Hello and welcome to the 3D Systems Conference Call and audio webcast to discuss the results of the Third Quarter 2021. My name is Kevin and I'll facilitate the audio portion of today's interactive broadcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to John Nypaver, Vice President, Treasurer, and Investor Relations for 3D Systems. Please go ahead, John.

Thank you, Kevin. Good morning and welcome to the 3D Systems conference call. With me on the call are Dr. Jeffrey Graves, our President and Chief Executive Officer, Jagtar Narula, Executive Vice President, and Chief Financial Officer, and Andrew Johnson, Executive Vice President and Chief Legal 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. For those who have access to the streaming portion of the webcast, please be aware that there may be a few seconds delay, meaning that you will not be able to pose questions via the web. 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 last night's 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, which are both available on our Investor Relations website. You will find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures. Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2020. Now I'm pleased to turn the call over to Jeffrey Graves, our CEO. Jeff.

Thanks, John, and good morning everyone. I will open today's call with a phrase that I'm sure many of you are saying to yourself this morning as well, and that's, wow, what a difference a year makes. At this time last year, we were seeing only the very beginning of what we all hoped would be a sustained recovery from the worst of the COVID pandemic. At the same time, here at 3D Systems, we were in the midst of executing our 4-phase transformation journey. We've reorganized our Company into 2 segments, healthcare and industrial solutions. We had restructured our organization to gain efficiencies, and we had announced the first of our divestitures of non-core assets. As we speak to you today, a year later, these first 3 phases are complete. We'll now focus singularly on additive manufacturing with a lean, nimble operating structure, global reach, and breadth of metal, polymer, and biological technologies that's unparalleled in the industry. These attributes, brought together through an intense focus on our customers' most demanding applications, have proven to be a powerful driver of value creation as reflected clearly in our organic growth rates, our profitability, and our operating cash performance, all of which we will recap for you in a few moments. While we're pleased with this performance, even more exciting is that we're now in the fourth and final stage of our transformation, namely investing for growth. Since last quarter, we completed the last of our divestitures, retiring our debt and stockpiling over $500 million of cash on the balance sheet. We subsequently announced 2 acquisitions that embody our strategic focus on growth, which is to invest in businesses that drive the adoption of additive manufacturing, solve customers' most complex application needs, and generate high-margin recurring revenue streams that are critical to sustaining value creation. The first of these acquisitions was Accton, a unique software company that's emerged as a recognized leader in the creation of a new breed of intelligence, cloud-based manufacturing operating systems. The driver for this acquisition is very simple. Customers across our industrial and healthcare segments are now anxious to accelerate their adoption of additive manufacturing in full-scale production environments. But in doing so, they're facing significant challenges in how to incorporate these technologies into their existing enterprise systems. To date, they've relied heavily on spreadsheets and highly skilled engineers to run production applications. This is obviously too slow, too inefficient, and too expensive to scale as production volumes ramp up. While we and others have made strides in optimizing and to some extent automating the performance of single printers or even a collection of like-kind printers working in parallel, our customers' challenges extend well beyond this. What they need is a manufacturing system that can easily and intelligently incorporate a mixed fleet of printers, often from a variety of manufacturers. And in addition, one that will incorporate all of the surrounding digital production systems on the shop floor, such as post-print thermal or mechanical processing, robotic motion systems, and automated inspection systems. Accton not only provides this linkage, it goes a step further in applying cloud-based AI to optimize the entire workflow, then links this workflow to the customer's existing enterprise software, such as those provided by Salesforce, Oracle, Microsoft, or SAP. The end result is that Accton not only links, optimizes, and tracks a customer's unique operational workflow at an individual component level from raw material to finished and inspected parts, but it also builds in the flexibility to substitute new printing, finishing, and automation technologies that will undoubtedly be introduced in the years ahead. These attributes, unique to the Accton platform, will remove a significant barrier to the large-scale adoption of additive manufacturing in production environments. And for that reason, we've opened the system to the entire industry, which we hope will accelerate market growth for everyone. In addition, for the first time in our history, we will now make available our full complement of market-leading metal and polymer printing software platforms to all others in the industry, which we hope will accelerate the introduction of new printing technologies to customers around the world. Importantly, as with all software platforms that span an entire industry, we're committed to Accton continuing to operate in this model, independent, with the supreme commitment to customer data protection and confidentiality. I'm happy to tell you that we closed the acquisition on November first, and the reception by our customers and partners alike has been very positive. Before I move to our most recent and incredibly exciting acquisition, let me step back and explain how we look at our Company holistically, which I believe is much different than others in this industry. In the decade since 3D printing was invented, we and our competitors have routinely defined ourselves as hardware and material developers, with our products sold broadly to customers around the world. While this is natural when any industry is young and when the product is mainly consumed in small quantities by labs or prototype facilities, as the industry now matures, and production environments are targeted, successful companies will need to adapt their entire operating model to reflect their deepening integration with specific markets and customers. If you don't, you will remain simply a vendor and not a true partner to your customers, which will ultimately be reflected in your organic growth rate and profit margins. So with this in mind at 3D Systems, beginning a year ago, we changed the way we defined ourselves by reorganizing the entire Company around key markets. And within those markets, key vertical segments that we believe will derive the most value from their adoption of additive manufacturing. We began with the creation of two business segments, healthcare and industrial solutions. Using a strong application focus, these two businesses each integrate our printer, material, and software technologies in unique combinations to solve a customer's product need. Once complete, our customers can then ask us to scale the process for them to a certain production level, and then with increasing demand, they can elect to have us enable a manufacturer of their choosing to continue scaling to high volumes. This transfer of the workflow involves providing printing systems, materials, and software along with the process definition that results in a seamless transfer of capability to the chosen manufacturer, whether it's the OEM themselves or a contract manufacturer of their choosing. So fast-forwarding to this year, with the acquisition of Accton, we expanded our software capabilities into what we call broadly digital manufacturing software, which as we described earlier, enables a rapid and efficient adoption of additive manufacturing in high-volume production environments. This operating model has been very well received by our customer base, and we expect it to fuel exciting organic growth in the years ahead. Most recently, we've added a strong biotech organizational focus and invested significantly to bring our emerging biological technologies to laboratory and human applications, details of which we'll cover in a few moments. So in short, these are our 5 core market segments that you'll hear us talk about moving forward. While each of the 5 will adapt to the needs of their customers, each will also leverage our core technologies of hardware, software, and materials in the unique manner needed to fulfill their customer application needs. Let me illustrate this approach using our healthcare business as an example. In the mid-1990s, 3D Systems pioneered Medical Modeling, which is the printing of highly detailed anatomical models from digital images. These models have proven instrumental in support of complex surgical procedures in a highly publicized application of our modeling technology, which was beautifully documented by CNN's Dr. Sanjay Gupta. We created a number of medical models to assist in the separation of conjoined twins, Jadon and Anias McDonald, who were born with the extremely rare craniopagus condition in which twins are joined at the head, sharing not only the skull and vasculature but portions of the brain itself. The modeling use for the surgical planning was vital to the success of Dr. James Goodrich and his team. They had in separating the twins, both of whom are alive and living independently today, many years later. To date, our medical modeling technology has supported dozens of similarly complex operations around the world, along with hundreds of others, and it continues to expand each year. Building upon this foundation and investing in point-of-care infrastructure that supports this growth, we deepened our surgical support over the next decade, and by 2005, we were working with surgeons to design and manufacture customized patient-specific surgical guides and instruments using 3D printing. As this portion of the business, in turn, grew, we expanded our scope once again, this time to include actual patient-specific implants, which offered an even larger market opportunity. Fast-forwarding today, we offer the broadest range of FDA cleared capabilities for modeling, surgical planning, and patient-specific medical implants, which inspires our customers to continue expanding their partnership with us year after year. While we're very proud of our progress, by now redefining ourselves as a healthcare business in this example, and leveraging both our critical infrastructure and channel partner relationships, we can broaden our scope more aggressively to now include other parts of the human skeletal structure. And importantly to advance these applications in parallel, instead of uncertainties, as we have in the past. This provides us the opportunity to bring benefits to a much larger patient population and at a much higher rate than ever before. This is the power of redefining ourselves as a healthcare business, and now simply a provider of printing technology to healthcare customers in the market. Of note, our healthcare business grew over 28% in our most recent quarter and over 44% on an organic basis, which disregards the businesses that we have divested. This remarkable growth rate is a testament to our increasing momentum in this exciting market. So building upon this discussion of our healthcare business, I would like to end my commentary for today on the remarkable emerging market of bioprinting and our announcement last week of our acquisition of Volumetric Biotechnology. This company, under the inspired leadership of Dr. Jordan Miller, brings specific expertise in biomaterials and regenerative medicine that combines synthetic chemistry, 3D printing, micro fabrication, and molecular imaging to direct culture human cells to form more organized, complex organizations of living vessels and tissues. 3D Systems has been a pioneer in our industry by focusing resources on regenerative medicine since 2017 when we began a joint development program with United Therapeutics Corporation to develop the capability to print capitals for human lungs using a process we call Print to Perfusion. Once developed, this bioprinting technology can be applied to other major organs in the human body as well as a wide range of other human and laboratory applications. We've made significant strides in this unique technology, and as a result, we recently announced an expansion of our development program with United Therapeutics, an expansion that includes increased funding and an extension to 2 additional organs. This program expansion reflects the progress that our joint team has made in this groundbreaking endeavor. By acquiring Volumetric, we're adding critical skill sets to our 3D Systems team, which we feel are a perfect complement to ours, bringing strong biological expertise and cellular engineering skills along with highly creative bioprinting systems to our development group. As I realize this is an entirely new area for many that have followed our company for some time, let me quickly recap our regenerative medicine strategy and the market opportunities that we're addressing through our unique bioprinting technology. The first opportunity is the printing of human organs, beginning with the lung and expanding from there to 2 additional organs. We're pursuing this as a joint program with our partner United Therapeutics. The ambitious goals that we've set for this program are driving quantum advances in our technology and laying the foundation for the rest of our regenerative medicine efforts. In our second regenerative medicine market opportunity, we're taking the core unique disruptive technologies developed for the bioprinting of human organs and applying them to other parts of the human body. There are tremendous numbers of these applications, ranging from the printing of human skin for burn victims to soft tissue for breast reconstruction and repair to critical blood vessel and bone replacements, and many, many more. We're now forming partnerships focused on each application area where we can combine our bioprinting expertise with the appropriate application experts to provide unique and highly impactful solutions for people in need. We refer to the second market vertical within regenerative medicine as human non-organ bioprinting. Our last but certainly not least market opportunity is to extend our bioprinting technologies into research labs, providing advanced printing systems and unique biological materials to those who study the basic science of regenerative medicine and in the pharmaceutical laboratories, where the ability to print high-precision, 3-dimensional vascularized cell structures can be used for the development of new, more effective drug therapy. Our acquisition of Volumetric and their unique capabilities in combination with our own will allow us to expand the pace of our efforts in all 3 of our regenerative medicine markets. It amazes me to think that these revolutionary applications enabled by our 3D printing technologies, applications that we are uniquely positioned to deliver with our extensive history in advanced 3D printing technologies, our material expertise, our application development expertise, our deep understanding of FDA and other regulatory processes, and now, our biological and cellular engineering capabilities. We believe that in the years to come, bioprinting will take its place as a very significant business for our Company, bringing critical relief to patients in need of life-saving procedures and great value to our Company's employees and our shareholders alike. Moving from our strategic growth investments to our most recent quarterly performance, I'm very pleased to say that we've continued to execute well on our core business. With continuing strong demand, our operational challenges have largely centered around global supply chain and logistics issues, which are unfortunately continuing to plague most companies around the world. Our solid execution in the face of these challenges in the third quarter resulted in strong double-digit growth, with revenues increasing by 15% before adjusting for divestitures. When these adjustments were made, which has a much better reflection of our core business performance, revenues were up over 36% versus 2020 and up over 20% versus our pre-pandemic 2019 third quarter, a benchmark we consider very important. Looking at our major business segments, our industrial solutions segment is continuing its rebound, seeing strong performance, particularly in jewelry, automotive, transportation, and general manufacturing. In healthcare, we see continuing strong demand for personalized health services, as well as solid performance in general. Jagtar will discuss shortly. In addition to the strong revenue performance, EBITDA climbed by over 125%. We generated positive cash from operations for the fourth consecutive quarter, the first time this has happened in four years with our cash generation in addition to the proceeds from divestitures. We built a sizable cash balance by the end of Q3. A portion of these funds will be used to fund the strategic growth initiatives I mentioned earlier, but we will still be left with a significant amount of liquidity to pursue additional opportunities. As I'm sure it's clear to everyone, I am very excited, not only about what we've accomplished this last year, but even more so about the future. Our focus on growth in this final stage of our transformation has only just begun. With that, let me turn the call over to Jagtar, who will now describe our third quarter results in more detail. Jagtar.

Thanks, Jeff. Good morning, everyone. For the third quarter, we reported revenue of $156.1 million, an increase of 14.6% compared to the third quarter of 2020. Our organic revenue growth, which excludes divestitures completed in 2020 and 2021, was 35.9% in Q3 2021 versus Q3 2020. Since the third quarter of 2020 was the beginning of the economic reopening from the COVID-related shutdowns, we think it is valuable to compare results to Q3 2019, which was untainted by the pandemic. Again, excluding divested businesses, we're comparing on an apples-to-apples basis. Our revenue in the third quarter of 2021 was 21.2% higher than pre-pandemic Q3 2019. As we have discussed previously, with the completion of our Simbionix and on-demand manufacturing divestitures in Q3 2021, we have completed our planned divestitures and now focus on the performance, growth, and investment of our core additive manufacturing business. I would like to note that post-divestitures we continue to generate nearly 2/3 of our revenue from our recurring revenue streams. These high-margin lines of business highlight the strength and diversity of our core business. Our ability to weather various economic cycles, and the area around which we will continue to make strategic investments. Turning to earnings, we reported GAAP Net Income of $2.34 per share in the third quarter of 2021 compared to a GAAP loss of $0.61 in the third quarter of 2020. The year-over-year improvement was driven by gains on divested businesses, as well as the goodwill impairment charge we took in the third quarter of 2020. For our non-GAAP results, we reported non-GAAP income of $0.08 per share in the third quarter of 2021 compared to a non-GAAP loss of $0.03 per share in the third quarter of 2020. The year-over-year improvement reflects higher revenue, lower non-GAAP operating expense as a result of the cost actions we took last year. Now, I will discuss revenue by market. Healthcare grew 28.3% year-over-year and decreased 7.8% compared to last quarter. The decrease was primarily a result of the divestiture of the Simbionix medical simulation business during the quarter. Adjusted for divestitures, healthcare revenue increased 44.5% year-over-year as a result of strong demand for dental applications, in both printers and materials. In fact, the last 4 quarters have seen the highest level ever of dental material sales compared to any prior 4-quarter period. Our industrial segment generated revenue growth of 4% to $79.7 million compared to the same period last year and was flat to last quarter, reflecting the divestiture of the on-demand manufacturing parts business during the quarter. Adjusted for divestitures, industrial revenue increased 28.1% year-over-year and 2.1% over the last quarter, with the increase driven by higher demand in both printers and materials in a variety of sub-segments, most notably jewelry, automotive, transportation, and general manufacturing. Now, we turn to Gross Margin. We reported Gross Profit Margin of 41.2% in the third quarter of 2021 compared to 43.1% in the third quarter of 2020. Non-GAAP gross profit margin was 41.5% compared to 43.2% in the same period last year. Gross Profit Margin decreased primarily as a result of businesses divested in 2020 and 2021. If we exclude the impact of those divestitures, gross margins increased 80 basis points in the third quarter of 2021 compared to the same period last year, driven by 2020 cost actions and the higher revenue, which resulted in better capacity utilization. As evidenced by our strong performance this year, demand continues to be strong for our products in both business segments. The biggest challenge we face isn't unique to 3D Systems. We are all aware of the supply chain issues that are affecting everyone, from multinational corporations to small businesses, to individuals on Main Street. In fact, our Q3 revenue, while strong, was impacted by supply limitations on certain products. Consistent with last quarter, we continue to see a tightening of cost and availability for certain components that go into our products. Our team is doing a heroic job as it manages through these challenges. Supply chain, and not end customer demand, remains the key headwind in our business, and it's our strong focus as we finish out the year. We have taken steps to mitigate the economic impact, such as adding alternative sources for key components where possible. We have seen some cost impacts from the supply chain constraints, especially in increased freight charges, and have instituted a temporary increase for our customers on certain types of purchases effective in the fourth quarter. Year-to-date, our non-GAAP Gross Profit Margin was 42.6%, and we expect full-year Gross Profit Margins to be between 41% and 43%. Operating expenses for this quarter were $81.5 million on a GAAP basis, a decrease of 35.4% compared to the third quarter of 2020. This year-over-year decrease reflects a goodwill impairment booked in Q3 2020. Our non-GAAP operating expenses in the third quarter were $54.1 million, an 8% decrease from the third quarter of the prior year. Compared to the second quarter of 2021, non-GAAP operating expenses decreased 2%, primarily driven by lower R&D spend. Adjusted EBITDA, defined as non-GAAP operating profit plus depreciation, was $16.3 million or 10.5% of revenue compared to $7.2 million or 5.3% of revenue in the third quarter of 2020. Our disciplined approach to growth, cost management, and focus on our core business is resulting in continued strong adjusted EBITDA. Turning to the Cash Flow Statement and Balance Sheet, we are pleased to report $502.8 million of cash on the Balance Sheet, an increase of $418.4 million since the beginning of the year. The increase was primarily driven by proceeds from the divestitures of the on-demand parts business and our medical simulation business, but supported in no small part by our extremely strong cash generation from operations. During the quarter, we generated $20.7 million of cash from operations, marking the fourth straight quarter of positive cash from operations. This is the first time in 4 years the Company has achieved 4 straight quarters of positive operating cash flow and reflects a strong transformation of our business. Now that we have demonstrated consistent profitability in cash generation, and post-divestiture have $0.5 billion of cash on hand, we are in a prime position to continue growing the Company by taking a disciplined approach to invest in organic and inorganic solutions that will solve customer's complex needs, drive adoption of additive manufacturing, and generate high margin recurring revenue streams. We have previously announced some of those growth opportunities, namely our acquisitions of Accton, which closed November first and Volumetric Biotechnologies, which is expected to close in the fourth quarter. The cash considerations for these will total approximately $130 million, leaving roughly $370 million of cash. These acquisitions will position the Company for strong growth in our core strategies in both high-margin software to enable the adoption of additive manufacturing, as well as the adoption of advanced 3D printing technologies in the field of regenerative medicine, where we believe we will be a leader in the market. As I conclude my remarks, I want to reflect on the past year. I joined the Company at the beginning of the third quarter of 2020. At that time, the Company was just beginning its transformation. We had just announced results for the second quarter of 2020 that included negative operating cash flow of $21 million for the first half of that year, cash and cash equivalents on the balance sheet of only $64 million and $22 million of debt. Now fast-forward to this year and the transformation we've been through. We have generated over $60 million of operating cash this year through the third quarter and ended the quarter with over $500 million of cash and cash equivalents with no debt. We are 100% focused on additive manufacturing and growing strongly in our core markets. We are able to make smart and strategic investments to support our core business and our rapidly advancing key technologies into new segments, such as regenerative medicine. I continue to believe that we are uniquely positioned in our industry with a strong balance sheet, growth, cash generation, and a suite of technologies that continue to be in demand by our customers. Finally, we wanted to provide an update on our Investor Day event. You may recall that we have scheduled an event for September 9th in the Denver, Colorado area. Out of an abundance of caution for the safety of our investors, analysts, and employees, we postponed the planned Investor Day as COVID infection rates increased this past summer due to the Delta variant. We are now seeing hopeful signs of progress, with once again declining infection rates, rollout of booster shots, and a newly announced pill that seems to offer promise of dramatically cutting the hospitalization rates from infection. As a result, we are in the early stages of planning an updated Investor Day with an aim for the first half of 2022. We will provide an update as soon as possible and look forward to sharing our long-term growth strategy in more detail with the investment community. With that, I will turn the call back to Jeff.

Thanks, Jagtar. Both Jagtar and I have covered the remarkable progress that we've made over the last year. We've created value for our investors, our customers, and our employees by remaking the business. Our growth and profitability distinguish us in the industry and have made us a key partner for the growing number of organizations that are considering additive manufacturing. At the same time, our transformation has also made us a more exceptional place to work, to drive the future of additive manufacturing. And as a result, more talented individuals are becoming a part of the new 3D Systems each day. However, as much as we've accomplished this last year, it's more about the future. We will continue to be a valuable solutions partner with customers and deeply integrate with them as they adopt our solutions and technologies. We'll also invest in our business and drive our solutions capabilities in the 5 key areas I spoke about earlier. I'm truly excited about the depth and breadth of technology we bring to our markets and application expertise. So with that, I'll now open it up for questions, Kevin.

Thanks. We'll now be conducting a question-and-answer session. If you'd like to be placed in the question queue, please press star one. One moment, please, while we pull for questions. Our first question today is coming from Troy Jensen from Lake Street Capital. Your line is now live.

Hey, gentlemen, congrats on a great result here.

Thanks, Troy.

I want to ask you a few questions, Jeff. I missed the Volumetrics call, but I saw the email from John about the three areas you mentioned: organ printing, non-organ printing, and lab and research work. I'm not asking you to size them, but could you help prioritize which ones are bigger? When I think about Bio, I see the materials as the key factor, while the bio products seem less significant. Can you clarify which facets are most important?

Those are two interesting questions, Troy, and let me address both. I'll begin with the second one, which is the printing technology itself. It's truly remarkable. We started this journey in 2017, initially believing it would be impossible to achieve the necessary resolution for printing along a scaffold. We are talking about micron-level precision in a very intricate structure, akin to the size of a human lung. The complexity and detail are incredibly challenging, especially since we are using biomaterials—essentially the building blocks of the human body—that have seldom been printed before. It took us several years to refine this technology to the impressive level it has reached today. This advancement has instilled confidence in us and in United Therapeutics, enabling us to expand into printing other human organs. It's important not to underestimate the printer technology. We are not only developing this technology for bioprinting from scratch, but we are also utilizing some of our previous work in photopolymer printing, which has been advantageous. This kind of synergy between technologies is beneficial as we move forward. From a materials perspective, we are working with unique biological materials and will continue to focus on these unique biological aspects. The acquisition of Volumetric was driven by their biological expertise, which we needed. They also have excellent printing capabilities but approached it with a biological focus. Their cellular engineering and biology expertise is essential for our growth in this field. We can now apply this knowledge not only to organ printing but also to non-organ components of the human body and laboratory applications. This technology is extraordinary, Troy. When these organs and other items are produced for patients, they are primarily made from the patient's own cells, ensuring they are biocompatible and can last a lifetime without necessitating immunosuppressive drugs, which is a significant issue for transplant patients today. We are very excited about this organ printing initiative, which is driving much of the core technology that we are applying to non-organ markets and laboratory settings. Regarding market size, these are emerging markets, and it can be challenging to gauge their scale. For instance, if we consider the number of organ transplants performed today, the list is intentionally kept small due to the limited number of available organs. Although we can estimate the dollar value of organs, the potential market could grow to millions of patients. Therefore, it represents a high-value offering and helps avoid substantial expenses on traditional transplants and medications. We see this as a highly valuable and differentiated product entering a market projected to be worth billions. For non-organ applications, the potential is similarly vast. While difficult to estimate, consider the implications for skin, arteries, and soft tissue implants; this could also translate to billions in market size. Laboratory applications might be slightly smaller, potentially a billion-dollar market. We are enthusiastic about research labs, having acquired Levy earlier this year, which already had a strong presence in this space. There are over 300 research labs globally, playing a critical role in advancing regenerative medicine. Engaging with these labs to provide printers and consumables is essential. However, the most exciting market from a financial perspective, coupled with the benefits of incorporating drug therapies, lies in pharmaceuticals. The ability to print 3D cellular structures with blood vessels allows pharmaceutical companies to conduct quicker drug tests without moving directly from animal studies to human trials. They can test in laboratories using real human biological cells with blood flow, in a controlled and reproducible manner. We foresee tremendous benefits and opportunities in supplying printers and materials, which may eventually form part of the testing process. I believe this sector will be a fantastic business opportunity for us, and I would tentatively project it to exceed a billion dollars. There are clearly substantial markets ahead, and I see this as a transformative opportunity for our company. It aligns naturally with our current healthcare business, given our FDA expertise and process discipline, while also opening up entirely new avenues where we aim to establish a strong presence. We are leading in this field and are continuously enhancing our technical resources, committing to advance our technology in this area.

Thanks, Jeff. You've become quite the healthcare expert in a short period of time. But a quick follow-up for Jagtar. Just Gross Margins I want to hit a little bit. If we get to the midpoint of the range they called out for 2021, here would imply 40% to 40.5% for Q4. And we just think about going forward. I mean, is this base level here? Do we grow it from here? I know you probably don't want to give a lot of guidance on 2022 yet, but it just while we're working on them models now thoughts.

Troy, I mean, we put out the guidance, and what I'd say is our plan is to absolutely grow from there, right? We are, as you heard in my prepared remarks, we're investing in the type of businesses that are going to drive gross margin, right? The recurring revenue streams that we've talked about, software, materials, and the like, we think will drive gross margin for the future at the same time, we continue to enforce good cost discipline and cost management on our existing products to manage costs. I think we're going through, as you heard me talk about, some near-term headwinds with supply chain constraints and the impact that has to pricing, and we are measuring appropriately. But I think over the medium term, you'll start to see gross margins tick back up.

Good luck guys. Keep up the good work.

You, Troy, just a quick thanks for picking up coverage on the Company too. I know you guys are stretched then, all of you guys. We respect to guide the industry, really appreciate you following the Company and picking up coverage.

Looking forward to working with you guys.

Thanks. Good morning. And I appreciate some of the commentary around everything that started to occur over the last year. It's been a pretty amazing turnaround or transformation in the Company. So kudos to you and the team there.

Thanks, Greg.

Thanks, Greg.

Maybe let's start with supply chain. You called out that headwind not surprisingly. Can you quantify what the revenue impact was? And if maybe you can just look ahead, do you think that this could be a tailwind or a driver for additive manufacturing, at least for companies that are looking to maybe add in localized on-demand production or at least secondary sources of supply?

Sure, Greg. I'll start with the quantification and let Jeff talk through the impact to our customers. On the quantification side, in Q3, we probably had about $3 million of revenue, $3 million or $4 million of revenue left on the table that we would have captured had the supply chain issues not occurred. If you exclude divestitures, revenue was up for us Q3 vs Q2. Normally, Q3 is lighter than Q2. So if I think about revenue being up and the fact that we left revenue on the table because of supply chain, is actually a pretty strong indicator of customer demand. I do think we'll see a little bit of impact in Q4, but like I said in my prepared remarks, we continue to do a yeoman's job of dealing with the issues out there.

Greg and I have experienced several cycles in the electronics industry before, and these cycles tend to be challenging, especially when there’s a surge in demand. As companies try to expand their capacity, they typically find solutions faster than anticipated. While these periods can be tough, we currently have strong demand for our products, particularly our application expertise. The ongoing supply chain shortages have prompted our key customers to rethink their supply chains, emphasizing the need for more flexibility and cost efficiency, often closer to home to avoid high logistics costs. Although this situation is difficult, it serves as a significant advantage for us and the entire industry, as additive manufacturing addresses many of these challenges. It enables companies to streamline their supply chains and localize production effectively and economically. With our recent acquisition, we aimed to eliminate a major obstacle for customers looking to establish production capabilities for printers, which often leaves them questioning how to proceed. They struggle to acquire skilled engineers for production lines and need user-friendly software tools to set up their printers and related equipment easily. This is the purpose of Accton—helping to eliminate barriers as the industry benefits from major companies re-evaluating their supply chains.

Yeah, makes sense. Where would you envision that demand coming from? I don't know whether that end market or by technology, just outside of dental, I guess. where are you seeing the most demand and work through some come from?

Yes, it's very interesting and varies by market, Greg. That's why we have reorganized the company around market segments. The dynamics are distinct in each segment. In healthcare, including dental and other medical devices, growth is driven by the need to personalize solutions. Whether someone has a broken bone or requires a tissue implant or specialized surgery, they seek cost-effective, personalized medical approaches for better outcomes. This addresses significant needs such as reducing infection rates and increasing efficiency in surgical suites. On the industrial side, the focus is on revamping their extended supply chain. Major consumers, including OEM assemblers in sectors like automotive and aerospace, want a more local and agile supply chain while remaining cost-effective. Each sector has its own trends, such as the automotive industry's shift towards electric vehicle technology, which positively impacts additive manufacturing. I am passionate about our current business approach and the vertical focus on healthcare and industrial sectors, as each industry evolves at its own pace with distinct requirements. This is my perspective on the driving factors in these sectors, Greg.

Yeah, that's great. And if I could just sort of sneak in one follow-up. Your disclosure of your largest customer being 20% of revenue this year. That's a pretty big step-up relative to the prior year. How sustainable at that level going forward?

Well, it's primarily a result of divesting other businesses. We've sold off parts that weren't aligned with our focus. I have a strong affinity for the dental space and the customers we serve. Our large customer has tremendous potential, with their market penetration still relatively low, suggesting they have a bright future thanks to our technology. I feel we have a solid runway with them and have never maintained a better relationship. Despite facing logistics challenges that hindered our ability to support their growth as economies reopened and demand for their products surged, I am excited for both their future and ours as it's a great customer. At the same time, we saw our 15% growth in the medical device sector.

Med device is.

So 15% excluding divestitures is stuff we got out of. We had 15% growth in the med device space outside of dental. If you exclude dental, 15% growth, which we're thrilled by. I mean that's an exceptional number. And I see that continuing and getting bigger. So I think the whole business will get bigger for health care. I love the fact that we have a very successful customer that continues to grow based on our larger and our technology. And I think we've got a great horizon with them and with many others in the dental industry and in the med device industry.

Hi, guys. And again, congrats on all the progress you've made over the past year. Just one question from me, given that you're now moving into this investment phase, I was hoping that you could, in a bigger way. I was hoping that you could kind of comment on what the pipeline looks like in terms of companies that you're talking to, what your conversations are like. And then maybe if you could just revisit if you had to rank priorities in terms of where your interest lies, you could talk about medical versus industrial and software versus applications. Just giving us the essence of how you're thinking about this next phase moving forward. Thanks.

I'm happy to address that, Noelle. If I overlook anything, please feel free to bring it up again. Regarding our priorities, they are quite straightforward. At the core of our market focus are our three main technologies: printers, materials, and software. We aim to maintain a strong differentiation in these areas, which sometimes involves investing at the component level in disruptive technology, particularly in innovative printing methods. Our top priority in this space is materials. We have an excellent internal team dedicated to photo polymers, and we are also seeking expertise from outside sources, whether they are individuals, small teams, or larger organizations focused on materials development that could enhance additive manufacturing. These developments are consistently at the forefront of our priorities, as materials that add value significantly benefit our customers and generate recurring revenue for us, which we highly appreciate. Software is also a key priority. We have successfully developed robust platforms internally and are now making them available to external users. Additionally, we've invested in the Accton platform to assist our customers, and software will continue to be a fundamental focus for us. While I'm unsure of the availability of additional software resources, it will always be a priority if opportunities arise. In terms of underlying technologies, materials are critical, and innovative printer technology is always significant. When it comes to market or application priorities, healthcare is undoubtedly a strong sector for us. We have built a solid foundation and are now expanding into biotech, actively seeking growth in this domain. Our traditional healthcare and medical device business is experiencing a rise in applications. For example, historically, our focus has mostly been on the head and its skeletal structure. We have made considerable progress with surgeons in that area, and now we are addressing other parts of the skeletal system concurrently. We're also being more selective in the industrial sector, concentrating only on areas we believe will yield differentiation in the future. This aligns with our commitment to innovative technology. Aerospace and space technology, including rocketry, satellites, and propulsion systems, consistently require high-performance technology, particularly due to weight considerations. Thus, these fields will always be priorities for us. Ground vehicles, particularly cars, have been a mixed experience for us in the past, largely due to their price-sensitive nature and high-volume demands, which can be challenging for additive manufacturing. However, with the advent of electric vehicles, there is a fascinating shift occurring, as many technologies from aerospace are being adapted for these applications. The same principles that drive success in aerospace can also be applied to electric vehicles, which benefit from the unique part designs that additive manufacturing enables, resulting in lightweight and strong structures that enhance battery efficiency. We have some new specialty materials that are well-suited for high-temperature applications under the hoods of vehicles and other demanding automotive needs. I hope this overview provides a clearer picture of our priorities, and we’ve established a solid workflow to pursue these goals while generating sufficient cash flow to support our initiatives further.

Hi, good morning and thank you for taking my question here.

Sure.

In the last 12-month period, excluding divestitures, your sales were just over $520 million. Just wanted to get a sense for what's your outlook on organic growth for the top line going forward on that base?

In terms of organic growth, everybody struggles to put a number on the industry. I would put it this way. Our organic growth rate should be equal to or better than the industry norms, and people put that in nicely single to double-digit ranges. There's no reason in the world that we wouldn't meet or beat industry growth rates. And in some of these emerging areas that we're going to try to really continue to double down on, I think you'll see even higher growth rates. I feel really good about meeting and over time gaining some share in the market. In our approach, we know it's not a big share gain approach by pricing, it's more of a technology differentiation. So I think you'd put an industry growth number, which is our exciting numbers, good solid double-digit numbers, and a little bit of windage above that for us. That's how I look at our business.

That's really helpful. And then rate operating expense for SG&A and R&D, I guess when considering the addition of Accton and then Volumetric, once it closes, are these diluted to profitability in essence, what's the OpEx run rate as we think about integrating those businesses?

Yeah, Sure. Sarkis. I've talked a little bit about that in the calls where we announced those acquisition, so I'll reiterate my commentary there. So on Accton, what I'd said is in the near-term meeting the rest of this year and we closed on November 1st, don't expect much revenue contribution from them this year, although I expect that to ramp next year. Right now, their OpEx run rates running about $3 million a quarter. So it will be dilutive in the near term, but with a rapid growth, we would expect over the next year or 2, to be less dilutive. On the Volumetric side in the near-term, I am not expecting any net OpEx impact until we make decisions to invest further in the call it non-organ side of the business on the core business. We announced the expansion of our contract with United Therapeutics that will help support the expenses associated with Volumetric. But then as we make decisions to further advance the non-organ side, we may have additional investments, but we'll talk about that in the future.

Great. Thank you. That's all for me.

Yes. Thank you, Jeff. I'm trying to reconcile some of your commentary regarding the wary change that companies are implementing in terms of supply chains and how they're thinking about maybe manufacturing at different places and doing their entire manufacturing process differently. Versus comparing industrial revenues from 2 years ago to now. Like, if you alluded to the growth in aggregate, but the industrial side itself has not shown that much growth. Whereas in some of the other industries where digital transformation has become a priority, you have seen, for instance, in software like material improvement in revenue growth as these companies are implementing digital transformation. So I'm just wondering, are you seeing any tea leaves with respect to industrial? How should we think about industrial as it progresses into 2022? Should we be seeing a much more material inflection in growth rate? If you've got any comments on that would be helpful on our follow-up.

It's a general observation that the industrial market is quite significant and varies across different sectors. Each company has unique exposure to customers in the industrial space, with some experiencing faster growth than others. Over the next few years, the industrial sector is expected to grow considerably, partly because the disruptions caused by COVID, such as supply chain issues in Asia, have created challenges, including shortages and logistics problems. Overall, the industrial sector is likely to experience strong growth in the near future. Individual performance may fluctuate each quarter, depending on the specific market focus, so it's best not to be overly concerned about quarterly variations. However, year-over-year changes should show positive trends for most participants in the industry. We particularly aim to work with companies that are driven by technology, and while growth rates may vary among them, I anticipate they will all demonstrate impressive growth moving forward. I hope this information is useful to you.

Yeah. That's helpful. And then just a follow up. As we think about gross margins, I understand that there are some supply chain headwinds currently as you're looking into the fourth quarter. But as you look out, I know last call you guys spoke about your long-term targets of 50% gross margin, and you mentioned on this call that that was largely a function of increasing levels of software and increasing level of materials, but you also made the comment that your go-to-market is much more solution-based than product-based per se where it like not piecemeal thinking about printers, materials, and software. And so as I put those two things together, are you essentially saying that you're making a big change to your sales motion to support a solution-based selling, and secondarily, as you think about their gross margin, hitting that inflection. What's the timeframe that we're talking about? I know your long-term target is 50%. But if we're tracking closer to 40 today and we're still having supply chain issues, the mix is probably not going to swing that quickly. So just help us with the trajectory as you think, things will, while those large contributors, when they kick in.

The big drivers, and maybe I'll ask Jack to supplement this with comments on the short term, but I can tell you the big drivers for us in terms of hitting our gross margin target, which again is 50% or better. From a macro standpoint, clearly healthcare will be a big driver of that. Healthcare commands higher gross margins. So clearly growing in healthcare is a good thing broadly. So we'll continue to drive that hard. And with the exceptional into biotech, I think that's really exciting from a gross margin implication standpoint. Not only top line but gross margin standpoint. So that's really good. From a mix standpoint, we invest a lot of money in value-added materials. If you look at ongoing consumables, once you have an installed base of printers, materials are great and then software. But the software platform upfront and ongoing upgrades software we're moving more to a subscription model now. That's a great recurring revenue stream. So if you look at the mix of what we actually sell, where we are in the transactions, you should see a richer mix going forward from a macro standpoint; you should see faster growth rates in healthcare overall, which carry a higher gross margin, so those are kind of the macro trends that will drive. And we will continue to focus on technology that's differentiated. Day-by-day pricing. If you wrap it into a solution and its differentiated technology, hopefully you can command the highest gross margin upfront as well. So those are the individual levers and the macro trends that will drive gross margin up to that 50% target. In terms of short-term, objector are all that you put on your crystal ball.

Yeah sure. So the way we've modeled it out, we approached 50% gross margins over our strategic planning period which is 4 to 5 years that we've modeled it out. The way I look at it is in the near term we've got the supply chain issues for what our supply chain people tell us they are kind of projecting these issues in the market for the first half of next year and then it starts to soften down, so we're looking at improvements in gross margin sort of continuously over that 4 to 5-year planning period, kind of excluding the near-term supply chain issues.

Okay. Thank you so much.

Good morning, Brian.

Thank you for taking questions. Good morning. Can you share how much revenue came from dental compared to non-dental within the healthcare business this quarter?

We haven't broken that out. What we've said is that our non-dental business grew 15% organically after adjusting for divestitures.

Okay, great. So that 15% when you say med device you talked, that's non-dental.

Yeah. That's non-dental. Right.

Right. Got it. And then just some other cleaning up, like modeling stuff. You gave divested revenue, but can you help us with how much of the product segments accounts? How much of the divested revenues in products versus services?

I don't have that breakout with me, Brian, but I can get you that offline.

Thank you, Jagtar, for your comments regarding the Accton $3 million in operating expenses. I'm curious if you could provide a broad overview of the operating expenses and what we can anticipate for the fourth quarter and beyond, given the operating expense run rate for this quarter.

Yeah, sure so our non-GAAP OpEx in the third quarter was $54.1 million. You'll have the impact of the divestitures. So right now, the assets that we've invested in Q3 contributed about $4 to $5 million in OpEx. So that'll come out in Q4. And R&D was light in Q3, the result of some R&D credits we received in certain countries, as well as some attrition that we had in some hiring of backfill that we're doing. So I would expect R&D to be marginally up in Q4, not by much though. If you weigh those trade-offs, you say flat to slightly up OpEx after adjusting for divestitures and then you add in Accton, which will have about 2 months' worth of.

And then Accton?

Right. I meant Accton. I said Volumetric, I mean Accton, sorry.

Right? Okay.

Right.

Okay. Looking ahead to 2022, you mentioned plans to invest in higher growth businesses, but will this involve significant investments or will operating expenses grow in line with revenue?

No, I think OpEx will grow in line with revenue.

Hi, thank you for taking my questions.

Sure.

Over the last few months, it appears you are placing a significant emphasis on healthcare and transitioning into more of a healthcare company. I am curious about how discussions are progressing with your large industrial customers. How are you assuring them of your ongoing support as they make substantial investments? Also, how are you approaching the sales headcount and R&D investments for the industrial sector as you become more selective, ensuring that you don't fall behind?

We appreciate the important questions. While many of my examples have focused on healthcare, we are very enthusiastic about the industrial sector as well. As I mentioned, we carefully select our markets, ensuring that we target those who can benefit the most from additive manufacturing. We are particularly excited about the industrial opportunities. There is significant potential at the technology level with printing. For instance, in powder bed printing with lasers, both metal and polymer powder can serve industrial and healthcare applications effectively, showing substantial synergy and overlap. By investing in these foundational technologies, we essentially gain double benefits. What differentiates the two sectors is the application expertise. For example, aiding a rocket company in producing a large titanium part versus a small titanium piece for an orthopedic implant showcases the fundamental technology's similarity but highlights the distinct application knowledge needed. This is why I discussed reorganizing the company into separate healthcare and industrial units, as the application knowledge is specifically tailored to each customer base. A client focused on orthopedic implants does not want to discuss rocket parts; they need to understand how we can assist with their specific needs, like surgical repairs using titanium implants. This application expertise begins to create distinctions across market verticals, influencing the sales process. We are expanding our direct sales force in certain verticals, particularly in healthcare, where specialized customers need specific application knowledge. At the same time, we maintain a strong, globally distributed sales team catering to small emerging customers and broader industrial clients. We aim to balance both approaches while being mindful of costs. It’s crucial to get this right, and we have heavily restructured our efforts over the past 18 months to ensure we do. I'm sorry, Ashley, I think we may have lost you.

Thank you for joining us today and for your continued support of 3D Systems. A replay of this webcast will be available after the call on the Investor Relations section of our website. Have a good day.

Thank you everyone.

Thank you. This concludes today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.