3D Systems Q2 2026 Earnings Report

3D Systems EPS Results

• Actual EPS: -$0.04
• Consensus EPS: -$0.06
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

3D Systems Revenue Results

• Actual Revenue: $94.60 million
• Expected Revenue: $94.01 million
• Beat/Miss: Beat by +$588.00 thousand
• YoY Revenue Growth: N/A

3D Systems Announcement Details

• Quarter: Q2 2026
• Date: 8/3/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 4, 2026
• Conference Call Time: 8:30AM ET

3D Systems (NYSE:DDD), founded in 1986 by stereolithography pioneer Chuck Hull, is a leading provider of additive manufacturing solutions. Headquartered in Rock Hill, South Carolina, the company develops and sells a broad range of 3D printers, materials, software, and on-demand manufacturing services. Its core technologies include stereolithography (SLA), selective laser sintering (SLS), direct metal printing (DMP), and multi-jet printing (MJP), enabling customers to build prototypes, production parts, and complex geometries across a variety of industries.

The company’s hardware portfolio spans desktop to production-scale systems designed for applications in aerospace, automotive, healthcare, consumer products, and education. In addition to printers, 3D Systems offers a suite of proprietary materials—including photopolymers, metals, ceramics, and engineered thermoplastics—optimized for performance, biocompatibility, and durability. Complementing its hardware and materials, the firm provides software tools such as 3D Sprint and 3DXpert, which streamline design preparation, build simulation, and process control.

To support customers with limited in-house manufacturing capacity, 3D Systems operates a global on-demand manufacturing network, offering custom parts, rapid prototyping, and low-volume production services. This network serves corporations, research institutions, and small businesses, ensuring access to advanced additive manufacturing without the capital outlay for equipment acquisition. The company’s service offerings also include application consulting, training programs, and maintenance support to help users optimize their additive workflows.

With operations spanning the Americas, Europe, and Asia Pacific, 3D Systems maintains a presence in key markets through regional offices and channel partners. Under the leadership of President and CEO Vyomesh “VJ” Joshi, the company continues to invest in research and development, focusing on expanding material libraries, improving printer performance, and advancing end-use part applications. This strategic direction reinforces 3D Systems’ position as a comprehensive solutions provider in the rapidly evolving 3D printing industry.

3D Systems Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Printer demand accelerated, with hardware sales up more than 40% year over year and total printer sales rising over 45%, led by the DMP 350 metal printer, SLA 825 polymer platform, and NextDent 300 denture system.
• Positive Sentiment: Growth remained strong in the company’s priority markets, including med tech, aerospace and defense, and data center infrastructure. Management cited a large multi-quarter order for SLA 825 systems used in reusable rocket-engine casting patterns and nearly 30% growth in semiconductor and high-performance computing applications.
• Positive Sentiment: The NextDent 300 denture business is gaining traction, with printers expected in more than 100 U.S. and European labs by year-end and recurring annual revenue of over $2 million from the initial installations. Management expects dentures to become a major, high-margin revenue stream over the next several years.
• Positive Sentiment: Cost reductions have generated more than $60 million in annualized savings, helping first-half adjusted EBITDA turn positive at $1.3 million. The company ended the quarter with $129 million in cash and restricted cash after raising just over $53 million through an equity offering.
• Negative Sentiment: The CEO announced a planned transition after more than six years, with a search just beginning and potentially taking several months. Management also expects third-quarter adjusted EBITDA of negative $3 million to negative $1 million, while printer-heavy sales mix is likely to pressure gross margins and industrial revenue remains affected by weakness in consumer-facing markets.

Presentation

[Operator]

Greetings. Welcome to the 3D Systems Q2 2026 earnings webcast. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad.

[Operator]

As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Vice President of Investor Relations, Monica Gould. Monica, please go ahead.

[Monica Gould, VP of Investor Relations at 3D Systems]

Hello. Welcome to 3D Systems Q2 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.

[Monica Gould, VP of Investor Relations at 3D Systems]

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.

[Monica Gould, VP of Investor Relations at 3D Systems]

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, President and CEO at 3D Systems]

Thank you, Monica. Good morning, everyone. Today's call is accompanied by two important announcements: our earnings results and the beginning of a leadership transition plan, both of which I will address this morning. I will begin by reviewing a few important highlights from our Q2 and H1, as well as provide updates on several of our key market focus areas. After that, I'll address this morning's leadership announcement.

[Jeffrey Graves, President and CEO at 3D Systems]

I'll then turn the call over to Phyllis Nordstrom, our CFO, who will summarize the quarter's financial results and outlook, and will then open the call up for Q&A. With that, let's turn to slide five. A major theme clearly emerging this year is the return of capital spending by our customers in key markets. The timing is excellent, given the intense focus we've placed on refreshing our product portfolio over the last three years.

[Jeffrey Graves, President and CEO at 3D Systems]

In the Q2, printer sales increased by more than 45%, led by our best-selling DMP 350 metal printing system, our new SLA 825 flagship polymer platform, and our MultiJet printing systems that form the cornerstone of our new denture product line.

[Jeffrey Graves, President and CEO at 3D Systems]

I'll comment on each of these in the context of their market drivers in a few moments. From a business unit standpoint, our healthcare business once again delivered solid growth and remained the company's largest segment, driven in particular by strong demand for new printing systems in both med tech and dental markets.

[Jeffrey Graves, President and CEO at 3D Systems]

Industrial business revenue was modestly lower year-over-year as older systems in our installed base are now being increasingly replaced by our new printer platforms. Despite this dynamic, our two key industrial focus markets, aerospace and defense and data center infrastructure, both delivered strong double-digit growth again this quarter.

[Jeffrey Graves, President and CEO at 3D Systems]

I'll share a few highlights on those markets momentarily. Moving to slide six. Our newest generation of 3D printers offer levels of precision, economics, and robustness that were only dreamed of a few years ago. These advancements are now proving essential to the widespread adoption of 3D printing in key production environments. One of the clearest trends is the accelerating use of 3D printing in metal component manufacturing.

[Jeffrey Graves, President and CEO at 3D Systems]

As we've discussed on previous calls, there are two equally important paths to producing metal parts. Direct metal printing using laser powder bed fusion and metal castings that rely on 3D-printed patterns as a critical step in the manufacturing process. To address each path, we've launched two important systems. Our DMP 350 triple laser direct metal printer and our SLA 825 dual laser polymer printing system designed for high-quality metal casting patterns.

[Jeffrey Graves, President and CEO at 3D Systems]

Sales of both platforms into our key markets have been very strong, with Q2 growth of roughly 90% and 125% respectively year-over-year. Given this rapid rise in demand for 3D-printed metal parts, we're also significantly expanding our internal metal parts production capacity. This is an important element of our growth strategy, and I'll touch on it in more detail in a few moments.

[Jeffrey Graves, President and CEO at 3D Systems]

The third breakthrough product we have brought into the market is the NextDent 300, purpose-built for the production of dentures. This platform is being very well received because of its precision and economics, enabling dental professionals to deliver a high-quality, durable product that improves the patient experience while increasing the productivity of their practices. These technologies will continue to enable our success in key markets for years to come. On to slide seven.

[Jeffrey Graves, President and CEO at 3D Systems]

As proud as I am of our refreshed product portfolio, it would mean very little if we did not target these systems effectively at markets moving most decisively toward the adoption of additive manufacturing technologies. Four markets fit this profile very clearly. Med tech, dental, aerospace and defense, and data center infrastructure. Two of these sit in our healthcare business and two in our industrial business.

[Jeffrey Graves, President and CEO at 3D Systems]

Customers in these markets derive exceptional value from 3D printing, from enhanced design flexibility that improves both performance and cost to reduce supply chain risk in an increasingly volatile world.

[Jeffrey Graves, President and CEO at 3D Systems]

With limited time on each quarterly call, I'll focus on a few key use cases that I hope will capture the excitement and momentum these four markets provide. Moving to slide eight, I'll start with aerospace and defense, with a specific focus this quarter on space applications.

[Jeffrey Graves, President and CEO at 3D Systems]

As everyone is aware, there's been a resurgence of interest in space access, with applications ranging from new satellite constellations for communications to large-scale orbital data centers and even interplanetary travel. These visions are all enabled by the remarkable advancements achieved in reusable launch vehicles.

[Jeffrey Graves, President and CEO at 3D Systems]

These enormous rockets have already reduced the cost of access to space by an order of magnitude, and the next generation of fully reusable vehicles is positioned to drive costs down even further, making these large-scale applications in space far more economically viable.

[Jeffrey Graves, President and CEO at 3D Systems]

The impact of this breakthrough in rocketry is clearly visible in launch cadence. A rocket to space is now launched roughly every two to two and a half days. In short, what used to be a yearly total for the entire global industry is now being achieved by a single company in a matter of weeks.

[Jeffrey Graves, President and CEO at 3D Systems]

This acceleration is expected to continue as reusability improves and costs decline further. A critical enabler of this progress has been the development of advanced rocket engines designed for high flight rates. These engines use a sophisticated combustion architecture that improves efficiency and durability while reducing maintenance between flights.

[Jeffrey Graves, President and CEO at 3D Systems]

Additive manufacturing has been integral to this evolution, both through direct metal printing of complex geometries and even more so through high-precision investment castings made from 3D-printed patterns. Our SLA825 dual laser system, launched late last year, is specifically targeted at these advanced casting applications.

[Jeffrey Graves, President and CEO at 3D Systems]

As evidence of its early success, in the Q2, we received one of the largest industrial printer orders in our company's history, driven by demand for casting patterns used in next-generation reusable rocket engines.

[Jeffrey Graves, President and CEO at 3D Systems]

Production of these engines is expected to grow by nearly an order of magnitude over the next decade as launch cadence continues to accelerate. These capabilities are helping make fully reusable heavy lift vehicles more practical and are contributing to a sharp reduction in the cost of access to space. Moving to slide nine, let's turn to the healthcare business with an update on our dental market.

[Jeffrey Graves, President and CEO at 3D Systems]

Of the four dental markets, straighten, protect, repair, and replace, 3D printing has already proven its value at scale in tooth straightening. Building on that foundation, the next large growth opportunity is converting the historically labor-intensive replace market for dentures into a fully digital 3D-printed monolithic denture product, an objective we have been intensely pursuing for the last three years.

[Jeffrey Graves, President and CEO at 3D Systems]

With more than 30 million denture wearers in the U.S. and nearly four million new dentures sold each year and comparable numbers in Europe, the end market opportunity is measured in the billions of dollars. Based on these estimates, the corresponding revenue potential for our company exceeds $150 million annually in the U.S. in printers and consumables sold to the dental labs that produce dentures with a similar exciting opportunity in Europe.

[Jeffrey Graves, President and CEO at 3D Systems]

We launched our NextDent 300 denture printing system in late 2025 following FDA clearance and secured full EU MDR approval for sale into Europe in the Q2 of this year. Since that time, acceptance by dentists has been strong, driven by the beauty of the product, its durability, and the comfort patients experience from the first fitting.

[Jeffrey Graves, President and CEO at 3D Systems]

These clinical benefits create demand, while the efficiency of the digital production process and shorter lead times translate that demand from dental labs into revenue for 3D Systems. The result has been a rapid rise in demand each quarter since launch, as shown in the production chart on slide nine. While the market's highly fragmented with more than 8,000 labs across these regions, revenue is concentrated in the top 300-400 manufacturers.

[Jeffrey Graves, President and CEO at 3D Systems]

Based on our current outlook, we expect to have printers installed in more than 100 of these dental labs by year-end, with a growing number of multi-unit deployments to follow. Importantly, once operational, even these initial printers alone will generate a recurring revenue stream of more than $2 million annually at highly accretive gross margins.

[Jeffrey Graves, President and CEO at 3D Systems]

While encouraging, these sales represent less than 2% penetration of the overall denture market in the U.S. and Europe, meaning the future growth potential is very strong. As an example of customer receptiveness to this technology, one of our earliest lab customers purchased their first printer late last year and has already installed and is running a sixth unit, tripling their historic capacity. We now see others following suit.

[Jeffrey Graves, President and CEO at 3D Systems]

For early adopters, this creates a clear path to market share gains through lower production costs and faster turnaround times. Looking ahead, with regulatory approvals expected in Mexico, South America, and several Asian countries over the next year, combined with the strong acceptance rates we're seeing in the U.S. and Europe, we expect our denture-related revenue to become one of the largest and most profitable streams for the company in the years ahead.

[Jeffrey Graves, President and CEO at 3D Systems]

Moving to slide 10, we come to one of the most exciting growth opportunities in our industrial business, second only to aerospace and defense, data center infrastructure, a market we have been building for several years. This market spans several high-value applications, including semiconductor manufacturing equipment, advanced GPU cooling systems, and emerging energy generation technologies, including both nuclear fission and fusion-related applications.

[Jeffrey Graves, President and CEO at 3D Systems]

We participate in these markets in two complementary ways, by supplying precision metal-printed parts directly to customers and by providing printers that enable them to manufacture these components themselves.

[Jeffrey Graves, President and CEO at 3D Systems]

In the Q2, our semiconductor and high-performance computing business grew almost 30% year-over-year, building on strong H1 momentum. Growth was driven primarily by demand for metal-printed parts, while the pipeline for new printer systems also remains healthy. This distinction is very important.

[Jeffrey Graves, President and CEO at 3D Systems]

While printer sales expand our installed base, the growing volume of parts we manufacture for these customers is a key lever for improving the gross margin profile of our metal printing business over time. As production volumes scale and we continue to optimize our manufacturing operations, we expect parts manufacturing to become an increasingly meaningful contributor to both revenue and profitability.

[Jeffrey Graves, President and CEO at 3D Systems]

Over time, many of these customers are also natural candidates to adopt our metal printing systems as their volumes increase. Looking ahead, the unprecedented level of capital investment flowing into data center infrastructure continues to create strong demand for complex, high-performance metal components that are difficult or uneconomical to produce with traditional methods. Direct Metal Printing opens new design opportunities that will play an important role in future chip manufacturing capability and cost.

[Jeffrey Graves, President and CEO at 3D Systems]

We believe we are well-positioned to capture a growing share of this market through both our parts manufacturing capabilities and our advanced printer platforms. From an energy perspective, we're already seeing demand related to large land-based turbine manufacturing, which benefits from both our polymer systems used in investment casting and our direct metal printing systems.

[Jeffrey Graves, President and CEO at 3D Systems]

Given the significant electrical demands for data centers and the growing need for hyperscalers to secure their own power, there is increasing interest in metal 3D printing for next-generation nuclear applications, including small data center-focused designs, as well as fusion-related components that require materials capable of withstanding extreme temperatures and radiation.

[Jeffrey Graves, President and CEO at 3D Systems]

These are areas where traditional manufacturing is often difficult and very costly. Turning to slide 11, I want to highlight the resources we're drawing upon to expand our energy-related activities.

[Jeffrey Graves, President and CEO at 3D Systems]

As many of you know, 3D Systems is headquartered in South Carolina, we're fortunate to have one of the leading organizations in nuclear research as our neighbor, Savannah River National Laboratory, or SRNL as it's known.

[Jeffrey Graves, President and CEO at 3D Systems]

For decades, SRNL has conducted critical research and development in support of nuclear energy, spanning nuclear materials and component processing to system applications relevant to both national security and commercial power generation. I'm pleased to announce that we've executed a cooperative research and development agreement, or CRADA as they're known, with SRNL.

[Jeffrey Graves, President and CEO at 3D Systems]

This partnership will enable our organizations to collaborate on the development of new materials for the extreme environments of nuclear fission and fusion reactors on component design and manufacturing, on the use of AI to optimize processing and performance. We believe direct metal 3D printing will play an essential role in developing and scaling these technologies.

[Jeffrey Graves, President and CEO at 3D Systems]

Of particular note, this collaboration will leverage the Advanced Manufacturing Collaborative, a 63,000 sq ft research and innovation center operated by SRNL on the University of South Carolina Aiken campus, which opened in 2025.

[Jeffrey Graves, President and CEO at 3D Systems]

As the only U.S. Department of Energy facility of its kind located on a university campus in South Carolina, the AMC is uniquely positioned to support both R&D and the training of engineers in advanced manufacturing processes, including metal 3D printing.

[Jeffrey Graves, President and CEO at 3D Systems]

In short, this partnership provides a clear pathway from collaborative research on nuclear energy applications to commercial scale industrial opportunities in the U.S. We view it as an important element of our longer-term growth strategy in advanced energy markets. Moving to slide 12, I'd like to take a few minutes to describe how our direct metal printing technology is differentiated, an area that represents a major growth vector for the company.

[Jeffrey Graves, President and CEO at 3D Systems]

Our metal printing systems were originally developed to manufacture critical components from highly reactive materials used for medical applications. These systems were designed to meet the highest quality standards required by the FDA and European regulatory bodies. Central to that capability is exceptional environmental control during the printing process, which minimizes reaction with oxygen.

[Jeffrey Graves, President and CEO at 3D Systems]

As a result, our systems rank among the best in the world at printing titanium, a lightweight, strong, temperature-resistant, and biocompatible material, as well as cobalt chrome alloys used in joint replacement.

[Jeffrey Graves, President and CEO at 3D Systems]

Today, we maintain a large active installed base of metal printers with leading medical device OEMs and their contract manufacturers, along with our own fleet of metal printers in the U.S. and Europe, producing parts daily for implantable applications. Building on this foundation, over the last several years, we've expanded our metal focus into aerospace and defense, data center infrastructure, and advanced energy applications.

[Jeffrey Graves, President and CEO at 3D Systems]

As demand has grown for components made from nickel-based superalloys and refractory metals such as tungsten, molybdenum, niobium, materials used in extreme temperature and stress environments, we've engaged with leading OEMs on these applications. These high-performance materials are extremely difficult to fabricate with traditional methods.

[Jeffrey Graves, President and CEO at 3D Systems]

Direct metal printing not only enables conventional designs to be manufactured economically, but also opens the door to new configurations that can improve system performance and reduce cost. The commercial results are now clear. Sales of our metal printers are growing at record rates. In fact, we sold more metal printers in the H1 of this year than in all of 2025, and demand continues to rise.

[Jeffrey Graves, President and CEO at 3D Systems]

Looking ahead, with the support of the U.S. government, we're building on this strong foundation through the development of a large-scale metal printing system capable of manufacturing components over one meter in size at quality levels and production rates that we expect to lead the industry.

[Jeffrey Graves, President and CEO at 3D Systems]

Importantly, this system is being designed and will be manufactured entirely in the United States, including the critical application development work required for targeted markets. Finally, let's turn to slide 13, and I'll conclude my comments on the quarter with a brief summary of our metal parts expansion plans. Demand for direct metal printed parts is rising rapidly.

[Jeffrey Graves, President and CEO at 3D Systems]

This is not only driving sales of our printer systems, but increasingly our customers are asking us to supply finished metal parts. These are typically very challenging production parts that combine extreme performance requirements with highly advanced materials, and therefore, generally command a higher ASP.

[Jeffrey Graves, President and CEO at 3D Systems]

Given our application development work with OEMs and our ability to ultimately provide printers for their own use, this is a natural request by our customers. By fulfilling it, we can effectively bridge a customer from concept demonstration to full-scale production without the need to qualify new print processes or suppliers along the way. Depending on the demand profile, this bridge period can last for months to years.

[Jeffrey Graves, President and CEO at 3D Systems]

In response to this growing demand, we're expanding our part production facilities in both Leuven, Belgium, and Littleton, Colorado. Leuven primarily supports European customers, while Littleton, a suburb of Denver, focuses largely on U.S. customers and has the capability to support U.S. defense work.

[Jeffrey Graves, President and CEO at 3D Systems]

To put numbers to this expansion, today we have roughly 220,000 sq ft of space dedicated to metal printing, covering design, manufacture, application development, and support.

[Jeffrey Graves, President and CEO at 3D Systems]

We're adding approximately 50,000 sq ft of parts production capacity in Littleton, bringing our total to over 270,000 sq ft with the grand opening of this expansion targeted for the fall. From a printer standpoint, we currently have 77 metal printers in production and an additional 42 polymer printers used primarily in support of our med tech business.

[Jeffrey Graves, President and CEO at 3D Systems]

This expansion of both our U.S. and European metal parts production allows us to leverage the rigorous quality infrastructure that is essential to our medical business. The ability to print metal parts at the highest quality levels is at the heart of our growing metal part business.

[Jeffrey Graves, President and CEO at 3D Systems]

You'll hear more about this expansion in the months ahead. Before I turn the call over to Phyllis, I want to briefly address the announcement we made this morning regarding my planned transition.

[Jeffrey Graves, President and CEO at 3D Systems]

Today's quarterly earnings call is roughly my 100th as a public company CEO. After more than six years leading 3D Systems, I've developed a deep appreciation for this company, for my colleagues, for our mission, and for the customers that we serve. I'm also grateful for the unwavering support of our shareholders, particularly through the challenging industry conditions we've experienced over the last two years.

[Jeffrey Graves, President and CEO at 3D Systems]

While the succession process is just getting underway, in the months ahead, I'll be concluding my service as CEO. I remain fully committed to supporting a smooth transition and will stay closely engaged with the board and leadership team during this period to ensure we stay on track with the positive momentum that we're experiencing.

[Jeffrey Graves, President and CEO at 3D Systems]

The strategic priorities we've discussed today focus in our four key markets, expanding our metal printing and parts capabilities, and driving profitable growth remain the right path forward for this company.

[Jeffrey Graves, President and CEO at 3D Systems]

I'm confident in the strong foundation we've now built and pleased with the progress we're making as we emerge from the industry recession. I believe there are bright days ahead. With that, I'll turn the call over to Phyllis for a more detailed review of our Q2 and first-half financial results. Phyllis?

[Phyllis Nordstrom, CFO at 3D Systems]

Thank you, Jeffrey, and good morning, everyone. Before I begin, Jeffrey, I want to thank you for your leadership over the past six years. Through a period of industry challenges and considerable change, the company made notable progress in strengthening its operational foundation and streamlining its cost structure while also refreshing the product portfolio and sharpening our focus on four important growth markets.

[Phyllis Nordstrom, CFO at 3D Systems]

These efforts have established a solid foundation enabling us to build on our strategy moving forward. We are grateful for your continued service to the company during the transition. Thank you very much, Jeffrey. With that, let's now turn to our financial presentation. Before beginning our review, I'd like to remind you that we completed the divestiture of our legacy software businesses during 2025.

[Phyllis Nordstrom, CFO at 3D Systems]

As such, the comparisons I will reference today are presented on an adjusted basis, excluding the impact of these divestitures to provide a more meaningful apples-to-apples view of our operating performance across periods. With that, let's now begin on slide 17. As highlighted earlier in the call, our Q2 results reflect continued progress against our strategic priorities. Before I walk through the financial results in more detail, let me start with some highlights from the quarter.

[Phyllis Nordstrom, CFO at 3D Systems]

Q2 revenue increased year-over-year, driven by strong demand across our target markets and increasing sales of our new polymer and metal printer platforms. Adjusted EBITDA also improved notably from the prior year period as a result of higher revenue, disciplined cost management, and ongoing operational efficiencies. Turning to our Q2 revenue performance. Revenue was $94.6 million, an increase of 1.4% year-over-year.

[Phyllis Nordstrom, CFO at 3D Systems]

This increase was driven by continued momentum in hardware printer sales, which grew over 40% from the prior year period and more than 20% sequentially, as demand across several of our printer platforms continued to strengthen. Performance across our key strategic markets remained strong in the quarter as med tech, aerospace and defense, and data center infrastructure each delivered double digit year-over-year growth.

[Phyllis Nordstrom, CFO at 3D Systems]

Within the med tech and aerospace and defense markets, we had strong demand for our DMP 350 metal printers, along with healthy sales of our SLA 825 polymer printer. Both of these platforms meaningfully contributed to revenue performance during the quarter. In data center infrastructure, revenue grew more than 20% year-over-year as a result of increasing demand for metal parts used in critical airflow and thermal management components for semiconductor manufacturing equipment.

[Phyllis Nordstrom, CFO at 3D Systems]

Moving now to slide 18 to cover our business segments. Healthcare solutions remained our larger segment in the quarter, with revenue of $48.1 million, up 6.8% from the prior year period. Healthcare growth was driven by continued strength in our med tech market.

[Phyllis Nordstrom, CFO at 3D Systems]

Demand for metal printers used by OEMs to produce orthopedic medical implants meaningfully increased during the quarter. Personalized Healthcare Solutions, our PHS business, benefited from growth in surgical planning and trauma applications.

[Phyllis Nordstrom, CFO at 3D Systems]

Dental revenue also increased in the quarter, with steady demand for dental material sales and continued adoption of our NextDent 300 denture printer across both the U.S. and Europe. Turning to our industrial segment. Revenue for the Q2 was $46.5 million, down 3.7% from the prior year period and up 2.4% sequentially.

[Phyllis Nordstrom, CFO at 3D Systems]

The decline primarily reflected revenue that did not carry forward following the closure of a non-core product offering last year, as well as lower services revenue on our legacy printer installed base. As we continue to see momentum in sales of our updated printer platforms, we believe the ongoing refresh of our installed base should position us to drive future recurring products and services revenue.

[Phyllis Nordstrom, CFO at 3D Systems]

Looking across our industrial markets, aerospace and defense remained our largest market, with space and defense applications driving sales in the quarter. We also saw healthy year-over-year growth in data center infrastructure, resulting from increased demand for parts manufacturing, along with solid growth in materials and services revenue within automotive and motorsports. Turning to slide 19 to review gross margin. Q2 non-GAAP gross margin was 36.7%.

[Phyllis Nordstrom, CFO at 3D Systems]

Gross margin performance in the quarter reflected offsetting factors, including a higher mix of hardware printer sales, less favorable materials mix, and the comparison to a large regenerative medicine milestone recognized in the prior year period. These headwinds were partially offset by the benefits of prior cost reduction actions and the recognition of $2.6 million in tariff refunds during the quarter.

[Phyllis Nordstrom, CFO at 3D Systems]

As we look to the H2 of the year, we expect continued demand for printer hardware, which should drive a growing base for future materials and services revenue. Turning to slide 20. We continue to demonstrate strong cost management and operational efficiencies through the H1 of 2026. In the Q2, non-GAAP operating expenses were $39.5 million, a decrease of 11% from the prior year period.

[Phyllis Nordstrom, CFO at 3D Systems]

Sequentially, operating expenses increased by $2.9 million, primarily due to normal quarterly timing of expenses and an isolated bad debt reserve. Additionally, this quarter we completed our six-quarter cost reduction initiative, which included actions to optimize our facilities footprint, streamline our operating model, and reduce ongoing operating costs. These actions have now delivered a little more than $60 million of annualized savings, contributing meaningfully to the improvement in our profitability metrics.

[Phyllis Nordstrom, CFO at 3D Systems]

While this initiative is concluded, we remain focused on identifying additional opportunities to further optimize our operations. These actions have strengthened our cost structure and reinforced our disciplined approach to expense management, enabling us to selectively increase investments in R&D and capital to support our strategic priorities. Now moving to slide 21. Q2 adjusted EBITDA was -$800,000, an improvement of $3.9 million from the prior year period.

[Phyllis Nordstrom, CFO at 3D Systems]

This was primarily driven by the benefits of our previous cost reduction actions and the recovery of tariff refunds in the quarter and was partially offset by the isolated bad debt reserve recognized in the period. Turning to earnings per share. Q2 non-GAAP EPS was -$0.04, an improvement of $0.02 per share compared to the prior year period.

[Phyllis Nordstrom, CFO at 3D Systems]

While there is still work ahead, our consistent performance over the past several quarters demonstrates that the actions we have taken are delivering measurable financial improvement. We believe these efforts are strengthening the foundation of the business and positioning the company for long-term profitable growth. Turning to slide 22 for a summary of our balance sheet.

[Phyllis Nordstrom, CFO at 3D Systems]

During the Q2, we completed an equity offering with net proceeds just over $53 million, strengthening our liquidity position and providing flexibility to support ongoing business operations and strategic investments in our priority growth markets.

[Phyllis Nordstrom, CFO at 3D Systems]

We believe targeted investments in talent, facilities expansion, printers and equipment, and critical tools and technology will enhance our ability to capitalize on key markets that are accelerating the adoption of additive manufacturing. Moving to our cash position for the quarter.

[Phyllis Nordstrom, CFO at 3D Systems]

We ended the Q2 with $129 million in cash equivalents, and restricted cash. Total debt outstanding was $96 million, with $3.9 million coming due in the Q4 of 2026 and the remaining $92 million maturing in 2030. Now turning to slide 23. As we conclude our detailed review of the Q2, I'd like to briefly summarize our year-to-date performance through the H1 of 2026.

[Phyllis Nordstrom, CFO at 3D Systems]

Looking at the first six months of the year provides a more comprehensive view of the performance of the business by helping to normalize the impact of typical quarter-to-quarter fluctuations related to the timing of customer purchases. Turning to our H1 results, revenue increased 6% compared to the prior year period, driven by strong performance across our four priority markets, each of which delivered more than 20% growth year-over-year.

[Phyllis Nordstrom, CFO at 3D Systems]

Within our business segments, healthcare grew 14%, while industrial revenue declined 1% compared to the prior year period. Revenue growth in healthcare was driven by strong demand across the med tech business, including growth in personalized health solutions, higher DMP printer sales, and continued strength in orthopedic parts demand, along with double-digit growth in our dental business for the H1.

[Phyllis Nordstrom, CFO at 3D Systems]

Industrial revenue performance was primarily impacted by softer demand in our consumer-facing and general manufacturing markets, the end markets most sensitive to pricing and macroeconomic conditions. These headwinds were mainly offset by strong growth in aerospace and defense and automotive during the H1 of the year. Moving to adjusted EBITDA, we generated positive adjusted EBITDA of $1.3 million in the H1 of 2026.

[Phyllis Nordstrom, CFO at 3D Systems]

This performance reflects solid revenue growth in the half, meaningful benefits from our completed cost reduction actions, and continued discipline in managing operating expenses. While there is still work to be done to carry forward this momentum, we believe these results demonstrate the progress we are making toward our long-term profitability objectives. Turning to slide 24 to conclude with our Q3 outlook. As we look to the Q3, we remain encouraged by the positive trends we see across the business.

[Phyllis Nordstrom, CFO at 3D Systems]

We anticipate ongoing strength within our key markets, supported by growth in both printer hardware systems and parts sales. We also remain confident in the continuing adoption of our new denture platform and ongoing growth of our PHS business. Reflecting on our recent performance, ongoing operating discipline, and expected product sales mix trends, we are providing the following outlook for the Q3 of 2026.

[Phyllis Nordstrom, CFO at 3D Systems]

Revenue in the range of $96 million-$99 million and adjusted EBITDA in the range of -$3 million to -$1 million. In summary, we believe our results in the H1 of the year, combined with the breadth of our metal and polymer portfolio to address the needs of our growth markets, position us well for the Q3. This now concludes the review and discussion of our Q2 and H1 financial results.

[Phyllis Nordstrom, CFO at 3D Systems]

With that, I will now open the line for questions. Operator?

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to be placed into question queue, please press star one on your telephone keypad. A 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.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please while we pull for questions. Our first question today is coming from James Ricchiuti from Needham & Company. Your line is now live.

[James Ricchiuti, Analyst at Needham & Company]

Thank you. Good morning. First off, Jeffrey, congratulations, and I wish you the best.

[Jeffrey Graves, President and CEO at 3D Systems]

Thank you, James, very much. I appreciate that coming from you. I really appreciate it.

[James Ricchiuti, Analyst at Needham & Company]

It looks like some nice progress in the quarter. A couple of things. First off, how are you thinking about the NextDent deployment looking out to 2027, just based on what you're seeing in the market today?

[Jeffrey Graves, President and CEO at 3D Systems]

James, I would tell you I've been thrilled with the receptivity. We've been out there long enough now to really start getting some feedback from the end user, the patients, if you will, and the dentists. I knew it was an attractive product and that the performance was good. What I've been particularly pleased with, James, is the feedback we get on the comfort of fit the first time.

[Jeffrey Graves, President and CEO at 3D Systems]

From a patient standpoint, they don't have to come back multiple times to have them adjusted, which you do with conventional dentures quite a lot. For the dentist, what that translates into is productivity. They can see more paying patients a day by doing that. All the stars align for dentures right now. I am thrilled with the uptake.

[Jeffrey Graves, President and CEO at 3D Systems]

Now it's really about marketing to make sure more and more dental offices know of the availability of the product, then our direct sales activity to dental labs. There are a lot of them, James, and that's good and bad. It's nice to have a distributed customer base, so you don't have customer concentration. For a smaller company like ours, we also have to have

[Jeffrey Graves, President and CEO at 3D Systems]

Really good direct salespeople and channel partners to get out there and touch those labs. Even when you concentrate it down, there's about 8,000 total labs between the U.S. and Europe. You focus it down, there are a few hundred that really drive a lot of revenue, that's still a large number. What I was really pleased about, James, is that we're now in about 100 of those labs with our first printers.

[Jeffrey Graves, President and CEO at 3D Systems]

Some of them are buying second and third printers. That's the start of really building momentum. I think it'll take a couple of years to really build. If you look at, we've already revised our Q3 and Q4 production plan up twice this year, and we're starting to be a little, to be frankly, James, rate limited by electrical components that are going into data centers.

[Jeffrey Graves, President and CEO at 3D Systems]

We're starting to have to buy ahead, make sure our supply chain is able to support our growth in the denture market. I am really pleased. I see no impediments. It's all a matter now of marketing and sales and really getting the message out about it. On the heels of the products we've already launched, we've got already a next generation product in the pipeline we're working on to make it even faster and better.

[Jeffrey Graves, President and CEO at 3D Systems]

I'm thrilled. Just opening up the U.S. and Europe, James, could potentially bring a revenue stream that's several times the revenue stream we've had for teeth straightening, for the aligner product. The materials are regulated. They're FDA and EU MDR approved, so when you sell a printer, customers really are incentivized, if you will, by the regulatory environment to use your material.

[Jeffrey Graves, President and CEO at 3D Systems]

I am thrilled with all aspects of that, James, and the quality of what we're shipping is outstanding. I think by 2027 and 2028, you'll see this revenue stream growing significantly. We've got other exciting growth markets, it's impossible to say what will be the single biggest in our company.

[Jeffrey Graves, President and CEO at 3D Systems]

I would tell you, dental in total, I could see being that, and dentures, I believe in a couple of years could be the leader in that whole parade. I'm really excited. 2027 will be a good year. I think 2028, 2029, there's many good years to follow, James.

[James Ricchiuti, Analyst at Needham & Company]

That's great color. Phyllis, this may be a question for you. I'm wondering how we should be thinking about gross margins and OpEx in the back half of the year, if you're able to give us some color on where you see margin trends.

[Phyllis Nordstrom, CFO at 3D Systems]

Sure, James. Just looking at gross margins. Jeffrey mentioned in his script that we were going to be printer heavy in the back half of the year, particularly in Q4. That's always a very printer heavy quarter, given CapEx spending that occurs near the end of a calendar fiscal year. On the OpEx side, margins will be slightly impacted by that printer mix.

[Phyllis Nordstrom, CFO at 3D Systems]

I would factor that in as you're looking forward in the H2. As it relates to OpEx, I think we've done a really good job over the first two quarters. I don't see that momentum changing. I think there's stability now in our OpEx performance. Looking in the back half of the year, I would expect what you saw in the H1 of the year to be pretty similar to the back half.

[James Ricchiuti, Analyst at Needham & Company]

Got it. Thanks very much.

[Jeffrey Graves, President and CEO at 3D Systems]

Hey, James, before you drop off, I just want to personally thank you. You have followed this company. I've known you a long time. You followed this company extremely well and our entire industry. Really appreciate the hard work you've done and the research you put out on us and others in this industry. Thank you very much for the support. It's obviously a bit of an emotional day for me, and I just want to say thank you personally very much.

[James Ricchiuti, Analyst at Needham & Company]

No, I thank you, Jeffrey, and again, I wish you the best.

[Jeffrey Graves, President and CEO at 3D Systems]

Thank you.

[Operator]

Thank you. Our next question is coming from Greg Palm from Craig-Hallum. As a reminder, that's star one to be placed in the question queue. Please go ahead, Greg.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Yeah. Thanks, Jeffrey. Wow. I think you mentioned almost 100 quarterly calls. That's a pretty impressive feat. That probably puts you in rare territory. Yeah, I'd like to just offer my congratulations on a pretty amazing career as well.

[Jeffrey Graves, President and CEO at 3D Systems]

Thank you, Greg. I really appreciate that, bud.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Let's maybe start with that. The timing is a little bit interesting given, frankly, a lot of hard work over the last few years that's now, I think, put the company in a pretty interesting position to accelerate growth profitability. I guess the question is, why now? Why does the timing make sense? Just to be clear, has the search process already started? I just wonder how long this has been going on behind the scenes.

[Jeffrey Graves, President and CEO at 3D Systems]

No, it's just really getting underway, Greg. It could be a protracted period, Greg. I'm certainly not leaving right away. This could take many months to play out. It's just getting underway. I will say in terms of timing, Greg, it's a great question.

[Jeffrey Graves, President and CEO at 3D Systems]

In addition to being a CEO, I've been on public company boards cumulatively for 35 years, through many different boards and public company boards, CEO transitions are always tricky. It's always an art. Many companies wait until a company has a real problem, there's an issue, and they're forced to make changes and make them as quickly as they can. I think 3D Systems now, we're in an enviable position.

[Jeffrey Graves, President and CEO at 3D Systems]

We have made it through a really difficult period in this industry, where we had to cut an enormous amount of cost out of the business while maintaining our R&D portfolio spend in order to be ready for this resurgence and now out of the recession that I think you're going to see going forward.

[Jeffrey Graves, President and CEO at 3D Systems]

The timing may look a little interesting from the outside, but I would tell you, we've got the company well-positioned now. When you go to look for a CEO, you can say to somebody, "Look, the hard work's done of leaning out the company, getting the portfolio refreshed, and focusing on the core markets. We're ready to rock, and we've got cash on the balance sheet to do it." That's a really attractive, if you will, advertisement for a CEO to come in that has maybe a 10-year runway.

[Jeffrey Graves, President and CEO at 3D Systems]

I grew up at GE, where when you looked for a CEO, you wanted somebody with a decade runway. I've been at this for some time. It's not like I want to go sit on a beach somewhere, but it is an elegant time to hand to somebody and say, "You've got a run ahead of you now that's very positive." I think it's a good time to do this type of thing.

[Jeffrey Graves, President and CEO at 3D Systems]

It may look a little different because it's not being driven by anything, but it is being driven more by an opportunity to the future to keep the momentum going in this company for an extended period of time, because our products tend to last 10 years or more.

[Jeffrey Graves, President and CEO at 3D Systems]

The decisions that you make, they take several years to see them play out, and you want somebody in the chair that's going to see it through that whole process. That's what I would say is the timing. It's a positive thing for the future. I'll be here until we get a very good person in this seat to carry the ball forward. I am committed.

[Jeffrey Graves, President and CEO at 3D Systems]

I love what we do. I love this company, frankly. I love our people and particularly our customers and our mission. I will ensure that to the best of my ability, that we get somebody that is credible, worthy of this position going forward, and can really carry the ball to new heights. That's the simple kind of long-winded explanation, Greg, for you. Okay?

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Yeah. No, I appreciate the thoughts. I wanted to maybe shift gears and talk about some of the highlights. You noted, I think what you said was a record industrial polymer printer order, or at least I think sort of strongest order activity,

[Jeffrey Graves, President and CEO at 3D Systems]

Yeah.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Since 2014. Can you quantify that or give us some sense of what that represents in terms of the number of shipments and were some of those shipped? Are those from future delivery? I just wanted to be clear. I think you said that was casting for reusable rockets, but just wanted to confirm.

[Jeffrey Graves, President and CEO at 3D Systems]

Yeah, you certainly got the market right, Greg. In terms of the exact details of the order, I don't want to get to an order level of detail, I will tell you it spans multiple quarters. It's a very large order for printers that are critical to the production of reusable rockets, I just couldn't be happier about it.

[Jeffrey Graves, President and CEO at 3D Systems]

When we accepted that order, I tell you, I was not only happy for the company, I was happy for our nation and the world. I think the revolution in space travel now is amazing. The cost they've brought out of doing that is incredible. 3D printing is really showing its potential to change the manufacturing environment for a company that'll embrace it and use it.

[Jeffrey Graves, President and CEO at 3D Systems]

I love visiting that customer because I see every day how they're embracing new manufacturing technology, not only 3D printing, but other technologies that are really evolutions of our traditional industrial base. You say, "Wow." You guys are plowing new ground that is amazing to me. I look up in the sky at night, sometimes you can see the constellation of satellites that are up there, all based on their use of this kind of technology.

[Jeffrey Graves, President and CEO at 3D Systems]

I could talk on and on about it. I love it. It spans multiple quarters. We did do some shipments in Q2. They wanted immediate delivery for as much as we could, and we've got much more ahead of us. Man, if we play it right, if we do a good job for them, it can be a revenue stream for many years to come.

[Jeffrey Graves, President and CEO at 3D Systems]

Because it's a polymer-based product, you'll have consumable access to material sales that carry a high gross margin. Love the application. It's a model for us to follow in all of our core growth markets now. Okay? That's why I think you'll see a nice resurgence of industrial 3D printing in many markets now, Greg.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Yeah. Okay. That makes more sense because I was going to segue into that and ask about Q3 because I'm not sure when the last time you actually grew sequentially from Q2 to Q3, it's mid-single digits at the midpoint.

[Jeffrey Graves, President and CEO at 3D Systems]

Yeah.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

It sounds like maybe it's a combination of this and some of the other stuff.

[Jeffrey Graves, President and CEO at 3D Systems]

Yeah.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

But,

[Jeffrey Graves, President and CEO at 3D Systems]

Well, the encouraging thing, Greg, is, yeah, this order was a really nice cornerstone to build on. We see strength. I'll ask Phyllis to comment on here in a second. We see strength. We keep talking about these four key growth markets, two in healthcare, two in industrial. They're all coming back, and they're doing well.

[Jeffrey Graves, President and CEO at 3D Systems]

Quarter-by-quarter, there'll still be noise, but they are all doing well. Look, we still have exposure to other markets and stuff. That's why the whole company is not growing at this rate yet. You look at our four core growth markets, and they're all firing now on all cylinders. I think you'll see that going forward a lot. It starts with printer sales. We're selling a lot of printers into the field.

[Jeffrey Graves, President and CEO at 3D Systems]

Material sales on the polymer side will follow, metal part sales will follow on the metal side. Phyllis, maybe you could comment for Greg on the core growth markets.

[Phyllis Nordstrom, CFO at 3D Systems]

Yeah. I think what I'm most excited about is not just seeing it concentrated in any one category. Greg, we're seeing it again across printers, materials, parts. Even within our healthcare services like PHS, there's an expectation that there is continued momentum from quarter to quarter. Oftentimes, we can be a little lumpy just depending on mix, I think we've got a good broad sort of growth story coming into Q3, which is why we set the range where we did. I'm very happy about that.

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Yep. Okay. I guess just last one in light of this positive commentary, I mean, across a whole bunch of end markets and product lines, and I'm cognizant of the fact that you only guide one quarter out, but I'm having a hard time not believing that this is kind of a growth company again, and you can maybe get back to double-digit growth. Do you have line of sight in returning to double-digit growth, whether that's next year, 2028?

[Jeffrey Graves, President and CEO at 3D Systems]

Well, Greg, yeah, you can certainly extrapolate that direction. Given the last two years of severe headwinds from this recession our industry's gone through, I hate to get it too far out in time because I just don't know what's going to go on in the world. Yes, I agree with you. That's the trend. We've taken the conservative approach now to just guide a quarter out, one foot after another.

[Jeffrey Graves, President and CEO at 3D Systems]

That's where we're going. We try to give you color on the core markets, that we don't just hang our hat on a one-time event, like one big order, try to give you color on the core markets. Our four key growth markets are, I believe, long-term growth markets. They're looking really solid for years to come, I believe. I'm optimistic, I'm positive about the trajectory.

[Jeffrey Graves, President and CEO at 3D Systems]

I don't want us to get out over our skis like so many times this industry has done. I just want to keep delivering on solid growth every quarter and improving profitability. That's why we're guiding Q3 and not the full year or 2027, okay?

[Greg Palm, Senior Research Analyst at Craig-Hallum]

Yep, understood. I will leave it there. Best of luck going forward. Thanks.

[Jeffrey Graves, President and CEO at 3D Systems]

Thanks, Greg.

[Operator]

Thank you. As a reminder, that's star one to be placed into question queue. Our next question is coming from Kieran McCabe from Cantor Fitzgerald. Your line is now live.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Hi. Yes, thank you for taking our question, and I want to thank Jeffrey Graves service to the company. I just started following this industry a few months when you joined 3D Systems, so I enjoy learning the industry as you're CEO of the company. I want to go and send my congratulations.

[Jeffrey Graves, President and CEO at 3D Systems]

Hey, Kieran, thank you very much for those kind comments, and please pass along my thanks to Troy as well, Troy Jensen, who has done an excellent job. Your colleague there at Cantor Fitzgerald, done an excellent job working not only with me and 3D Systems, but this entire industry, particularly through this difficult period the last couple of years. You guys have been there and done a terrific job, Kieran, so thank you.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Great. Will pass it on, and we appreciate it. I guess my question is maybe kind of a follow-up to the previous one, but maybe I guess in industrial, you said some of the end markets are price sensitive, were a little bit weaker, and maybe you can provide a little bit color on, like, aligner sort of. Are you seeing better visibility in those markets that may be more cycle, more price sensitive? Maybe are you kind of seeing some light at the end of the tunnel in those kind of markets that are maybe more tied to the economy?

[Jeffrey Graves, President and CEO at 3D Systems]

Kieran, I would tell you, dental as a whole has been a good story, and historically, it's been highly tied to the aligner market. We've ridden the ups and downs of that market. That market now, seen from everything I can see publicly and stuff, it seems to have stabilized at more modest growth rates but continue to be a growth market. I think that's a great foundational business. I do not put that in the category of severe external competition and things.

[Jeffrey Graves, President and CEO at 3D Systems]

I think we've got a really deep relationship and foundation there. When you think about other markets that remain weak for us, it's on the industrial side of the business, outside of, it's easier to say what's out, outside of aerospace and defense and data center infrastructure. The more consumer-facing markets that we have are like the service bureaus that support consumer-oriented business.

[Jeffrey Graves, President and CEO at 3D Systems]

The jewelry business happens to be not only a consumer-facing business, but also deeply embedded in the Middle East. Those kind of markets remain challenging, and that's why on the industrial side, you see that as pretty much an offset to the strength in the high growth markets. Over time, those high growth markets are going to become dominant. Aerospace and defense is already our biggest industrial segment, and it's got great legs to it.

[Jeffrey Graves, President and CEO at 3D Systems]

Data center infrastructure, I think you're going to see the exact same thing. It's going to be a big market for us and a very good one. Part making to support those markets is going to be very big. Over time, we'll get less exposed to consumer-facing markets. Those are not markets that we're looking to make tremendous investments in for growth. They're certainly more competitive, particularly with Chinese products now.

[Jeffrey Graves, President and CEO at 3D Systems]

We look more and more, they're good, they're foundational, but we're looking more and more to these high growth markets for our future investment, Kieran. Okay?

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Right. You did a very strong improvement year in just EBITDA, nearly break to even. You're guiding to a small loss in the Q3. It seems like things are improving and have done $60 million in run rate cost reductions. I guess maybe what do you kind of view as the levers to get you over that hump to positive EBITDA and kind of a timing? I know you're kind of conservative on the outlook, you seem to be almost there, and you just need kind of a nudge to get to the positive side.

[Jeffrey Graves, President and CEO at 3D Systems]

That's right. Yep. It's like you're sitting at the table, you can smell dinner, it's not quite on the table yet. No. You're right. It's really tied to continued volume growth. We're getting that now in printers. It's great to have. We'll get volume efficiencies with that. We'll get gross margins up based on volume efficiencies there and stuff. The real payoff is going to come on material pull-through on the polymer side.

[Jeffrey Graves, President and CEO at 3D Systems]

When those printers are installed and really running, we're going to get material pull-through that almost assuredly always follows. I mean, in many cases, it's a regulated environment, it has to follow. In other cases, our materials are just very attractive and are strongly preferred for our printers. You'll get material pull-through, which is important for our gross margins.

[Jeffrey Graves, President and CEO at 3D Systems]

On the metal side of things, we've got what's emerging is this, I think, a relatively unique model where we now bridge customers from initial application development through part production, through printer sales. It's the rise of part production as a part of that model that's going to also drive our gross margins. The key to profitability for us is getting our gross margins up.

[Jeffrey Graves, President and CEO at 3D Systems]

The linkage there is to consumables on the polymer side and metal parts on the metal side. I think that naturally follows from the growth we're seeing on printers right now. I'm thrilled with the outlook. I think it's rock solid in a very volatile world. We're in the markets you'd like to be in for growth and a bit of insulation from some of the day-to-day volatility, if you will.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Right. My final question, kind of personal interest in it's on the data center infrastructure, the slide you had powering the data center and the nuclear. Are you working a lot with the hyperscalers and data centers for powering more behind the meter at the site? Are you also working with large utilities and sort of the grid and generation offsite?

[Jeffrey Graves, President and CEO at 3D Systems]

Nope. We're working primarily with the traditional, first of all, the traditional OEMs. You've got people like GE Vernova, Siemens, others that are in the business of manufacturing power generation equipment using traditional means of like natural gas fire and gas turbines. You've got now these hyperscalers that have to basically bring their own energy, Kieran. I mean, it's too much for the grid to handle easily, they have to bring their own power.

[Jeffrey Graves, President and CEO at 3D Systems]

I'm getting called into more and more meetings about things like small nuclear reactors for data centers. After not being in the nuclear business for a few decades as a country, I think you'll see a resurgence in nuclear power. Not necessarily the big power plants owned by utilities as much. Those take a long time to build. You measure it in decades sometimes.

[Jeffrey Graves, President and CEO at 3D Systems]

You'll see nimble, smaller nuclear plants, I believe, powering big data centers. We're in direct discussions right now with the OEMs, the hyperscalers, that have to buy those products, their key suppliers that are going to supply them. Okay? Hyperscalers aren't going to manufacture the energy generally. They're going to rely on key suppliers to produce it. Those are the folks that we're getting down to now.

[Jeffrey Graves, President and CEO at 3D Systems]

Kieran, I'd just point out, this Savannah River National Lab tie-in that we have now in South Carolina, they do marvelous work on nuclear power and fusion power, which is right on the cusp of being commercially viable. The materials they use are custom-made for 3D printing, if you will. They're high-temperature, difficult materials, very hard to manufacture through traditional means, and they're very expensive parts.

[Jeffrey Graves, President and CEO at 3D Systems]

They're ideal for 3D printing, where you can bring the cost down and you can enhance the design capability of those components. That's what we're doing on the fundamental side is working with SRNL on leveraging their R&D. We're putting that technology into our printers now, and we're working with the hyperscalers to apply that technology.

[Jeffrey Graves, President and CEO at 3D Systems]

That's where we're headed. I wanted to mention it because it's a future thing, but I think it's a really big deal, Kieran. When you look out a few years for us, I think energy will warrant its own discussion. It'll have its own revenue stream and profit stream from that. Okay?

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Great. Thank you so much.

[Jeffrey Graves, President and CEO at 3D Systems]

You're welcome, Kieran. Thank you.

[Operator]

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.

[Jeffrey Graves, President and CEO at 3D Systems]

Hey, Kevin, you've been our operator on these calls, I think since I arrived at this company over six years ago. You've done a marvelous job for us. In my mind, you're not only a hero for seeing us through these calls, but you represent hundreds of people that help us do what we do every day and communicate with the outside world.

[Jeffrey Graves, President and CEO at 3D Systems]

I want to thank you personally and for all the folks that largely go unsung in getting information out on the company and helping us deliver every day. Thank you, my friend, for helping us through these calls, and I wish you the very best as well. With that, let me wrap up the call. Again, I will be here for months to come yet, most probably. I may see you on another earnings call. Thank you all for tuning in today.

[Jeffrey Graves, President and CEO at 3D Systems]

Thank you for supporting our company, and we look forward to sharing our continuing results with you after the Q3.

[Operator]

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Participants

Executives

• Monica Gould, VP of Investor Relations
• Jeffrey Graves, President and CEO
• Phyllis Nordstrom, CFO

Analysts

• James Ricchiuti, Analyst at Needham & Company
• Greg Palm, Senior Research Analyst at Craig-Hallum
• Kieran McCabe, Analyst at Cantor Fitzgerald