Katherine Thompson

Katherine Thompson inquired about customer reactions to the proposed acquisitions, the regulatory timeline for the deals, and the strategy for achieving EBITDA breakeven.

Answer

Executive Yoav Stern reported that customer reaction has been 'extremely excited' at the Formnext trade show. He confirmed the company expects the Desktop Metal deal to close in Q4 and the Markforged deal in Q1 2025, pending final regulatory approvals. Stern clarified that the path to profitability by early 2026 will be driven by dramatic expense cuts and cost synergies following the mergers, rather than revenue synergies.

Katherine Thompson of Edison Group requested an update on the post-merger integration (PMI) process with Desktop Metal, the timeline for regulatory approvals like CFIUS, and whether the company would continue its share buyback program.

Answer

Executive Yoav Stern explained that joint PMI teams are conducting detailed planning to ensure a smooth integration immediately upon closing. He expressed confidence that regulatory approvals would pass without major issues, viewing them as formalities. Stern also confirmed that a board-approved allocation of nearly $150 million remains for share repurchases, which will be executed as market conditions and regulations permit.

Katherine Thompson of Edison asked for an assessment of current customer demand, whether the Q1 cost base represents a new steady state, and if the company plans to continue share buybacks at a similar pace.

Answer

CEO Yoav Stern characterized customer demand as varying by vertical, noting strong activity in defense, particularly in Europe and the US, with some weakness in the German general electronics market. He confirmed that the cost base will be reduced further from Q1 levels and stated that future share buybacks are a matter of capital allocation, weighed quarterly against R&D and acquisition opportunities.

Asked for details on revenue growth, including the 2024 outlook, the mix of new versus repeat customers, system versus consumable sales, and the company's alternative plans for consolidation if the Stratasys bid is unsuccessful.

Answer

2023 growth was 29%. 2024 growth is expected to be 15-29% without acquisitions. Consumables are 7-10% of revenue for applicable machines, and repeat sales were at a record high in 2023. If the Stratasys deal fails, the company has attractive alternatives with more exciting technology, though less developed sales channels, and is already in advanced negotiations with them.