Q3 2019 Earnings Call
Good afternoon, and welcome to three D. systems Conference call, an audio webcast to discuss the results of the third quarter of 2019.
My name is Robert and I will facilitate the audio portion of todays interactive broadcast.
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At this time I'd like to turn the call Libre to Melanie Solomon Investor Relations.
Good afternoon, and welcome to Threed Systems Conference call with me on the call our Vms Joshi, our President and Chief Executive Officer have boots, Executive Vice President and Chief Financial Officer, and Andrew Johnson Executive Vice President and Chief Legal Officer, what gets portion of this call contains a slide presentation, we will.
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The following discussion that responses to your questions reflect management's views as of today only and will include forward looking statements as described on the spot.
Actual results may differ materially additional information about factors that could potentially impact our financial results is included in today's press release in our filings with the FCC, 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 in the 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 the comparable GAAP measures.
Finally, unless otherwise stated all comparisons in this call will be against our results for the comparable period of 2018.
Now I'm pleased to turn the call over to you on those Joshi, our CEO VJ.
Thanks, Melanie good afternoon, everyone.
GAAP revenue in the third quarter was $155.3 million and non-GAAP revenue was $155.1 million the difference between the entertainment divestiture completed in July .
These results reflect it degrees of 5.6%.
But it had the entertainment business being excluded from or what is old.
Revenue would have decreased by 3.6%.
GAAP gross profit margin was 40.3% and non-GAAP gross profit margin was 44.4%.
The third quarter 2019, we reported a GAAP loss of 15 cents per share and then non-GAAP loss.
Up four cents per share.
The well known industry decline in manufacturing activity and industrial production has impacted our business this year.
Overall demand from our customers is down.
We also continued to experience revenue headwind this quarter due to the ordering patterns of a large enterprise customer.
And the pause we have taken on factory metal systems.
From a geography standpoint, these challenges impacted results.
In the Americas and Asia Pacific.
Which was slightly offset by.
My strength in the EMEA region.
Hi, mostly driven by healthcare.
I wanted to highlight if you policy do go look Ben from this quarter.
As expected we have returned to growth in materials.
And we are working closely with our customers to find the right production workflows.
We are excited that seems somewhat last earnings call.
We have introduced eight new production materials.
What I want to figure for platform.
These include application specific reasons.
Like actual.
Medical reasons, like Mad Amber and Mad White.
And production reason.
Like put all black Tan and high stem 300.
I believe feedback from customers tell us.
They are very innovative.
And the customers are very excited about these do would do deals what end user product production.
These materials will open up new production workflows in our target markets of healthcare.
Automotive.
Consumer electronics and other industrial segments.
Enabling us to transition from brutal typing to production.
Our figure for dental platform has been very successful with next then materials.
And with these eight new production materials, we will scale I'll, let industrial figure four platforms significantly in the coming month.
Our healthcare revenue grew 6% and excluding our large enterprise customer it grew.
Deemed put it that.
We are committed to operational excellence and keenly focused on cost structure and cash flow.
In the third quarter, we degrees net inventory by $11.2 million quarter over quarter.
And generate that.
6.5 million dollar cash from operations.
We believe in these uncertain environment.
I don't want to most important HDL focus is profitability.
And to achieve this we continue to take cost out of the business.
Compared to last year at this time, we reduced S yearly by 5% and R&D by 8%.
We have been taking costs out of the business throughout 2019.
And in the first nine months, we have lowered SGN day by 6%.
And R&D by 11% for total operating expense reduction of 8% in 2019.
In the coming months.
We will be accelerating our strategic reductions.
So that as we enter 2020 <unk>.
We will have the right cost structure for the company.
Last quarter, we disclose the suspension of federal contracting from the United States Air Force and I'm pleased that this has now been resolved.
On September six they're forced lifted the suspension following our execution off.
It to your administrative agreement with them.
And we are now eligible to Jane and perform new U.S. government contract without this fictions.
Finally, I would like to introduce our new CFO Dod boot.
Who joined us in the September .
I'm very excited to have dawn here as we are partnering to focus on operational excellence and driving toward a common goal of profitability and cash generation for two new systems.
Todd will now provide more details on our reserves for the third quarter up 2019, Scott.
Thanks, BJ good afternoon, everyone for the third quarter, we reported GAAP revenue of $155.3 million, a decrease of 5.6% compared to the third quarter of 2018.
Yeah gross profit margin was 43.3% compared to 47.3% in the third quarter of 2018, GAAP operating expenses decreased 10.8% to $79.2 million.
We reported a GAAP loss of 15 cents per share in the third quarter of 2019 compared to a loss of 10 cents per share in 2018.
We reported non-GAAP loss of four cents per share in the third quarter of 2019 compared to earnings of two cents per share in the third quarter of 2018.
Printer revenue decreased 17.2% to $30.4 million driven by the ordering patterns of our large enterprise customer and the softer macro industrial environment.
Materials revenue increased 2.8% to $41.4 million in the third quarter. We're pleased to have turned the corner to grow and expect to continue going for health care services and simulation revenue increased 6.3% to $56.4 million as BJ mentioned, excluding the large enterprise customer orders from each year.
Healthcare revenue increased 15%, we continue to be pleased with the overall demand trend for virtual surgical planning medical simulators and advanced manufacturing.
On the man manufacturing revenue decreased 12% to $23.1 million in the quarter attributable to the decline in the manufacturing activity and our industry and the headwind associated with the now resolved government suspension. We expect this headwind to persist in the fourth quarter due to its impact on the pipeline.
Software revenue increased 1.1% to $24.6 million in the third quarter, we're still seeing some headwinds from the automotive slowdown and our symmetry on product revenue that we expect to continue in the fourth quarter. So we're taking actions to enhance our software portfolio and expect long term growth.
Looking at the fourth quarter, giving the ongoing macroeconomic challenges and persistent headwinds that we have been facing we're expecting mid single digit sequential revenue growth.
We reported GAAP gross profit margin of 43.3% in the third.
Hi team, a 400 basis point decrease from the previous year non-GAAP gross profit margin in the third quarter of 2019 was 44.4% at 300 basis point decrease from the prior year. The decrease was driven primarily by factory utilization mix and inventory adjustments as we can.
When you are cost reductions during Q4 and drive supply chain efficiencies, we expect gross profit margins to remain in the mid Fortys range in the near term.
GAAP operating expenses for the quarter were $79.2 million, a decrease of 10.8% compared to the third quarter 2018, including the 11.2% decrease investing expenses and 9.7% decrease in R&D expenses.
non-GAAP operating expenses in the third quarter were $69.3 million, a 6% decrease in the third quarter or the prior year at 3.4% decrease sequentially.
Compared to 2018 quarter, non-GAAP dusting expenses decreased 4.9% to 48.3 million.
non-GAAP R&D expenses decreased 8.3% to 20.9 billion.
We are focused on reducing our cost structure by continuing to drive efficiencies and lowering head count to reduce cost to sales and operating expenses, while prioritizing investments to drive profitable growth.
We ended the quarter with $127.6 million of unrestricted cash on hand, we generated $6.5 million of cash from operations and pay down debt by $21 million during the third quarter, we improve working capital performance sequentially, reducing inventory by $11.2 million to $122.7 million.
While cash use and generation will continue to fluctuate period to period, we're very pleased with the cash result for the third quarter.
With that I'll turn the call back the VJ VJ.
Thanks Todd.
One of the last three years.
Since I joined treaties systems.
We have stabilized the company.
We have introduced innovative platforms for plastics, we've asked delay so you got a floor and our new production materials and we are gaining share.
350 metals platform.
We are confident that we will ramp up our metals effective system solutions by the end of the first quarter of 2020 and metals will become a growth opportunity for the company.
For the remainder of this year, we remain focused on profitability and cash generation.
Structuring the company to be lean and profitable.
We enhanced our focus on cost structure in 2019 and have reduced non-GAAP operating expenses by 8% in the first nine months.
And we will continue taking cost out in the fourth quarter to rightsize the company in this on certain environment.
Looking ahead, we believe our focus on innovate new production workflows, including hardware platforms materials software and professional services will drive profitable revenue growth in 2020 and with that we'll now open the floor for questions.
Operator.
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My first question comes from Hendi Susanto with Gabelli and company. Please proceed with your question.
Good evening, Fiji and thought and welcome Todd.
Hi, Hendi.
Fee, Dan thought I would like to us more questions about the upcoming strategic initiatives to rightsize your cost structure for 2020 can you share. What made you areas you are planning to address and how long it may take.
So I think we started cost reduction.
And throughout 2019, we are reducing the cost so we reduced 8% as I talked about.
Within R&D and SGN today, and we need to really.
Because on getting the Companys is smaller company, which is profitable.
We believe that there is lot of opportunity in SGN day aside because.
As we understand better the revenue profile that we want to regenerate and I talked about the two business model.
Do you have printer hardware materials and the on demand box and the second business model on health care and software when we would like to do is we want to work towards how we want to organize so that we can focus on those two business model and simplify the company and that.
That will enable us to continue to drive or what SGN day cost reduction is as far as the R&D is concerned we had upfront R&D dollars to really delano platforms and now as the platforms have been developed mode for plastics and metals. The everyone will focus on very specific.
Product category, which can really drive overall solution strategy that I mean talking about we're going to look for more production workflows and if you think about we have a line of production work flow dental work production work flow Julie production work flow medical devices.
Production work flow, what we want to do is to find hardware material software in professional services combination. So we can find new production work flow and that's where we're going to focus R&D dollars and try to reduce both R&D and SGN day.
Got it thank you PJ and second question is.
It is great to see the return of growth in your material business, how sustainable is that.
So I think fundamentally we believe that.
We've always talked about that in second half, we should be able to see all the hard work we have done in growing our installed base and delivering materials growth. So I do believe that you know the we'll have this material growth.
Next quarter end in 2020, now you know that could be some seasonality in full flexibility, but I do believe fundamentally that we own a buyback now auto materials growth onwards, the important part of the mosquitoes growth is the as I said to really have budesonide production workflows.
What a enterprise customer is doing really well so that materials growth is going to contribute into the overall positive loan growth. We also feel that dental.
Market, where we introduced over the next and is doing very well, we are gaining share and then that dental material.
No growth is also have yet to see we also feel that the approach that we have taken to go after production workflows.
Will enable us to drive more and more materials growth.
The new production machines that we just introduced its going to take some time because remember with this now we will have the growth of the hardware in 2020 of our industrial figure for and then in 2021, we will see the results off also this new production materials. So no I think we can sustain the.
The positive materials growth that we're talking about.
Thank you PJ good luck on finishing strong in 2019.
Thank you very much.
Our next question comes from Chris Van Horn with FBR. Please proceed with your question.
Hey, Chris Good evening, Thanks for taking the call and welcome Todd.
Yes.
You know you cited some some soft a macro industrial environment I was wondering if you could get into were there any positive our silver linings within that.
Isn't that statement.
Sure. So I think you know the automotive market and I think we all know right now that all industrial market the manufacturing.
Category.
Has lot of pressure, especially in the euro and in China.
And the positive inside for US is of course.
Americas for those categories, and then healthcare I really want to talk about our healthcare business.
You look at health care in third quarter. If you just take out the big enterprise customer. We grew 15% every single category in health care, what your surgical planning simulators, our advanced manufacturing of medical devices, we do for the.
Medical device company on those three businesses.
Grew.
In the third quarter. So the the thing that I can tell you from the growth point of view I, absolutely believe healthcare is in four front and I continue to see the progress that we are making in that particular segment and we are going to have that incoming quarter and in 2020. The other thing that I want.
Uhhuh lets you all know that as I said that he will stabilize the company.
Once we get our factory metal systems, you know completely qualified and start shipping in end of the Q1.
Our customers are just waiting for our solutions I do believe that also will help us.
For growth in 2020, so materials health care, and then software right now you know the I've seen.
Fundamentally some issues, especially on the summit drawn but I do believe that in 2020 with our new platforms in the solution focus that we have one software and the sales focus we are having on sale on software in health care will also enable us growth in 2020.
Okay got it then and maybe on that front are you seeing the competitive landscape change at all maybe specifically in health care and in other markets our competitors, leaving due to the softness.
So you know I think the thing is about this category you have lots of competitors. So you really talk about specific segment and a competitor Swiss for example in my mind.
For the escalate category.
In the low end I think there is real.
Bond issue then people are seeing on the low end.
Our SLF platform are very very competitive as a matter of fact me on the best in the World and we had seen growth, but I'm just telling you in that category I do believe that we have a much better value proposition.
The multi jet printing category.
Our success in jewelry market is there, but all that segment is under pressure and we can see that pressure.
The SLS market is growing and we have a very good product and what we need to do is continue to drive more share gains.
In SLS and I think you S is a.
Very good competitors, we of course HP plays into that particular segment in the metals segment I think our 350 is a very very innovative product, especially in healthcare.
I, absolutely believe our focus on health care with.
Medical device is really paying off and I do believe that that category has continued to grow you know in 2020, there idle in healthcare, we don't see that much competition.
For the medical devices.
With respect to the software side, you know clearly.
We have to compete with materialize, but I do believe that we have a much better.
Value proposition.
My view is right now the macro economic.
Issue with the and the the industrial and auto market will be the one but I think what we are doing is we really try to focus on profitability right now and making sure that when the market comes back.
We will be able to grow faster than the market.
Great. Thanks, so much for all that color.
Thank you.
Our next question is from Greg Palm with Craig Hallum Capital. Please proceed with your Hey, Greg.
Yeah, Hey, BJ and now welcome aboard Todd.
Thank you so oh.
I guess starting off with the kind of the Q4 guidance you don't normally you see a bigger jump sequentially I take mostly that's due to budget flush type scenarios I'm just kind of curious what what gives you the visibility now given the.
A lot of those sales tend to come in.
Sort of the December timeframe, anyways, and such as sort of where the pipeline is how it's developing right now so I I think I'm just trying to make sure that there is uncertainty in the market and I think that's what we're trying to reflect I think our pipeline is healthy, but I just want to make sure that we have proven and not really.
We look at.
You know over revenue profile, but I do want to really focus on profitability and cash flow. So what I'm doing with dogs health is to really saying, okay. Let's make sure that we take cost out cost out of the company because that's what we'll really enable US you know.
Well there.
The mid single digit that what we're talking about directionally.
Maybe plus or minus and I think thats not what we want to drive it I think we are going to get as.
Revenue as much as we can get what I wanted to focus the company really on making sure we take the cost out.
Yep, that's helpful and I mean do character to quantify sort of what you think is the appropriate cost structure for this company either next year or on a long term basis I don't know if you can make any commentary either on an absolute basis or maybe as a percentage well I mean, I think what do we ought to say.
Hey, you know we have a year.
The first our 2020, how could we be profitable.
And I think so that kind of uses the guidance guideline you know in our mind, let let's just be conservative in terms of the revenue growth look at our mid Fortys gross margin and then appropriately size. The structure. The second thing that we want to do is to really make sure that we look at our capital expenditure.
As you saw in this quarter, which I, absolutely think tremendous pride in the my team that lead to lower inventory down we are not consuming as much cash you know, we basically consumed 3.9 million dollar you know cash in Q.
Q3, we generated six in half million dollar.
Cash on the operating cash I think we need to continue to do that because I do believe that are having that focus on making sure that we get the right kind of a cost structures that will be profitable with lower revenue because you know I just don't want to count on getting the revenue.
And use that as an angle I want to really sad this revenue level that we have.
I want to be profitable.
Yes, it makes sense and your goal at this point as you know profitability starting in Q1 and 20, and then obviously I would say right, but we expect first half a year 2020 profit non-GAAP profitability.
Yep.
Okay, and I guess, just lastly taught it'd be helpful to get some sense on maybe what excites you about joining three systems I mean, obviously sounds like operator operating costs are sort of first and foremost, but what are some of your other near and longer term priorities here.
This trust as I'm very happy here partnering with BJ on the profitability and cash generation, but the technology of the company has in that direction is where we're going with health care of software metals.
And just the platforms, we have that that's what really excites me.
Great all right good luck on forward. Thanks.
Thank you.
Our next question comes from Troy Jensen with Piper Jaffray. Please proceed with your question.
Hey try.
Hi, VJ a welcome Todd Hey quit for you VJ can you just add a little bit more into this this metal factory a comment you made and I'm curious you know two is this related at all to the.
The metal material handling problem that we had out earlier in the year at these yes exactly the same enersis.
Yeah, So try asking what we wanted to make sure the powder management unit that we.
Planning to ship with over 350.
We look at the reliability and make sure that we don't have any issues and that's why we paused and we are making incredible progress we know the root cause and it's a tough problems because when you out I'm moving let's metal powders.
For the electrostatic forces and lot of things that we need to really pay attention do so it doesn't plump up and I think of we are finding a very good solution to that we are testing it thoroughly and I would rather wait then ship for product, having a quality issues that that is been.
Fundamental thing that as you know philosophy as had been focusing on quality reliability is our job number one we want to make sure and so yeah, it's taking a.
Few months, but I, absolutely believe that we're going to have incredible solution and you know if you look at the marketplace that are not that many.
Companies actually there are no company, which can really provide this kind of an automatic powder management unit for the matter print or so this would be a unique value proposition, but do you want to do it right and we are very excited that we have a solution that we will be able to ship in end of Q1.
So you are confirming you have a solution for the problem and it's just going through the fine yes testing, yes, yes, okay perfect. Okay cool how about just maybe for tied just if you can help US you give us great guidance on revenues and margins you know the sequential basis. We appreciate that transparency on sequentially do you think the opex.
On a dollar basis is going to go up flat or down sequentially. So as a percentage of sales. It will go down but it we're going to be relatively flat on a dollar but for the limelight offices.
Slightly up pedal perfect it's right.
Do you need to look at it more of a walk from as we continue to drive it down.
Yeah I figure there so as you and the focus is on taking the cost out so that if you think about it we have done in now for last three quarters and overall year to date eight but send down in operating expenses. So I want to let me see continue that kind of a profile because.
We just wanted to set up the company profitability and cash in that.
Yes, Okay Sir.
How about just quick for a three D.J. just could you give us an update on production platforms for figure for you didn't ship in many years are big pipeline.
It would be great.
I think what we are finding now so I think as I said with our dental index then material we are doing extremely well on figure for with these new materials, especially the two materials I'm very excited about RMB 10, the eight that I talked about.
The Black 10, I think black then for the first time Troy I fundamentally believe we have in end user part production material the customer the beta customer that we have provided this material. They are very excited they think that this is a game changing material with which you know V. We'll be able to.
Really fine lot of new production workflows in health care in.
Consumer electronics industry, where they want to really have.
Production parts that they could be doing it without using any tooling.
We will be able to go into the industrial segment.
And even the service bureaus are also getting very excited because I think they will be able to use this with the you know very short turnaround time on.
Production runs for the parts that they will be doing so I really think that black 10 [noise].
He is really very innovative material. The other one is the high time, because you know sort of people talk about high temperature I think we have now for the first time.
Hi, Tim material for 300 degree Centigrade, Richard which I really think is going to open up a lot of new applications in automotive under the Hood I really think this is going to be another very very important material.
The biocompatible material will allow us to go into the health care applications, and then actual which is the kind of an application, but I do believe for doing a elastomeric.
Silicon kind of.
Molding, that's also very and OTI material and I think you know always told you right. Let me we're seeing whenever you have the right materials write software and.
Product, we can really change the trajectory in dental we are shown that with next then I do believe with our new materials and with all the feedback that I'm getting from our beta sites. I think now we have arrived you know for our industrial both of these standalone and modular plus the production run off.
So it's I I'm very excited with these materials.
Understood. Okay. So good luck in Q4.
Thank you very much.
Our next question is some Brian drab with William Blair. Please proceed with your K Brian .
Hey, good afternoon, thanks for taking my questions.
Sure first you know I think it's really interesting that on this call.
We're talking a lot about cost reductions R&D and us DNA and I've had enough time here as I was listening to the call to look at the second quarter transcript and the word flat.
Was used over and over and that call with reference to how you wanted us to think about opex going forward.
And at that time, you know yet two quarters of about 70 to 72 million per quarter in Opex.
And now we're at 69 in the third quarter, we're talking about of going down from there. So.
So is this a.
You know a shift in how you're thinking about how you want to manage the company is this related well I guess, specifically to Todd joining like you know what are you.
No I think you know I I know I think this is something I started.
No accelerating that in 2019 quarter, one I think what we've been saying at that time also a John and I.
Flat, meaning flat sequentially, that's what we were saying and but do you know at the same time I think you want to get aggressive and you can see it already right. Then when we take you know what operating expenses for the a year to date you know we took out 11% in R&D and six months.
And in SGN day.
First nine months. So this is not like this quarter, we are talking about it this with having the path because I would rather have a smaller profitable company wins you have so much uncertainty and I think that's what we're focused on my view is you know when or what do you have uncertainty you want to get the right kind of a cost structure not rely on.
Revenue growth to get the Rightsizing because once you have that the other very important thing that I said, which is very important is.
We had put all of our R&D to develop platforms and we went to platform said double up you know the order profile of R&D spend is going to be more on software to materials and kind of a workflow solution rather than designing very expensive.
Platforms and that also is paying off because we believe that we underwrite platforms now the investment must be in the software everything I've been consistently saying thats. So Brian this is not like.
Last quarter thing. This has been something that we've been focused on and the really want to make sure we want to do the right thing.
Yeah, Okay, Yeah, I mean.
It was wasn't not long ago, though the last call is mid August and.
You know, it's over and over flat flat flat going forward. So that was the reason I asked the question and then that now it sounds like it's down down down this is.
As the message so talk seems like a shot for you then if you look at but if you look at every quarter. You know you had gone down year over year, you could check it out.
And I'm looking at it.
Okay, I just want make sure I understood the loss yet and then.
<unk>.
One other question I guess, if I could ask just junk gross margin.
So gross margin sounds like mid Fortys is what we're expecting going forward.
Yep.
It was.
Quite a bit higher in the past watching it just summarize just you know what what is the new model and why why this kind of shifting profile from.
Hi, or 40, so I think that's exactly.
Yes. The first thing there do you want to know because based on the actual revenue profile. You know we want to make sure that we reduced inventory, while revenues going down and when you do that your factory utilization is going to be a factor and so I want to make sure that we pay attention that fact utilization.
And was one of the key driving force in having the lower gross margin in the second one is.
No we want to make sure that we look at over inventory and then when inventory adjustments, let me do in the second reason.
That you know the gross margin a third thing is a mix because.
What do you want to do is to really ensure that we are driving the production platforms and then when you entered into production category. You know the mix also of the material that you have been shipping will have a different gross margin.
It's also so I think those other three things and I do believe that now the way. The we're looking at our profile I think getting to the mid forties in the gross margin in the right into the.
Okay. Thanks for taking my question.
Thanks, Brian .
Our next question comes from Jim Ricchiuti with Needham and company. Please proceed with your question.
Hey, Jim This is Mike.
Hey, How's it going this is Mike Cecos nonconsumer shooting for that.
My first question was about the.
Government contracts or the resolution congratulations on that just want to make sure that I heard correctly. So it sounds like there's going to be a bit of the hung over into Q4, I guess because of the pipeline was impacted by this activity.
Your first wanted to confirm that and then secondly is look sequentially was that I just had hang over if you will will be gone as we move into 2020 years, there's still some some pipeline activity that need to backfill or to make sure that.
Q1 is off to the races.
Yeah. So I think I just want to make sure you understand that our two part.
Of the Lily No government thing that is one of particular note I'm you know.
Government work that we have to do the export compliance and then we had our portal.
Which we talked about and then this was the air force suspension, which is now lifted and but it is lifted just in September so that to the pipeline that I talked about for the especially with OEM business. We still have work to do for Q4.
I do believe that it should.
No business will come back, but do you know it's generally their sales cycles are long.
Lead sales cycle. So you know I think that it would be some impact also in Q1, but starting in.
Second quarter on we should not have as much impact on the suspension that we had especially in Q3.
Okay. That's helpful. Tokyo, and then just shifting 60 markets.
We look at the automotive more good.
Obviously weaker their boost and all indications we've seen but is there any reason could go.
I'm more excited about that market near term or are you seeing any pockets, where where you might be seeing some green suits.
Moving to automotive market, you're not going alone.
Yes.
Yes, I think automotive market.
Globally is weak if you read everything.
For the got a lot of reasons people talk about electric guards to where do you know all kind of reasons and you know clearly for our prototyping market.
For one on demand barks market and certain jigs and fixtures sitting on those kind of applications automotive market is very important and though when you have that kind of a weakness plus they're not doing as many new models that that they're used to do you know and I think that has impact on.
Overall, the market, but there are lot of a innoviva auto industry companies, which are doing electric cars and electric vehicles actually they are still really a asking for a lot of innovative design solution using I do manufacturing so we see that part still.
You know really a engage with us and using this new innovative technology.
Okay, I'll leave it to Cook select us.
Thank you very much.
Thank you there are no other questions at this time I would like to turn the call back over to Melanie Solomon for closing remarks Melanie.
Thank you all for joining US say if your continued support a threed systems. A replay of this webcast will be available after the call on the Investor Relations section of our website. Thank you and good night.
This concludes todays conference you may disconnect your lines at this time and we thank you for your participate.