3D Systems (DDD) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Investor Relations - Monica Gould
• President and Chief Executive Officer - Dr. Jeffrey Graves
• Chief Financial Officer - Phyllis Nordstrom

TAKEAWAYS

• Revenue -- $99.3 million, representing 10.9% growth year over year on an adjusted basis driven by higher printer sales and material revenue.
• Adjusted EBITDA -- $3.1 million, an improvement from a loss of $10 million in the prior year period due to cost management and increased sales volume.
• Healthcare Solutions Revenue -- $49 million, reflecting 14.4% growth led by strong demand for dental materials and orthopedic implants.
• Industrial Solutions Revenue -- $50.3 million, up 7.7% on an adjusted basis as aerospace and data center demand offset declines in consumer-facing markets.
• Non-GAAP Gross Margin -- 35.5%, an increase of 420 basis points reflecting improved cost absorption from higher printer and parts manufacturing volumes.
• Non-GAAP Operating Expenses -- $36.1 million, a decrease of nearly 15% year over year following restructuring and cost-optimization initiatives.
• Aerospace and Defense Revenue -- Grew more than 50% year over year, excluding the Air Force development program, led by sales for space launch systems.
• Printer Hardware Systems Revenue -- Increased more than 25% year over year, reflecting accelerating adoption in strategic production applications.
• Parts Manufacturing Revenue -- Increased more than 25% year over year, contributing to growth in the medical technology and data center segments.
• Cash and Investments -- $120.5 million, comprising $91.8 million in cash and restricted cash plus $28.7 million in short-term and long-term investments.
• Total Debt -- $96 million, with $3.9 million in principal maturing in the fourth quarter of 2026 and $92 million classified as long-term.
• Q4 Revenue Guidance -- $100 million to $103 million, incorporating normal variability in customer investment cycles and program timing.
• Q4 Adjusted EBITDA Guidance -- Negative $2 million to break-even, reflecting shifts in printer material order timing throughout the year.
• Non-GAAP Diluted Loss per Share -- $0.06, an improvement from a loss of $0.08 in the prior year period.
• Industrial Strategic Markets Growth -- Nearly 50% year to date, as the company transitions toward higher-value industrial manufacturing opportunities.
• Littleton Facility Expansion -- 50,000 square feet, added to house metal printers and post-print processing equipment for industrial customers.
• Year-to-Date Non-GAAP Operating Expenses -- $112 million, representing a $31 million reduction compared to the first nine months of the prior year.
• Strategic Markets Growth -- 30% year over year collectively across medical technology, dental, aerospace, and data center infrastructure.
• Medical Technology Growth -- Management reported expanded production capacity for orthopedic implants to meet rising demand for titanium printing.
• Investment Casting Market Opportunity -- Approximately $20 billion globally, with the company utilizing additive patterns to replace expensive traditional hard tooling.

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RISKS

• Graves stated, "growing exposure to defense program timing may make quarterly results somewhat lumpier as we grow," referring to the potential for volatility in the Industrial Solutions segment.
• Graves warned that "The consumer-facing ones are shrinking," referring to the impact of inflationary pressure and geopolitical instability on sectors like jewelry.

SUMMARY

3D Systems Corporation (NYSE:DDD) reported financial results focused on four strategic markets: medical technology, dental, aerospace and defense, and data center infrastructure. Management indicated that additive manufacturing is shifting from prototyping to production in these high-value areas, while consumer-facing segments like jewelry remain under pressure. The company executed capital structure actions post-quarter, including an at-the-market equity program and a proposed debt exchange to extend maturities and transition to unsecured debt. The company also expanded its metal parts manufacturing capacity with a new facility in Littleton, Colorado, to support growth in industrial and healthcare applications.

• The SLA 825 Dual flagship system utilizes QuickCast technology to produce patterns using 50% less resin than previous generation methods.
• Management launched an at-the-market equity program to provide additional flexibility for capital markets access.
• The new 50,000-square-foot expansion in Littleton, Colorado, houses printers and post-print processing equipment for metal parts to free up capacity for medical implants.
• CEO Graves stated, "Through a prolonged industry downtrend, we reduced costs while protecting the technology and application investments that matter the most."
• CFO Nordstrom noted that printer material orders have been spread more evenly across the year, reducing the company's historical fourth-quarter concentration.

INDUSTRY GLOSSARY

• PEEK: Polyether ether ketone, a high-performance biocompatible material used for personalized bone replacements.
• SLA: Stereolithography, a 3D printing technology that uses a laser to cure liquid resin into solid parts.
• DMP: Direct Metal Printing, a process for manufacturing high-strength metal components directly from powder.
• MJP: Multi-Jet Printing, a technology used to create high-resolution wax or polymer patterns.
• QuickCast: A proprietary 3D printing build style for creating lightweight investment casting patterns with reduced resin consumption.
• Investment Casting: A manufacturing process that creates metal components using a pattern, which additive manufacturing can now produce digitally.
• Adjusted EBITDA: A non-GAAP financial metric that excludes interest, taxes, depreciation, and other nonrecurring or non-cash items.
• ATM Program: An at-the-market equity program allowing a company to sell shares into the market over time to raise capital.
• Refractory Metals: A class of metals, including tungsten, that are resistant to extreme heat and wear.

Full Conference Call Transcript

Operator: Welcome to the 3D Systems 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 should 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.

Monica Gould: 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.

Jeffrey Graves: Thank you, Monica, and good morning, everyone. Our third quarter showed clear continued progress. Revenue grew at double-digit rates year-over-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's 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 manufacturing uniquely provides, together with the part 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 disciplined execution.

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 recede, 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 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 med tech, 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 PEEK 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 Healthcare Solutions business, where we work directly with surgeons to plan procedures and deliver custom FDA-approved cutting guides and, increasingly, custom bone replacements. Med tech 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 into 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 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 systems 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 of 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. 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 use the alloys, casting processes, and manufacturing expertise they already trust, minimizing the need to requalify 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 nine, 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 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 is 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 QuickCast 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 SLA 825 is ideal for large components, the MJP 300W 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 3D printing. 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 platforms 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. With AI dramatically 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 focused intensely for the last three years on aerospace and defense and 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 DMP 350 Triple and the DMP 500.

The DMP Flex 350 Triple Laser Platform provides productivity, process control, and material flexibility required for many of the most demanding production applications. The larger DMP 500 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 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 qualification cycles, and limited production capacity create 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 med tech business, we cut the ribbon on an additional 50,000 sq ft that will house printers and post-print processing equipment for metal parts in our key markets. We will 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 will 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 would 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 are committed to it, and I remain very optimistic about the company's future.

With that, I will turn the call over to Phyllis and slide 15.

Phyllis Nordstrom: Thank you, Jeff, and good morning, everyone. I will walk through our third quarter financial results, including the progress we made on profitability, and then discuss our recent capital structure actions and fourth quarter outlook. Let us begin on slide 16. Before reviewing our financial results, I would like to remind you that we completed the divestiture of our legacy enterprise software businesses during 2025. Accordingly, the year-over-year comparisons I will discuss today are presented on an adjusted basis, excluding the impact of those divestitures to provide a consistent view of our operating performance across periods. With that, let us turn to slide 17. Consolidated revenue increased 10.9% year-over-year to $99.3 million.

All four strategic markets grew in the third quarter, collectively delivering nearly 30% year-over-year growth and nearly 25% growth year-to-date. This performance reflected positive momentum across our product portfolio. In aerospace and defense and data center infrastructure, we continued to see strong demand for our DMP 350 metal printer and our SLA 825 polymer printer. Additionally, parts manufacturing contributed meaningfully to revenue in med tech and data center infrastructure in the quarter, while higher material sales benefited dental and aerospace and defense. More broadly, printer hardware systems and parts manufacturing each grew more than 25% year-over-year, helping drive the quarter's double-digit revenue increase. Higher revenue also contributed to improved profitability.

Adjusted EBITDA was +$3.1 million, a significant improvement from the prior year period, reflecting higher sales volume, favorable pricing, and continued operating discipline. Moving to slide 18, I will provide additional detail on our business segments. Healthcare Solutions revenue was $49 million for the third quarter, an increase of 14.4% from the prior year period. Healthcare Solutions was driven by positive performance across both dental and med tech. In dental, material sales increased at a strong double-digit rate compared to the prior year period. Med tech benefited from continued demand for orthopedic implant applications, including spinal cages, knees, and shoulders. Our Personalized Healthcare Solutions, or PHS business, also delivered growth, led by surgical planning solutions in cranial and trauma applications.

Moving to Industrial Solutions, revenue was $50.3 million, up 7.7% from the prior year period. Within industrial, aerospace and defense and data center infrastructure both delivered strong double-digit revenue growth. Year-to-date, aerospace and defense, our largest industrial market, increased more than 30% compared with the prior year period. Revenue strength in these markets more than offset a double-digit decline in price-sensitive markets, including jewelry and certain areas of general manufacturing. While we continue to selectively pursue opportunities in these areas, our investment priorities remain focused on areas where we have greater differentiation and see stronger potential for profitability. These results reinforce our strategy of focusing our resources on key markets where customers value precision, reliability, and qualified production outcomes.

These demanding requirements align closely with our differentiated technology and applications expertise, and create meaningful barriers to entry. We are seeing these benefits in our results. Year-to-date, industrial revenue from our strategic markets grew nearly 50%, reflecting the progress we are making in shifting the business toward higher value, more differentiated opportunities. We remain encouraged by the long-term potential in these markets, while recognizing that the timing of customer investments and program-driven activity can vary from quarter-to-quarter. Now turning to slide 19 to review gross margin. Third quarter non-GAAP gross margin was 35.5%, an increase of 420 basis points from the prior year period.

Higher printer and parts manufacturing volumes improved cost absorption and operating leverage, while favorable product margins also contributed to higher gross profit. Importantly, the margin expansion reflects stronger operating performance as volumes increased across key areas of the business. The year-over-year comparison also benefited from the absence of certain non-recurring costs recorded in the prior period, including costs associated with the closure of a legacy facility and a one-time regenerative medicine accounting adjustment. Turning now to slide 20. We remain disciplined in managing our cost structure while investing selectively in the areas that support our strategic priorities. Third quarter non-GAAP operating expenses were $36.1 million, a decrease of nearly 15% from the prior year period.

Year-to-date, non-GAAP operating expenses were $112 million, down $31 million or 22% compared to the prior year period. Although operating expenses may fluctuate from quarter-to-quarter based on expense timing, we are seeing the benefits of the actions taken to reduce our operating costs and remain focused on maintaining that discipline as we grow the business. Moving to slide 21. The combination of higher sales volumes, gross margin expansion, and our lower cost structure drove Adjusted EBITDA to $3.1 million, a $13.1 million improvement from the prior year period. Year-to-date, Adjusted EBITDA was $4.4 million. This reflects the progress we have made through our prior cost reduction actions, together with higher sales and improved margins across products and markets.

Turning to earnings per share. Third quarter non-GAAP diluted loss per share was $0.06, an improvement of $0.02 from the prior year period. The difference between our GAAP and non-GAAP results reflected several key items, including costs related to a recent legal matter, a product-related asset impairment, and non-operating non-cash foreign currency impacts within APAC. Now turning to slide 22 for a summary of our balance sheet. We ended the third quarter with $120.5 million in cash and investments, including $91.8 million of cash equivalents, and restricted cash, and $28.7 million of investments. At quarter end, we had $96 million of debt.

Approximately $3.9 million will mature in the fourth quarter of 2026, with the remaining $92 million classified as long-term debt. Since quarter end, we have taken two important steps to strengthen our balance sheet and enhance our capital structure, better positioning us to support the business and invest in opportunities that can drive profitable growth. First, we launched an at-the-market equity program. The ATM provides us with additional flexibility to access capital markets while maintaining discretion over the timing and execution of potential capital raises. We also announced our plans to exchange our 2030 secured notes for new unsecured notes due in 2031, together with cash and common stock.

Upon closing, we anticipate this new structure will extend our debt maturity, transition us to unsecured debt, and give us greater flexibility in managing liquidity and allocating capital. Together, we believe these actions will enhance our ability to invest in the areas where we see the greatest opportunity, including expanding our parts manufacturing capabilities, continuing to advance our metals portfolio, and accelerating focus on our strategic markets. Additional details on this capital structure initiative are included in today's filings. Moving now to slide 23. Turning to our fourth quarter outlook, we expect revenue between $100 million and $103 million, with Adjusted EBITDA between -$2 million and break-even.

Following a strong third quarter, we expect fourth quarter revenue to remain on a positive trajectory. Our outlook reflects normal variability in customer order timing across several of our strategic markets, where purchasing decisions are often tied to customer programs, R&D priorities, and broader investment cycles. In addition, printer material orders have been spread more evenly throughout the year, resulting in less concentration at year-end than we have historically experienced. We remain encouraged by the positive trends we see within our markets, while recognizing that the timing and pace of customer orders can vary between quarters. As we continue shifting the business toward these growing areas, we believe we are building a strong foundation for sustainable, profitable growth.

For the full year, we expect our results to reflect meaningful improvement in the underlying profitability of the company. Higher revenue, gross margin expansion, and a substantially lower cost structure have established a more efficient operating foundation. Looking ahead, improved operating performance and greater balance sheet flexibility positions us well to selectively invest in the areas that can support continued growth and improved profitability. With that, I'll turn the call back to Jeff before we open the line for questions.

Jeffrey Graves: Thank you, Phyllis. To summarize, our focused strategy is producing results. Growth across our strategic markets is strong, operating margins are improving, and Adjusted EBITDA is strengthening. Most importantly, we are seeing increasing evidence that additive manufacturing is moving from prototyping into production across healthcare and industrial applications. Looking ahead, we will continue focusing our investments where our technology creates the greatest value, managing costs with discipline, and transitioning growth into stable profitability that is sustainable, cash generation, and long-term shareholder value. Moving to slide 24. Operator, we are now ready for questions.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star, one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star, two 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 poll for your questions. Our first questions come from the line of Troy Jensen with Cantor Fitzgerald. Please proceed with your questions.

Troy Jensen: Hey, good morning. Congrats on the improved results. Jeff, just quick for you, I missed the Littleton launch, but I just want to dive more into the metals, but thank you for the good update this quarter.

Jeffrey Graves: Thanks, Troy.

Troy Jensen: You are very welcome. Looking at your portfolio, I think it is just two platforms right now, so I would be curious if you have a roadmap for much larger formats and maybe where are you on supportless overhangs and number of lasers? I guess, to throw three questions into one, can you also talk about post-processing partners and selling more of a solution there?

Jeffrey Graves: Yeah. Both categories are great questions, Troy. On the additional printer platforms, absolutely. The decision there is, Troy, I would tell you, they are becoming a little bit more application-specific. If you look at it right now, we have the 350 and the 500. We are in discussions with folks ranging from 600 to 800, obviously a meter size. So we are beyond concept design on all of those sizes. We are trying to understand what is the right value proposition, what is the best volume and pricing for the components that are going to be produced, and make sure we dial in the size for that.

I think the whole industry, Troy, is going to move from this, from having generic sizes to having sizes that reflect certain market applications, because they are growing quickly enough now that you can design printers for specific ecosystems, if you will. I look at AI infrastructure. You have got the companies that design the chip-making equipment, if you will, the multi-hundred-million-dollar-type machines. The market potential for making components in those machines alone would justify its own type of printer, its own size of printer, if you will. Aerospace and defense is the same way. It depends heavily on what size components you are going to make.

If you are going to make missile parts that are over 1 m in diameter and 2 m high, you need to have a machine for that. Other applications are smaller components that can obviously be done in smaller footprints. It is a long-winded way of saying we do absolutely plan on launching additional platforms. They are all well beyond the concept phase and ready for detailed engineering and then move into manufacturing. We are waiting to see what the highest potential applications are, and those customer discussions are heavily underway right now, which is part of the reason, Troy, quite honestly, we wanted to make sure our balance sheet is in good shape, because those all require investments.

Once customers see you are going to have the machines, they want you to be ready to make parts and then to ultimately sell them machines. So we have tried to have a logical progression. We have a building now to make parts in that is expanded for industrial. We will soon have not only the current machines, but larger machines to go in that building, and we will sell them to people that want to buy parts at first at limited volumes, and then ultimately buy those printers for their own application. Those discussions, Troy, are all moving in parallel, and it is both in the AI infrastructure, the chip-making equipment folks, and in defense and aerospace.

Does that all make sense?

Troy Jensen: Yeah, that is great to hear. Thank you. If I could throw in a follow-up just for Phyllis. I think I noticed a second 10% customer in the quarter. Just curious if you could touch on that.

Phyllis Nordstrom: Yeah, so both of those customers, I think the last couple of quarters have risen to that level. They are both within our Healthcare Solutions business, supporting two different sides of the Healthcare Solutions business. Obviously, we do not talk about their names, but two very important customers for us and our key priority markets, and continue to have great partnerships with both of them.

Jeffrey Graves: Troy, with the kind of volume discussions that are underway right now for parts and then printer sales, I would expect the emergence on the industrial side of equivalent-sized customers over time.

Phyllis Nordstrom: Agree.

Jeffrey Graves: We clearly have two big ones on the Healthcare Solutions side right now in different parts of healthcare, dental, and orthopedic. On the Industrial Solutions side, I would be shocked if we did not have 10% customers in both AI infrastructure and in aerospace and defense.

Troy Jensen: Good to hear. All right, congrats. Good luck in Q4.

Jeffrey Graves: Thanks so much, Troy.

Operator: Thank you. Our next question is coming from the line of Greg Palm with Craig-Hallum. Please proceed with your question.

Greg Palm: Yeah. Good morning. Thanks. Maybe just to start in light of the news on the debt exchange, on the surface, it looks like the holders got a pretty lucrative deal. Maybe this is a good opportunity for you to sort of flesh out some of the details on the why now, and why does it make sense, and all that.

Jeffrey Graves: Greg, do you ever know a case where debt holders don't get a lucrative deal? I think that's their business. No, I got to compliment it. We have tremendous debt holders. 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 we are too. It was a timely time 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, my biggest concern right now, Greg, I would tell you, is making sure we have the capital for investing in growth right now, because the opportunities are going up by the day. I think we have good line of sight on the Healthcare Solutions side, so it's very predictable, both the denture growth and the orthopedic growth, our med tech business. The volatility, and it's a good thing, the potential volatility is on the Industrial Solutions side. When you look at the progress that additive manufacturing is making now in metals for both AI infrastructure and for aerospace defense, it's enormous.

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, because that's really where the payback comes from. So yes, you always wish these deals were cheaper and better and 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. 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. [Do you have] something to add?

Greg Palm: Nope. That is helpful color. It sounds like you are sort of doing this on the offense. I think it would be helpful for all of us to understand kind of how you see things playing out over the next couple of years, because we have not really been accustomed to growth here recent past, and I know you have returned to growth. As you look ahead, given the capital structure, given all these opportunities that are out in front of you, the Littleton launch, what is going on in metals, how do you see that translating into growth over the coming years?

Jeffrey Graves: There are two factors that you got to weigh against each other, and time will tell the timing on each one. For our four key markets that we are in for growth, again, two in Healthcare Solutions, two in Industrial Solutions, I think the healthcare side, very solid double-digit growth going forward and fairly predictable, okay? It may not be linear, but it is fairly predictable over the next two to three years.

The industrial side, I think, is going to come in waves because there are 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. The opportunities are there. The hard thing to predict is timing. If you look at our aerospace and defense, I think the number we put out was 50% growth. That may not happen every quarter, year-over-year, but it is clearly a market that is growing really fast.

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. They are earning their way in right now. It is earning its way in. But the added design flexibility they have to change designs. It is an unfortunate thing that the world is so war-prone right now. There are 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 would not be nearly as easy without additive manufacturing, and that is why I think we are positioned really well. 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 have got to have the cash to say, "Yeah, I will put in the capacity, and I will buy the raw materials to build the printers for you." Because when they need it, they need it. If you are there, it is really sticky business.

If you are not there, you miss the window, then you open it up for someone else to come in. I love our model right now. We invested through the hard years, especially in metals. I would tell you, I am really proud of our metal technology, and it is built off of titanium and into other materials. 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. We get really solid growth, double-digit growth, I believe, on the Healthcare Solutions side, and I think we will 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 are exposed to on the industrial side that are more consumer-facing. Things like, that we have traditionally been pretty big in, like jewelry and service bureaus and stuff. Those guys, number one, they are 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 is a lot of problems in that industry. We have some exposure to that industry.

That exposure will go down quarter by quarter, year by year, as the other industrial markets grow, but it is a headwind for us. Now, nicely, our printing platforms apply equally well to those markets. If they are opportunistically, if they are growing, it is great for us. If they are shrinking, it is a headwind, but it is now outweighed by, clearly, it is being outweighed by the growth in the industrial, the high-end industrial markets, defense, aerospace, those, because overall the company is growing. If you look at the difference though between those markets, though, it is 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. That is the way we look at it. So I am 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 have got to bridge that period, make sure we have got the cash to invest for the growth. That is what brought this whole timing together. I am 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. So I am out of breath. Phyllis, anything else to help that? Greg, did that answer your question?

Greg Palm: I think that covered it. All right. 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. I was maybe hoping you can just update us on the progress there and maybe the broader opportunity with that customer and others.

Jeffrey Graves: Yeah, Greg. That was in the rocketry space. That order is filled and flying. I mean, it was a tremendous opportunity to get. That's more to my point about having, being able to exploit these opportunities. We were able to take an order, ship it within a series of a few months, get the units running and operational. Today, they're making parts that are flying into space. That's the pace that industry's 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? For 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. The margin potential there is very nice with the consumables, as you know. The order's filled. They're very pleased with the product. I think we're the recognized leaders in the field. 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, regardless of the customer that's sitting there, you just look at the total global rocketry launch pace today, it is moving so quickly.

It'll 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.

Greg Palm: Yep. Okay. All right. Thanks for the color.

Jeffrey Graves: Thanks, Greg.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star, one on your telephone keypad. Our next questions come from the line of Patrick Muth with Needham & Company. Please proceed with your questions.

Patrick Muth: Hi, good morning. Thank you for taking my question. This is Patrick Muth on for Jim Ricchiuti over at Needham. You have typically seen a seasonal pickup in hardware sales in Q4, but it seems like that pattern has been a bit more variable the last couple of years given macro conditions. Are you guys seeing early signs of normal seasonal strength playing out this year? If so, which markets or product lines are leading that?

Jeffrey Graves: Yeah, Patrick, it has been a consistent trend over many years, probably a little bit dampened last year because of the recession that our industry had. I would expect it will return, but I think over time, Patrick, what is going to happen is there is going to be more leveling of quarter-to-quarter performance. Companies will always have extra capital at the end of the year to spend, but as you look at the markets today, the consumer-facing markets are really tough. I do not think they are going to have an uptick in capital spending from what I can tell. The defense-related ones, aerospace, those guys, they have got a lot of capital to spend.

Some of it will be seasonal, but remember, a lot of those defense programs are tied to the federal budget, which is an October budget. I think you'll see, as aerospace defense grows, you'll see that Q4 spike spreading out more. Maybe there'll be more into Q3. With the softness in the consumer side of the business, I think that this year could be more muted. That's why we're being reasonably conservative about our growth projections for Q4. We'll be growing. I don't doubt that we'll be growing. But in terms of the magnitude of that, we just don't want to get out over our skis in predicting it to be more aggressive than what we can see.

Hopefully we'll be surprised, but we'll see how that goes. Okay?

Patrick Muth: Okay, great. Thanks for the color on that. Then maybe quickly, how are you guys thinking about OPEX in Q4? You've noted that OPEX has stabilized over the past couple quarters following the completion of your cost reduction initiatives, but should we expect that level of discipline to hold throughout the rest of Q4, or are there any seasonal factors or year-end investments that can move OPEX up or down from where it's been running recently?

Phyllis Nordstrom: Yeah, that's a great question. I would say yes. At the end of the year and early beginning the following year, we typically in Q4 and Q1 see slightly higher OPEX. I think overall you're going to see the discipline carry through. I think the first half OPEX spend that we had is pretty indicative of what you'll see for the back half of the year. So that's how I would look at it for 2026 performance.

Jeffrey Graves: Yeah. Patrick, I want to compliment Phyllis on this call. She's done a really nice job. We have a very lean infrastructure now. There will be fluctuations in cost just due to normal cycles of insurance payments and all the annual kind of stuff that rolls through. But we're built to run lean, and I think that'll continue. Obviously with volumes, there'll be some parts that will scale with that, but we're built to run lean, and we expect more operating levers going forward.

Patrick Muth: Okay, great. Thank you guys so much.

Jeffrey Graves: Thanks, Patrick. Give Jim our best.

Operator: Thank you. We have now reached the end of our question and answer session, and with that, I would like to hand the call back over to Dr. Jeffrey Graves for any closing comments.

Jeffrey Graves: Great. Thank you all for joining us on our call today. We look forward to updating you on our progress following the close of the fourth quarter and the fiscal year. Have a wonderful holiday period. Thanks for the call.

Operator: 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.

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