Q4 2019 Earnings Call

Well Suited

Drive operating leverage on growth at this Revenue level we were able to generate slightly positive adjusted ebitda for the quarter.

We finished the year with Thirty one point 1 million of backlog that's more than 2 and 1/2 * prior-year back luck together with our pipeline. We believe we are well-positioned for growth in twenty G20 even in light of the market uncertainty. I'll touch on that further towards the end of the presentation from a capital perspective. I want to extend my thanks to the finance team who worked very hard to successfully complete a sale-leaseback of our facility in Germany last month. This gives us confidence that we have adequate Capital to support our growth plans for Life foreseeable future.

Finally from a business perspective during the fourth quarter. We shipped our first s Max Pro Sam printers and our first x125 metal printer. I'll talk more about those in a month now, please turn to slide six as I reflect on the year. There was a significant amount of change in our organization and I would characterize 2019 as a chef position here first and foremost. I congratulate our R&D teams as we rolled out new product and material developments at a record Pace. We introduced three new machines wage two of which we started shipping.

Internally, we made investments in our leadership team. And we also expanded our customer-facing resources. We now have more touch points than ever with customers around the globe.

What we accelerated our technology development and customer-facing resources. We we continue to prudently and efficiently manage our cost this positions us well to realize operating leverage as we grow finally from an external perspective the softening manufacturing economy impacted the timing of customer decision-making for Capital purchases month including 3D printers that made it a tougher backdrop for the year as well.

Please turn to slide 7. I want to remind you of our strategic pillars. You will see how our operational progress aligns with our strategy.

Our first pillar address is our focus on customers needs investing in more customer-facing people has as we have been doing Wheel Drive New Market penetration leading to expand across our second pillar addresses are binder jetting technology core this relates to the new machines and materials that we've been introducing reducing the total cost of ownership and expanding applications and addressable markets our third pillar focuses our attention on recurring Revenue growth a solid level of recurring Revenue will provide me with more stability at the top and bottom line helping to balance fluctuation in machine Revenue. We renewed our focus on government contracts and I will share with you how this is paying off later.

so to summarize our

Team is focused on executing our strategic plan and realizing our long-term financial goals. Please turn to slide eight and you can see we've clearly had a busy year. I'm I'm proud to say that more than half of our current machine line up is now new introduced over the past year or so the S Max Pro Sam printer shown in the upper photo Thursday is our fastest and smartest industrial production system yet. It has a full range of capabilities for prototyping large molds and Coors as well. As for serial production office printer is currently available as a stand-alone solution or several units can be connected to create a fully automated volume production line.

We patented it launched a new methodology for our printers which we refer to as the AAA CT or Advanced compaction technology. This passive patented methodology delivers industry-leading density and repeatability significantly enhancing the performance of our printers using fine metal powders our new x 125 Pro mid-size printer enables users to print with a diverse range of powders at an increased production volume this platform addresses the needs of metal injection molding or MIM powder Metallurgy and Manufacturing customers seeking a larger platform solution for producing in a production environment and last on the machine front, but certainly not least. We announced RX 160 pro metal production printer our fastest and largest system for direct printing of metal and ceramic Parts. We're really excited about the introduction to age.

Platform which is more than two and half times the build volume of competing systems. It is capable of printing more than a dozen metal ceramic and composite materials may also has industry 4.0 Cloud connectivity and process linking capabilities enabled by Siemens Minds fear. We believe this platform is particularly attractive for the the motive defense and Aerospace Industries. It's truly revolutionary. We have all also launched new materials and binders with an updated qualification process that I'll review in a few moments.

Please turn to slide 9 and I will provide an antidote about a key production user.

This customer has several of our m-flex metal printers. They are one of the first order and receive a new x 125 metal printer shipped in Q4 given their satisfaction with that printer. They have ordered additional x125 printers to expand their production volumes and also an inn event plus to expand their development activities to new new sites.

Additionally, they are expressing their commitment and have reserved several more systems for later in the year. We believe that this pattern demonstrates one's ability to help customers move Innovative direct Metal Products products from development to scale production.

Please turn to slide 10 and I'll briefly describe our new material qualification process. I direct printers have been capable to print dozens of materials Metals Ceramics and Composites. They fall into three categories as shown here first. We have seven materials that have been qualified by Third parties mean they have full marketplace Readiness examples include, materials such as 316l and 17-4 stainless steels.

Next we have fourteen more materials that have been qualified by our customers for their own application several of these are proprietary materials serving as differentiators former customers.

The third category includes more than twenty-four materials that are printable in an R&D setting but are undergoing further development to get them to the top of the pyramid including examples include aluminum h-11 tool steel and tungsten carbide.

We Believe x one has the widest pallet of materials and this in turn leads to Growing many new applications in many new markets

Please turn to slide 11 in the past. We've talked about recurring Revenue mostly related to consumables and parts while those efforts continue today. I woke touch upon our expanded focus on R&D contracts. We've been increasing our joint development programs with commercial customers to advance binder jetting applications may be on the contract revenues several of these R&D projects should lead to opportunities for RX 160 printer. Next. I renewed focus on government is paying off in 2019. We won several small sbir Awards and already in 2020. We have a new contract with us Department of energy. This is a multi-year grant amounting to over four million dollars.

It is a develop Innovative high-temperature ceramic heat exchangers that operate an extremely harsh service conditions some some of these contracts involve Innovative materials such as silicon carbide, which I've talked about before but aluminum is now a big focus and we are showing steady progress there. This is really exciting considering the brake light waiting opportunities that this material opens up for our customers, especially those in the automotive sector

I'm now going to let Doug walk through the details of our financial results Doug. Thanks, John. Good morning everyone. If you could please turn to slide 13 will start with revenue office revenue was down to Seventeen and a half million in Q4 2019 compared with our Q4 2018 record quarter.

For the year as John mentioned Revenue was 53.3 Million compared with sixty four point six million in 2018. The decrease in Revenue was attributable attributable to both of our product groups church. You can see on the next slides.

now, let's go to

514

here you can clearly see the driver of the revenue shortfall in the quarter and full-year.

Our machine sales were ten point seven million in the current quarter down from $19 million in last year's fourth-quarter. This is primarily due to the timing of finalizing machine installations at customer facilities, including our newly released desk Max Pro and x 125 platforms introduced during Q4 2019. In addition. We continue to experience the impact of the broader manufacturing on in 2019 compared to 2018 which has resulted in general delays and customer purchasing decisions for Capital Equipment.

We finished the year with 27.2 million of machine sales compared to thirty six point four million in the prior year.

Now if we can turn the slide fifteen will review a machine unit sales.

As a reminder our direct machines directly print components such as metal and ceramic parts for industrial and other applications and include our internet plus and flex and x 125 for platforms as well as our newly introduced X1 160 platform, which is expected to come online in late 2020.

Are indirect machines print tools such as Saint cords and molds and include r s Max Pro s Max & S print platforms are indirect machines are larger footprint systems with such systems generally achieving a higher average selling value.

We sold 14 machines in the 2019 fourth quarter compared with Twenty Eight and the prior-year quarter our 2019 fourth quarter machine sales included significantly fewer and a lower portion of our direct machines than the fourth quarter of 2018.

As you can see on the charts on the left, we sold three fewer indirect machines and 11 fewer direct machines in the 2019 fourth quarter as compared with the prior-year quarter.

This volume decrease on favorably impacted the machine Revenue dollar decrease. We saw on the last slide.

Our machine sales during the 2019 fourth-quarter continue to represent a diverse set of global geographies and customer applications and included a mix of industrial and research and development users.

During the full year 2019. We sold 44 machines as compared to 56 and 2018 the decreased driven by the fourth quarter factors. I previously explained.

Now let's turn to slide 16.

Recurring Revenue which includes our 3D printed and other products materials and services with 6.8 million in the fourth quarter of 2019 reflecting an eight per-cent increase over the prior year.

New Year 2019 recurring Revenue

Now if you'll turn to slide twenty, I'll review backlog to remind you our backlog includes firmly committed orders received from our machine and recurring Revenue customers and includes our machine maintenance contracts as well as the non-cancellable portion of our operating lease agreements backlog also includes orders from our global global direct and indirect printing operations and other contractual services including funded research and development.

We ended the year with a record backlog balance of approximately 31.1 million compared to twelve point three million at the end of 2018.

We expect the combination of our backlog at December 31st, 2019 and an acceleration in Market or doctrine of our newly introduced printer platforms to provide the basis for growth and twenty20 despite certain negative macroeconomic trends for Global manufacturing, including the global market impact of the Coronavirus.

We remain confident in our business given our expanding product portfolio and our leading position within the additive manufacturing space for binder jetting technology.

Starting to slide 21 this chart represents a waterfall of our first nine months and fourth quarter 2019 cash flows since I reviewed the first nine months previously. I won't repeat that here instead. I'll walk you through the fourth quarter section on the right.

We turned a net positive cash flow of approximately $100,000 during the 2019 fourth-quarter. This net increase was primarily driven by proceeds received from the sale of our European headquarters office operating facility and Kristoff in Germany and the sale of our former Houston, Texas operating facility, which combined generated three point two million in cash for the quarter.

This cash generation allowed us to repay our outstanding borrowings on our related-party revolving credit facility, which was fully available at December 31st.

We well we narrowed our net loss in Q4. We still had net cash outflows from operations mostly due to unfavorable working capital changes primarily an increase in inventories tied to our machine installation activities are cash Capital expenditures for the fourth quarter were limited to a hundred thousand dollars. We anticipate approximately two to three million a planned cash capex spending in 2012.

For the year our sg&a decreased by approximately $600,000 to twenty two point six million. The Improvement was driven by employee and Consulting cost reductions associated with our 2018 Global cost realignment program, which were offset by costs incurred for executive management changes and our investment in selling and marketing efforts including costs associated with the gifa Trade Fair wage, which we would discuss during our prior calls.

If you'll turn to slide twenty-two, you will see our total liquidity at your end 2018-2019 as well as a pro form of 2019 which takes into account certain liquidity actions. We took in a 2020.

At the end of 2019 we had 20.2 million of total liquidity compared with twenty two point six million at the end of 2018 on the right. You could see the pro forma chart which takes in takes r25 December 31st, 2019 total liquidity position and roles in remaining proceeds from the completion of the sale-leaseback of our European headquarters and operating facility and Gustav in Germany, which took in February 2020 this transaction resulted in total unrestricted that proceeds to us approximately 18 and 1/2 million dollars of which approximately 2.2 million was included in a cash and cash equivalents at December 31st, 2019.

separately

We entered into an amendment to our $15 related-party revolving credit facility, which reduced the amount available under the revolving credit facility to ten million dollars and extended the term of the facility through March 2024.

This generates a total pro forma liquidity of approximately 31.6 million.

And 2019 we significantly cut our cash burn rate as compared to to 2018 and our Focus remains centered on profitable growth and operating cash flow generation for the business office.

We've shown the ability to modify our operating model when necessary or 2018 Global cost realignment program as an example.

We remain focused on effective and efficient cost management within our business. We've also shown the ability to identify and execute on low-cost sources of non-dilutive liquidity to support our growth initiatives. We continue to believe that we have sufficient liquidity to support our near-term growth plants.

Turning to slide twenty-three. We wanted to provide an additional overview of the liquidity actions. We completed in February 2020 and the related pro-forma impacts on our operating model.

We expect to incur annual rent expense associated with the completed sale-leaseback of approximately 1.7 million dollars, which replaces are $600,000 annual depreciation rep.

We also expect to recognize the gain on the sale of approximately 1.4 million in our 2020 first quarter.

That concludes my prepared comments and now I'll turn it back to John. Thanks Doug. Please turn to slide twenty-five and I'll discuss the current economic backdrop as we see it wage noted in the chart here initial predictions for 2020 where that manufacturing production would grow. However, that was before the outbreak of Copa 19, which is caused significant uncertainty with respect to x one priority Remains the health of our employees and our business as well as continuity for our customers and our partners our present time our supply chain has not been impacted but we note that certain subcontractors applies. Particularly Electronics do have a risk from a marketing perspective. We given our Global reach revenues from highly impacted countries China South Korea. Italy are only about ten to fifteen percent annually of our business.

We are monitoring the situation closely and dynamically adjusting we're needed with that. Let me turn to slide twenty-six where I will discuss our Outlook would have said several positive attributes driving favorable momentum into twenty-twenty these include our record backlog entering the year followed by a solid pipeline even by our new machine line up and expanded customer-facing team also our operational and capital spending remains under control. We believe these factors position as well for growth and solid margins in twenty-twenty. Finally. Our balance sheet is strong and well-capitalized to support our growth. However, there's so much macro uncertainty including the unknown economic impact of cope of nineteen. We currently don't feel it's prudent to provide quantitative guidelines.

for a specific time.

We remain focused on continuing to execute our strategic plan and may give quantitative guidance in future periods.

Please start to slide twenty-seven and I will close with our commitment to sustainability. We'd X1 have always realized that our binder jetting technology is Greenberg and we recently expanded our communication to stakeholders on the sustainability value that we provide our vision is to deliver sustainable manufacturing without limitations compared to traditional manufacturing processes are binder jetting technology lends itself to a number of sustainability drivers wage as listed here. These include less waste lighter-weight components the consolidation of parts and even using recycled materials sustainable. Supply chains are becoming really important Supply chains that are shorter more decentralized closer to the End customer and with less risk. These factors are not new, but they

They are qualities. We want to be sure that our customers and our stakeholders are aware of.

That concludes my prepared comments and now let's open up the lines for questions.

Thank you. If you would like to ask a question, please. Press star one on your telephone keypad. Our confirmation tone will indicate your line is in the question to you may press star to if you'd like to remove your question from the dead for participants using speaker equipment may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Chris Van Horn with B Riley FBR. Please proceed with your question.

Good morning, everyone. Thanks for taking my call Chris. So, you know, I know it's I know it's a fluid situation and you know, it's hard to kind of look at 20,000 from a quantitative level. But you know, maybe just what do you seeing in the marketplace right now our our our customers somewhat shutting down our suppliers, you know making alternative rock bands and and you know, I guess what what are you kind of seeing real time?

I'll start with that. So yeah, I'd say it varies by region, you know, obviously Asia was the earliest impacted in some calls with customers in China. Their their facilities are starting up again at this point. So they're looking to stabilize production and then move to expand capacity with digital manufacturing wage and that that is similar across. The rest of the region in Asia. Japan has not been as impacted and and is a very strong market for us Europe has recently seen significant uncertainty and those customers there. Although we continue to be in good conversations do have a an attitude of part. I would say in North America and you know, which we have significant back or Pipeline and opportunity as well as the expanded customer face.

in the organization

Customers appear to be moving forward in many ways. We had customers here this week, um, finalizing programs and projects. So I feel in the Americas, you know, there's there's a good confidence to move forward, but it it does vary by region and and sometimes you wake up and then the next day's news may change people's minds but the combination of our backlog new products our sales force are well-capitalized balance sheet. We feel pretty confident about this year.

Okay, great. Thanks for that color. And then, you know focusing on the backlog, you know, really strong growth obviously. Could you give us a little bit of color of maybe you know the End Market, you know mix of that of that backlog and and then some perspective on on your visibility into that backlog.

Yeah, I'll start there as far as the the mix by industry again. One of the positive things about our technology is it's very broad. So we have business with you know, Aerospace automotive industrial. I mean, there's a lot of General industrial customers people that built pumps and brackets for utilities things that that are very odd Broad and not as cyclical and related to consumer spending. So it is both geographically and Industry broad. So there's no particular concentration. Um, yeah, I think would you have anything else? I think that that's fair we certainly saw, you know, an uptick related to that backlog based on the product introductions that we did sort of mid year in 2019. So we've got a nice share of the you know, the S Max Pro and the 25 Pro are starting to to take flight for us. So you do see that as a composer.

There and and that really sets us up for the early part of 2020.

Okay, got it. And then just on the timing of that backlog is you have good visibility of of when that comes to the piano. Yeah, sure. So of the 31 one that's their ass end of the year or twenty seven point one is is you know from our perspective is something we expect to recognize in 2020.

Okay, got it. And then and then just to put some perspective on on last year. Do you do you know what breakout kind of what you booked in shipped during the year?

We don't typically disclose that and the reason being that the the variability from one transaction to the next from the time we take in order to the time. We actually finish the project. It's it's quite wide summer can be multi-year where we start discussions in one. And then work through a process and ultimately deliver a product in a separate. That can take a bunch of different forms and other cases we take our order and and turn it rather quickly which the discussions may have had a Genesis well before that, so it's not a statistic that we that we use to run operation just because we're so fluid and and how many different discussions with customers and where they're at in their adoption cycle.

okay fair enough and then you know

From a capital perspective looks like you're in pretty solid shape here. I think you mentioned two to three million in capex spend for 20 20. And so you anything else that you you might use that cash for life, you know continued working capital Investments Etc.

Yeah, and I think the the capital Investments that we talked about a lot of that is related to our expanding our parts business, which is a recurring Revenue so that that's a positive and we're seeing opportunities down there, you know, as a matter of fact, we're from a working capital standpoint. We have several projects from a machine standpoint to implement lean processes and reduce lead times. So but we don't see a large increase there, but it is Lumpy sometimes quarter-to-quarter. So we're at this point with the uncertainty. We're quite happy to have a large purple and cashback capabilities.

Okay. Thank you so much for the time this morning. Thanks, Chris.

Thank you. All right. Next question comes from Brian kinstlinger with Alliance Global Partners. Please proceed with your question great. Thanks so much. I appreciate how difficult the environment is off with the limited business travel unless it's critical right now for most companies. I assume viewer perspective customers are coming to your facility to evaluate your printers. How can the company adjusted sales strategy? Should they should continue for extended. And should we expect very few printer sales the next few months while while we while we wait for more clarity. Well, thanks for the question Ryan. If firstly you're right, it is a fluid situation, but the positive thing is the large backlog we have and also order activity that's already occurred in a 3/4, um, as we also talked about our expanded customer-facing team for the most part that team is forward deployed previously. We had a strategy of having folks in, New Jersey.

Of our facility in sales now. Our team is forward deployed closer to customers. So that's that firstly allows us to better serve customers across the you all regions. Secondly, I would say that we've enhanced our ability to use digital tools. We have very wide wide use of video conferencing and and a team teamwork type meeting room. So we've been expanding that as well as on the marketing side, you know, there's several trade shows that are being canceled and we're flipping that to a digital trade show in our ability to continue to talk to customers even whenever they may not be able to travel how that impacts orders in the short-term. I mean, we'll see I described earlier my Q&A a little bit about the the geographic differences, but you know the I would say the the the Americas seems to be the most positive as far as moving forward.

and we have plenty of

Things in the pipeline. So we anticipate will be able to close things. And remember we're sitting here in a situation where there's been a disruption of the supply chain, whether it's because of took care of us, whether it's because of viruses the the aspect of digital manufacturing and bringing Supply chains closer to the end-use is a, you know, kind of a Mac Trend that we're going to see continue to play to our strengths. And so I think a lot of customers are looking at that long-term Trend and continuing to make decisions for the future life with that said you talked about the confidence with your backlog of the twenty-seven million that you expect in 2020. How much of that is from machine sales versus other sources.

Sure. So Machine Sales would would be roughly let's say twenty three million. So we turn our recurring Revenue as as you would imagine a lot quicker than that assisting a sales. So the large chunk of it is is geared toward machine great. And then again to John's answer from the first question with the first quarter almost complete and the insurgence in the market. Can you quantify how many punters you sold this far in the first quarter? And if you didn't sell any more, you know, what kind of Revenue do you already have in hand?

Yeah, so with a few weeks to spare. There's a lot of it's going on related to the company. It's it's a pretty fluid state. So I don't want to give any type of number or specific range when I can tell you is that the month, you know, the prior-year comp is pretty low. It was not our our best quarter and we feel pretty confident that we've got the Firepower to knock that number out for the first quarter looking at the backlog and considering where we were and a lot of these machine projects hanging over from the end of nineteen. That's our runway for the first half of 2020. Obviously with the uncertainty this out there right now, we're continuing to we've continued to pick up contracts and the first part of twenty-twenty the first quarter we've had more order flow than we certainly did in the same. During 2019. So often that really sets us up well to sustain a period of time. We're not a company that sells product off the shelf and turns it fairly quickly. So we were already into a number of these projects. It's just dead.

You know incumbent upon us to execute great and then you mentioned in your prepared remarks that some subs that that make electronics for your systems. I assume are sourced from China or maybe Source from China. So can you highlight what supplies those are and are you able to access those supplies right now to build to manufacture new machines?

Yeah, so we have modules and various things that may contain Electronics. We we've gone through with our suppliers are direct suppliers and they have told us they have adequate Supply and our supplies should not be impacted. However, they do note that some embedded components maybe uh, automatically sourced from China our primary, uh, you know, kind of controls vendor Siemens wage if we've reached out and had good conversations with them. They are obviously a large sophisticated company that has redundancy in their supply chain and feel positive or their ability to serve as well through this year and and again with that backlog, I mean a majority of that we already we already have that built and ready to go. So it's really more oriented towards the issue or orders and the second half of the year.

Great. Last question I've got is can you remind us the price points?

Have your two new printers and how customers are reacting to that but I think are some higher prices compared to your older technology.

Well in some cases one of the things I want to remind everybody is in our enhancements of the binder jetting core. Our objective is to drive better cost of ownership that broadens the application. So that is the way we're moving forward relevant to the S Max Pro those tend to be over a million dollars that price point was held from a prior system. But the machine is 20% faster as far as output in in in addition to multiple other features such as industry 4.0 capabilities in the the 25 Pro that that system is approximately $600,000 that is higher than a similar system that had less capability from a material set standpoint, but productivity wise compared to a smaller system. It has a better cost of ownership compared to our smaller systems that we're able to do men powders.

Great. Thanks so much guys.

Thank you. Our next question comes from line. Please proceed with your question. Hi, thanks for taking my question. I guess just to gain know given the fluid situation and sort of how it's hitting different geographies or the timing of different geographies is vastly differing. Do you think that's going to change the contribution between sand and metal and you know, what are your thoughts in terms of, you know, as you were coming in, you know given that you feel confident in the backlog you think that there will be some movement around. Thanks.

Okay, I'll get it started. I mean I guess we don't see a shift between sand and metal other than the normal expectation that you know metal continues to be a long-term adoption opportunity for direct metal Parts where which were never really printed in a production environment from a 3D standpoint. So, you know, we don't see broadly and this virus or other changes impacting that mix, you know geographically again, I mean one of the things I'm you know in some ways the the investment we made in the customer-facing resources and the global footprint we have gives us an ability for different regions to let's say speed up and be and go higher or or manage the situation compared to maybe some other companies. So, uh being closer to the customer is always good and we we don't see a shift from a product area I mean Geographic

Quickly, you know quarter-to-quarter. We obviously may see some slowness in Asia initially, but then, you know later in the year, we would, you know, hope and anticipate that that comes back up got it second question just with respect to your customers contracts and how those are written. Are there force majeure Clauses in there that put any of that backlog at risk in I mean our terms and conditions are standard relative to that and we've we've taken on a lot of you know cash down payments and and other money certainly we've not had any discussions, uh at this point about customers backing out of their prior commitments. So we feel pretty good about that. Okay. We we have a suggestion deposit down and and customers again. The I I just want to remind it this this element of supply chain disruption digital manufacturing and getting using 3D printing to get closer to age.

Customer closer to the point of views really is the long-term.

Getting more and more discussions where senior executives are understanding that and so projects, you know, long-term projects really continue to be funded in that regard. Thanks. That's helpful would could you remind me of what the when we look at the 2020 what the geographic breakdown will look like off between Asia and North America and Europe?

So we've been we predominantly had u.s. I guess the Americas from a regional perspective has been our leader. You know, that's anywhere from 35. Let's say, you know just above 40% of our split 2019 was actually a pretty strong year for us for for Asia. We expect that to maybe come down a little bit as a total percentage of our life news in 2020 and Europe has been pretty balanced in the low 30% So we have it because we're decentralized in terms of operations and and how we deliver to customers. We have a pretty pretty good balance with no specific exposure to any one region a globally

Yeah. No, I'm just trying to that that's helpful thing. So I'm just trying to get the you know, it seems like Ages come through the worst and so providing you don't get a second wave. It would seem like that's the area of strength. We're North America and Europe seem to be more of a wild card at this point. And that's why I was trying to better understand what that might look like in in how it might shift and I'm assuming that you can you would be able to shift some of that relatively quickly in terms of that backlog. Yeah. I think the way that John explained it. I mean certainly we're feeling the effects in Asia currently or we'd see, you know, that was the first shortest shoe to drop for us related to 20/20 already what's happened in the other regions. It's sort of a a little bit of an unknown at this point. But again, these are typically pretty long-term projects, uh, you know, six months in some cases or longer. So there's a dead

There was a period of time that if we're already into something if it gets stretched out for 30 90 days that you know, we recover within the same fiscal year.

Yeah, and and I would just to get in the the it's both that supply chain point where digital manufacturing wins and so customers want to follow those long-term programs. The other thing that I am reminded of is a number of the customers. I've talked to their products that they're going to build with these direct metal machines. They cannot design or manufacture them in traditional methods. They want to launch a certain vehicle that has lightweight components in 20 21 22. They need to continue that program to be able to ensure that the supply chain is not ready to launch that product. So we continue to see those long-term programs in in deep discussions. And in this. Except, they don't take a while to to to develop but we're not seeing any sign that they're stopping.

Got it. Thanks so much.

I appreciate it.

Thank you. Our next question comes from a timer with no, Please proceed with your question. Hi guys, just a quick question on the recurring Revenue versus the you know, sort of I guess printer Revenue. Can you talk a little bit about the margin profile difference between those two gross margin and what gets you know sort of down to the ebitda line?

So, you know, we we pretty much our operating as a singular operation. So we don't really break out margins per per our product groups. So but the the route of travel news generally follow similar stream to what the system self or so, uh, we don't see a lot of there's not a lot of dispersion between the two lines of business.

Great. Thanks. I appreciate it.

Thank you. Ladies and gentlemen, as a reminder. If you'd like to join the question to please press star one on your telephone keypad. Our next question comes from line of investment manager. Please proceed with your life. Good morning guys. When one question, I've heard that bind a check printing maybe the desirable way of going in the additive manufacturing area, especially for industrial end product manufacturing and you've been in this Thursday. Yeah a number of years, but now there appeared to be other companies in getting into the binder jetting areas such as desktop medals with a huge market cap and you let Packard is getting in there and GE. How does your find a jet offering compared with the others dead?

And what effect might the new entrance be having on the time it takes to get the orders and of course off on X1. And of course, how do you see your your offering Etc comparing with theirs and what are your advantages and your selling points against them? Thanks Rob. So that's there's a number of points there. I I would just say you're absolutely right people in the industry people or manufacturers are recognizing that binder jet printing is the right way to expand into production applications for direct metal parts. So that's a real positive. We we've known that for a long time. We've been building our knowledge base for more than 20 years from the the Advent of the other competitors joining is a recognition of that is the case off.

So that that is positive validation of what we've done. You know, when you say they are entering they are entering and they are announcing but the reality is to buy real products today than from us. And that's really where one of our main advantages is. The installed base. We have the experience. We have the productivity of our our systems in a binder jetting is that long-term solution for production. It's not a simple process. And so we recognize that it will take other competitors time to fully I get into the market and in that particular time, we can continue to expand our presence and relate to aspects of the business. I'd say competitive or you know, the new machines we've launched those are all being very well received. I had an antidote in the deck that related to the 25 Pro and yeah the the 160 Pro that we have a noun.

Then we'll deliver at the end of this year, too.

You know that has modular technology. So therefore we've actually proven out core components in other platforms that will be scaled up is getting a lot of attention from production come back. Why because it has that experience level they know and they can rely on our experience and the ability to run production Parts. It has industry 4.0 connectivity. They're putting these not one off but multi off, you know multi systems in production facilities and they need that ability to make this robust and scalable. And therefore we feel we're in a great position. So I guess the question

Be home, 11:30.

Thank you. This concludes today's teleconference. I'm sorry, this concludes our question-and-answer session. I'll now turn the floor back to management for any final comments. Thank you for your time today, and thanks to our team members around the world who work hard to drive collaboration Innovation and acceleration for the digital transformation of manufacturing. We look forward to them dating you on our first quarter progress in May. Thank you again for your interest in next one and have a great day.

Thank you. This concludes our conference today. You may now disconnect your line. Thank you for your participation.