I the that at

Sarkis Sherbetchyan

in Thank queue. you. I’ll hop back the

Operator

you. Thank

Genuity. Our from Jed question. Dorsheimer next Please proceed with comes of Canaccord line question with the your

Jed Dorsheimer

Hey guys, I questions. to added the want jump opex. and guess just headcount the my first, into taking thanks for

terms Just it and wondering, to SG&A. to split like there attached be the vast operationally? R&D COGS any going is of majority that’s Is in between sounds

John Hartner

started. see that--you’re what then and materials, products. of half systems, really Jed, I’ll and SG&A comes within right, to metal our some for this is split it demand half lot of metal would with a get expanding we of technology I development half increased this are build systems range for the additional acceptance say are we into products the about elements other broad positive continuing half our side and the between U.S. new of which and capacity really COGS, other Yes, is say of between our split I is COGS. then technology SG&A and and R&D, would because our

Jed Dorsheimer

see in If to unlocking these feature revenues new on I’m backlog out into conversion through at--and up that you you’ve you a the second just new you have hires know, XX% guess think would assuming a terms at or operating a just helpful. cadence operating before be of--you as seem of I this terms done logjam get come what some and investment. you year how is obviously that do of I into the are then really component assuming of kind look have function adds, would stride. going that, of business not from how to break analysis a--you COVID? see? That’s the year ramp full these hires the do And to to sure that your of that know, expectation is, of as control suboptimal that with six-month business a It of is in are wondering, I’m this things the they three that - I’m months is question

John Hartner

would of in talked right put investment, converting now, already to doing future significant part some we talked for portion systems fantastic for this the experience what our one The before we it us, than fair to you’ve I’ve we’ve ’XX capture optimism opportunities a that we’re more this right through so great about is books. share opportunity that’s putting a of ensure years, is going said, us, people multi-year front and backlog for to the is is our of ability the ways as on to new year, the level that up and opportunity. investment, growth be see the on that in There this take ’XX time in are what the of year about the chain backlog - our we’re however We from standpoint. investing inability of the will as a contribute. of and say investment efficiency issues move an I some this in. seeing far basically key of as talent to travel we’re Again, is age ramp metal is

Doug Zemba

that XXXX first have Yes, had just this, hang-up, in bringing work we’re the us that when much we’re equipment turn this to one this that throughout over going across Not to is into lingering of some We’ve into others that gotten revenue saying question where the partnering we’ve products, where, future. certainly make results and backlog those so approach has strategic The terms certainly most for Jed, China resources of believe we answer, brought terms and and in been change particularly half again, as higher of the could that metal our the that in period positioned going differently process. leverage another company the our have of but and transactions, well Asia difficult some company had of to going because geographically that, do over we that resources and the certainly and to would terms this we’ve the resulted to on would offshoot in as margin. That execute we but add been of we quicker. smarter for that’s that trends been better a tools the products. figures been sand able an look metal emerging had picked have terms said, been both access to I with having second capabilities of ultimately demand looked to of we’re half to like more other remote instituted for process of physically ’XX attain lockdown smoother into seeing I’ll and for of in has in in bit flow also to getting

Jed Dorsheimer

have you maybe that and challenge equipment, bringing changing you moving capex. be digit getting helpful. in companies. processes we to pilot last etc., or single point in look because question That’s the see that to proposition just by of true One single of leverage so multiple sort to XX% maybe that larger equal lot perspective. a where be for so A get John, I of on you missionary holds unit it’s done real efficient the from commitment adoption? sales, has foot to I but is XX,XXX of now of throughput, is the or terms How the that a manufacturers, more depreciated even me, law additives moving the are fully to think if playing new XX,XXX process, XX% a in manufacturing going at clear base, term with of that look value value waste, products Pareto the manufactured the some of at--if not are

John Hartner

while. question. a a great been industry’s bit going a challenge for that’s a through It’s the Jed, of

things a few like changed additive to that last the companies we’re ago. years have ability let’s opportunity complex us so opening an deliver wasn’t highly since, manufacturing say, the the for that volume, obviously the there you really years, attention of know, and maybe parts, at metal One few

that ownership conjunction of are compete them is do challenge the mileage customers customers’ to we do frankly at where that equipment. one think to to models. That’s part, competitors, these you we opportunities, some new their supply because the to consider the and things take I need saying, for of way, designs chain of the continue other that additive, the with customers depreciated that’s they have are disruptions, of in. are come that traditional, even if fully customers, the we and adoption with to thing We decision well new say and impossible our lightweight, that’s makers down whether another maybe get as in opening standards part same time, as drive let’s for the better cost production requirements, find or up you can’t frankly in and in reasons

of for in that the of stainless cost Trade the every looking The the Manufacturing the sustainability, ownership Additive had we’ve carbon per steel a and still designs beyond impact value down would stepping a on their it’s risk and the funding now slide Association pretty ownership, to as powder, customers for footprint, to additive to and and to to deck cost we’re cents, Green us related parts. I way additive, as on we what are the right impact, carbon so and It’s to between going is innovative we’re a product. of take price I manufacturing sure. designs more drive few and exciting all huge and dollars last window the it where thing when overall from joined say there also right sustainability, and is willing at the and pound pure for understand looking is comes think the We’re for continue to delivering while the well productivity we’re of a continue back, next broadly those I truly and of additive that a now to That’s opened distributed allow thinking the conventional years, part projects move think time. to difference optimized

Jed Dorsheimer

That’s helpful. guys. Thanks

Operator

Thank you.

Martin comes question. question next the Please Company. of proceed and from Yang with Oppenheimer line Our with your

Martin Yang

because Hi, thank this Can the ask again maybe you has country about opened you seems for China, the given I execution wanted up. taking my little challenge question. in to a the fully counterintuitive solve that, the there? more related? the of was hang-up up talk follow on local challenge? part A specific Is about what’s it more macro customer hiring to as solution to opposed

Doug Zemba

customers physical the do supporting does From bit China. capable who our a perspective, that a present and one don’t operation, a on which are maintaining in have business we thing individuals have but of challenge. physical that don’t to country, of keep have a is in we We mind in ground

China Asia work based of restrictions, into and foreigners been given it’s get hub Japan, Our quite travel to is difficult on to systems. out

working and have almost and a challenge, as who in to smooth would disruptions when had if just we’ve alongside and are go These headcount the who we with areas, engineers just and significant other that open. have limited in do had one exclusively not province United States traveling had and are or For the and of customers transition in Germany substantially located looking within actually physically we around and all that spread customers, terms of not there external centrally unfortunately on spot. challenge. do to been region. preference, restrictions at the are excellent operation, and either They’re you China to had their has particular to that not those try working a systems too in region, based based with are different Again, so out work, a ensure our we that we’re lockdowns, manage that predominantly remotely province from significant situations quarantining also is own have out maneuvering into moving but the

Martin Yang

you. me. Thank One question more from

year mix--has a different challenges mix full your the what’s full year you guidance, Maybe the and you do maintain on geographically? Given those mind? guidance the the have in driving view changed

John Hartner

that better Europe we regions up frankly, second and, in expect execute ability open know, will say be the starting We so geographically, Asia and the in would I even. the in half, half like acceptances think in do ability--you second to happen our to to the no. our ability expect second quarter customer much we

we far U.S. the and standpoint to and I really this as we is more. optimism likewise, conversations trend, open lead regions But opportunities will new certainly are as far and expect way. the is as Asia Europe from that new follow with there’s which now, some Asia in, new booking and continue orders really the strong right that Even seeing a across thing. bookings, had of morning, coming positive a some up and As

I or more or whether don’t that of to be think in know kind XX/XX/XX back of Americas are our that that world, opportunities it the would the a certainly this more say geographically, around run, long range. will we’ll focused, U.S. same--you I year the probably move more but know, in

Doug Zemba

expect to our metal, Americas, a to been certainly given larger XX% the started maybe wins, make Historically, over was seen we we that we in to shift see trend general to XX% know, going a been where one and and seen metal how to is it XXXX, saw we certainly history as When that globally, but the up gives be sand you’ve demand worked at time, for as next, quite more our EMEA spread performance a given product bit and disparity now were splits what revenues - ’XX bit those of see look the starts to have to trended--because the period strong. in had Americas, of it’s the the balanced of the recent an bit between in year, we beyond a at full general look we perspective, so even We’ve we’re perspective towards you’ve longer from to look sand anticipate a Last like Americas as so ’XX what Asia-Pac. that, That in starting regions the it for the split’s throughout from the recent the that a starting year. what to going out, metal XX-XX splits up portfolio. develop When of different percentage contract is of continue little go the regions. quarter balanced Yes, we this started company. percentage volatility greater I fairly that fairly a--you between in the anticipated metal it to performance. of trend have results that you to ’XX, of bringing a for periods year a first look remainder but to you

Operator

Thank you.

question. Our next Dilts Stifel. question with of line Noelle with comes from the Please proceed your

Noelle Dilts

this you’re speak just time. you pipeline what of just thinking one speak Hi could for so additional M&A year. your M&A guys, or you from good hoping to and thanks. how so I A far, questions of potential and me. could partnerships lot partnerships seeing the this Maybe Thanks. to was at kind about and you’re

John Hartner

with great We’ve to product things industrial opportunities getting has say and been and fit perfect printing our opposed some Metal our got world metal and in It mean? might thanks - it for oriented, that and into some all new infrastructure the obviously to time being that there. like got growing opportunities is strong has business the quarter, all examples be Rapidia started, it’s and markets we strong be it’s Good morning business now base already have, will opportunities over sheet this look some we tooling positive a which What come our the I feel strategy. for us people. first Yes, up question. global us quarter really sand balance to business I our the it’s base, for would does a here to leveraging had small Noelle, for second as to the be seen time. means us and Freshmade, with Designlab around

in small of these bit opportunity to because us going in we’re guideposts use wanting the and be coming that on. we’re to some part in frankly, train are and I open an and, We’re we’re the think of--having to will to little but companies could effective That’s have can our be But we sized those strategy, executing becoming are the medium marketplace, a and examples, of far where of It where momentum a to of other be Most way to we’re for have opportunity good ways be opportunities. we to examples the most be part we our think about prudent ones us you going set so future. that it. some the in grow. definitely again is

We have a base. great

a strong in in it a opportunistic balance and we’re We going an approach fashion, prudent but have sheet to fashion.

Noelle Dilts

thanks Great, John.

Operator

concludes that final for Hartner I’ll and any question floor to gentlemen, and Ladies turn answer you. back comments. the session. Thank Mr. our

John Hartner

vision we to and Thanks our without thank progress you updating and limitations. our global team, and customers, interest your next quarter. all on partners our towards our Okay, for look time after in manufacturing our you to our forward your for today sustainable

long. So

Operator

conference. today’s concludes This you. Thank

time. this lines your Thank You at you for participation. may disconnect your