Q1 2020 Earnings Call
Good afternoon, and welcome to three for such conference call and audio webcast to discuss the result of the first quarter 2020. My name is Jesse and I will facilitate audio portion of today's interactive broadcast.
What's your acquire <unk> during today's conference. Please press start zero on your telephone keypad that's.
Next time I would like from the call over to know any fallen investor relations.
Good afternoon, and walk into three D. systems Conference call with me on the call or the M.S. Joshi, our President and Chief Executive Officer, Hondas, Executive Vice President and Chief Financial Officer, and Andrew Johnson, Executive Vice President and Chief Legal Officer.
Please note that given the current situation with the cover 19 pandemic, we're all participating from different locations.
The what kept portion of this call contains a slide presentation that we refer to during the call. Those following along on the phone wished to access the slide portion of this presentation. They just want me industrialization section of our website.
Participant two like test questions at the end of the session related matters discussed in this conference call should call and using the phone number provided on the slide in in the press release that we issue today.
So those who have access is training pushing the Wildcats. Please be aware that there may be a few seconds away that you will not be able to pose questions via the web.
As long discussion response, what's your questions reflect <unk> as of today only one click forward looking statements as described on the slide actual results me different materially additional information about factors that could potentially impact our financial results was acquitted in today's press release, and our feelings with the L.C.C., including our most recent annual report on foreign 10 K. and.
Reports on foreign 10 Q. During this call we will discuss certain on got financial measures in our press release inside the Cup things webcast, which are both available on her investor Relations website, you will find additional disclosures regarding these non got measures, including reconciliations of these measures with comfortable got measures finally, unless otherwise stated all comparisons in this call will be.
Results for the comparable period of 2019.
No increase the trying to call over to the N.S. Joshi R.C.U.U.J.
Thanks Melanie.
Afternoon, everyone Forrest I hope, everyone is staying safe and healthy.
I would talk started with those people affected by the pool, we'd 19 wireless and those on the front lines.
Doctors nurses.
Health care professionals and all of the other essential workers, who are providing needed services for the rest of us.
A treaty systems, we have taken balanced measures to protect our employees and their families while maintaining covert operations, including hosting this call remotely.
Reform the crisis response committee that a shaped everything from employee help.
Safety to following government mandates applicable to over business and facilities worldwide.
Oh, we're close partnership.
Local site leaders around the globe has been critical in understanding and addressing challenges at the local site level.
How about team has stepped up and he's doing our part.
Connect people in need.
Those who can help using digital manufacturing solutions.
The rapid sprayed off go read 19 has put many healthcare workers and the great screen as they put a white.
I went and care to affected patients.
Our company has a unique ability do architects solutions specific to customers needs three a combination of breakthrough materials hardware platforms software in professional services.
Thing at park for what to integrating edited into traditional production environment.
As a result manufacturers are able to achieve design freedom increase agility.
Gale production and improve overall total cost of operations.
What are the greatest benefits already do manufacturing is that it allows companies to reduce dependency on the supply chain manufacture barks internally or make them on the man.
This is proven to be extremely important in the current Gorby 19 pandemic.
Healthcare environments have been lacking basic supplies due to the need for protective measures for both healthcare professionals and patients and backlogs from bottleneck since shortage using worldwide supply.
<unk>.
Within their they do manufacturing community to succumb, even the supply chain and helped produce these boxes as quickly as possible to meet the needs of the health care sector as they care for patients that contain the spread of the wireless.
Received offers from the community for everything from printer materials.
Usage of facilities for printing engineers time, and expertise and even offers to foreign efforts I.
I truly believe that collaboration like this will be e. two savings.
Or the last several weeks, we have seen applications over technology and software being used to assist <unk> 19 efforts.
You do the shortage of personal protection equipment.
Employees wanted to focus on a high impact area, where we could really help healthcare workers on the front lines.
We identified fish fields as being something or they do manufacturing could quickly support what we brought to the table for emergency.
Face shoes was massive capacity.
<unk> left over on high efficiency fish use frame or the course of two days and I were printers <unk> output hundred phrase shields every 24 hours.
You also get will be the data file.
Do the community to enable others, who haven't.
So let's sprinter to go from cat file to production in minutes <unk>.
The log 300 downloads in the first 24 hours the fish she'll frame is printed in medical grade nylon thrill.
<unk> customer response was from Lunati S.B.A. manufacturing company based in but it's you Scott.
Italy, who deployed at three D. systems Blue X.S.L.S., 60, 103, D. printer with Dude off for materials do treaty, putting more than hundred when Judy ventilator walls for respiratory machines, which are facing a critical shortage throughout the world because ups.
If you're cases of Kobe 19 require intensive care and oxygenation.
Hundred miles were designed Devil up previews, then delivered in only three days showing the key capability of homework technology and the value proposition up fast response time.
We now have a ventilator projects going on all over the wall and in hospitals and we are working with the N.H.S. in the United Kingdom on venture evolves that can be deployed quickly and close to the point of care.
In March released a new ultrasound module to trained physicians will be 19 diagnosis through lung ultra or something.
Using ultrasound physicians can immediately dogmas and monitor patients up the point of care.
Module has already been deployed globally and was received enthusiast equally.
We went as far as mobilizing an ultrasound simulator that rotated between all his riley hospitals to trained doctors fighting Colby 19.
As a situation continues to double up we have been able to apply or solutions to changing three <unk> paradigms.
The very recent trend of moving from ventilators to seep up mosques, which need adaptor components. We have another example of how editing manufacturing can address problems quickly.
Turning what would have been at 122 month project into a solution on day one.
<unk> unit build time off just over one hour and finished product in one day.
Finally, as widespread diagnostic testing of <unk> 19 begins to ramp that are known shorter use up diagnostic tools such as nasal swaps.
Customers have been looking at a report <unk>, then the L. and industrial fieger for printers <unk>.
Do treaty print nasal swabs, using dental and industrial grade reasons as well as medical grade nylon 12.
<unk> you go to four engine for example has demonstrated the ability to produce or what 18000 swabs per week.
We have received interest from board hospitals, and <unk> and are currently engaged in clinical validations with several teams.
These activities show about taught leadership in order to manufacturing and a balanced approach.
How the industry can quickly address supply and demand needs <unk> <unk>.
In 19.
However.
Spite these imported activity that our contribution to the fight.
Well, we'd 19 has been a negative impact on our overall business with significant impact on printers and on demand manufacturing for a few reasons.
The first is end user demand well, what all Catholics spend is down across the industry's research, including aerospace automotive and health care, but elective surgeries have been cancelled or delayed.
Says affected demand for the new hardware and associated software licenses.
Secondees the overall dental market.
But at the mine has slowed as much detail consumption has slowed.
The majority of dental and orthodontic procedures considered elect to consumers aren't going to the dentist or starting new treatments.
Next we didn't have our own facilities that has been a supply chain disruption.
We ought to global company facilities in China couldn't operate for it period of time and in Euro some capacity was limited finally.
Recorded extend service technicians for installations because of our customers sites being closed.
This provides some context to the first quarter results.
Total revenue in the first quarter was $134.7 million.
Reflecting a decrease of 11.4% over 2019.
Gap gross profit margin was 42.4% and non gap gross profit margin was 43.1%, but all margins, but slightly down competitively.
Material Smart you have held at 69 per cent.
Reported gap loss of 17 cents per share and non gap loss of four cents per share.
Oh, it all operating expenses, but down 13% yodel what are your.
We shut down our on demand operations in Brazil.
We continue to work on optimizing our cost structure and digging costs out and as we've seen go read impact refocused even more on cost structure.
The pandemic Oh, what executives on board members to get 10% pay cut in the majority of the employees are taking limited furloughs.
Pushed out some r. and d. programs and have reduced hiring significantly.
These actions strike the right balance between near the cost savings and also being prepared when the market comes back.
Although all cap axes down and we are focused on generating revenue.
Reducing operating expenses.
<unk> preserving cash.
God will not provide more details on over results for the first quarter of 2020 dot.
Thanks D.J. Good afternoon every one for the first quarter recorded gap revenue of $134.7 million decrease of 11.4% compared to the first quarter up 2019.
Yep gross profit margin was 42.4% compared to 43.2% and the first quarter a few thousand g.
<unk> operating expenses decreased 13.4% to $75.4 million.
<unk> 17 cents per share in the first quarter of 2020 compared to where he lost 22 stops and the first quarter of 2019.
During the quarter, we recorded a tax benefit of approximately $3.2 million from utilizing that operating losses as loud as a part of the tax legislation enacted on March 27, 2020, another Corona virus eight really.
Security at all so called cares.
We reported nine get lost four cents per share in the first quarter of 2020.
Pair to last night, that's for sure and the first order of 2019.
V.J. mansion, our revenue was impacted by corporate 19 effect on our business.
Bradford revenue decrease 35.5% to $19.3 million.
Revenue decrease 0.1% to $41.4 million.
Care revenue decrease 7.3% $46.3 million.
The main manufacturing revenue decrease 12.8% to $19.7 million.
We're revenue decrease 7.7% get $21.2 million.
And the second quarter of 2020, we still expect significant impact from Cogut 19, and will focus on continuing take cost out anything yeah.
Recorded gap gross profit margin of 42.4% and the fourth quarter of 2029 gap gross profit margin in the first quarter of 2020 was 43.1%.
Yep operating expenses for the quarter, where $75.4 million, a decrease or 13.4% compared to the first quarter of 2019, including they 13.8% decrease in S.G.N.A. expenses, and I, 12.1% decrease in or India expenses.
<unk> operating expenses in the first quarter, where $63 million it 13.6% decrease in the first quarter or the prior year at 5.1% decrease <unk>.
Compared to the 2019 quarter non gap S. Unix buttons decrease 13.9% to 43.9 million.
<unk> decrease 12.8% to 19.1.
Non gap operating expenses decrease due to continue focus on reducing costs structure.
We ended the quarter with $112.8 million cash in cash equivalents during the quarter, we use $2.3 million a cast operations generated $1.2 million, okay awesome financing activities.
4.4 million for capital expenditures.
In addition, we use 10 million of Caspar acquiring the remaining 30% of the capital and voting rights of our joint venture in Brazil, and use 2.5 million of cast one second.
<unk> installments do acquire the remaining controlling interest of our previous joint venture in China.
I also love to conduct that adds up today, we have not drawn on every bolvar and we are focused on preserving cash along with reducing costs and working capital.
That altering the call back to B.J.B.J.
<unk>.
We'd 19, we'll have long term impact that we cannot do you have to quantify.
Business is sound and our products are 11, but how about a near term results will continue to be Beckett bike will be 19.
Be shipped factory marital teenage pretty less plan.
But unfortunately, the timing means that the demand is low right now.
Medical device manufacturing continues to grow.
In health care, while consumers are canceling unnecessary subsidies.
Simulator business is doing well.
Capital constraints will continue to put pressure on new hardware and software sales.
All the M. business.
<unk> projects are continuing but demand driven dueling purchases hubby sloate.
In this uncertain environment, we remain focused on gas generation and optimizing cost.
The search for my successor.
Continues to go well.
As we make good progress on the C., you'll such.
I want to take this opportunity to think all four employees and customers for their loyalty and dedication. During these trying times as we never get these pandemic together.
As a leader the 92 manufacturing in healthcare applications.
Helping healthcare professionals.
[noise] companies bridge, the manufacturing gap and accelerate new design ideas.
The <unk> value proposition that we have demonstrated with the speed at reach over technology can produce necessary supplies.
Gives me confidence in our long term potential.
I'm proud of the work.
You know what customers have done to address some of the challenges posed bike with 19, we talk about three d. printing capabilities and V. Ville continue to look for ways to collaborate and Strinden as a community.
And with that.
Will now open the floor for questions.
<unk>.
Thank you we will now be conducting the question and answer session. We ask that you. Please let me yourselves to one question and one follow up.
If you would like to ask the question. Please press star one on your telephone keypad. The confirmation tend to indicate that your line isn't the question kill you May press start you know if we'd like to remove your question from the queue for part two seconds, you think speaker equipment and may be necessary to pick up your hands at the <unk> <unk> probably prefer question.
Thank you I first question comes from Greg Palm with Craig Helen pleased to see with your question.
Yeah. Thanks, a lot to hear you guys are everybody's doing okay, and nice to see some of your technology has been used and helped in this fight against coven.
Oh.
Yeah.
Can you hear me, Okay, Yeah, Yeah <unk>.
You know just.
Do you spend some time on the covert 19 impacts on on the quarter and was was hoping you could maybe help us understand or at least block it out the various impacts you've got you know lower end user demand, which you know presumably his cap extra then you know some slow down an elective procedures versus your talked.
About supply chain disruptions versus some of the lack of service revenue because customers sites were close so help us understand what was you know most important we used important in terms of impact to the quarter. Yeah. So I think let's start with the hardware the printer hardware.
I think that was major letting it start talked about you know we heard a 35% decline in hardware revenue.
And that all new hardware was related to my view.
The cool with a a related.
When you think about you know they I say lay printers.
Printers for dental we talked about a dental market being slow.
Jewelry Mark it also because that say you know a category, which is not going to be really consuming lot of materials.
Because that's the item people will not be really buying in the current very tough environment. So the hardware side I think it would figure for did okay. Because as I said you know the new application you materials.
And if you go to four.
Ideal for doing a new are indeed designs.
And you know dental was slow, but the other standalone pretty good for what's doing well in this and that's the less machines.
I think I'm better the mind because of the you could do with an island 12 that I talked about so I think it's mainly a silly.
M.G.P.
Dental printers on the printer side, then when you go to the software the new software.
[noise] licenses. So if you think about the manufacturing software because the manufacturing activity has really impacted negatively and so they submit drawn software, especially the automotive market and you know very different place right now when they had a tough already 2000.
Dean and in addition, with all these corporate stuff.
The other software you know all the Geo Magic software, especially the inspection software also had a negative impact because of the <unk>. So new hardware new software licenses or the core thing you saw the materials. We will did okay, but I think you're going to start seeing that impact.
In a second quarter, because clearly material consumption on the dental in orthodontic, you know procedures and.
Price customer also talked about that have you also as I said jewelry material <unk> because of the automotive segment that really address so I think you'd Q1 really it okay, but I think as the quoted spread no happening in Europe and arming America.
Some impact of that in Q. too.
With respect to healthcare all the elective surgeries. So you know these so difficult planning.
Services, you know you're going to see the impact, but the medical device manufacturing I think we are still very healthy. So I think that's the kind of a color I can give you Greg I hope it addresses the question.
Yeah that that was I mean are are you may energy in the business currently with the thought.
That you know cue to the June core you know, we'll be sort of the worst we'll be the bottom and you know I don't know if you can give us any sense of what you know sort of company wide trends or maybe segment trends from a a demand or decline standpoint, you know what you're seeing an April specifically that can.
Sort of help us make some assumptions on on sort of what the <unk> quarter in in in full year might look like so I think you know clearly go read started in China and then in Europe and then it came to America. So there was not a full impact of cool read and Q1, so clearly cute.
You know, we'll have and I think thought talk about significant impact you know <unk>, especially in the new printing hardware and you soccer licensees. So I think you're going to see that and so materials false impact in q. too.
I had all depends on now you know how the market opens up and how the activity. The manufacturing activity will start ramping up I think in China, you're already seeing sign that you know, it's slowly coming back I think Italy, and Spain of slowly coming back, but I I.
I think it'd be very hard to predict you know how this is going to really play out I can tell you that you two will have more impact on Q1, whether the cute too is a bottom or not it's very hard to say and I think in April we are seeing consistent with what I'm you know telling you with respect to.
What we saw especially in March and playing it out in April.
Yep.
Okay, alright, thanks <unk>.
Thanks correct.
Thank you. The next question comes from Chris Van Horn, what F.D.R.'s place to sit with your question.
Good afternoon, Thanks for taking my call and hope everyone's well.
Yeah go ahead, Chris Okay. So on the supply chain side. You know are you seeing some of your suppliers you know <unk>. They are they recovering or do you have to find new avenues for your supply chain.
I think fortunately on the supply of site you know the out okay, but still you know they are also going through shut down.
The ability of the critical parks. The good thing is the contract manufacturers, we work with like some Nina and joke Fisher you know they have Ah you know kept up clearly they had to shut down but slowly they're bringing their capacity back which is a good use for us.
But you know it's not really the question now is more on the demand side.
Then supply chain disruption I think what we need to do is get the manufacturing activity going and then our customers will start ordering new hardware new software in materials and I think that's what we need to really paying attention to Fortunately the baby managed I would've supply chain I feel very good about you know we will be able.
To meet the demand, it's more going to be now.
With respect to you know how the end user demand you know, we'll double up the other important parties I would own no facilities.
And we're looking for their website leaders and they have shown incredible leadership here.
That I would own factories say for example on demand manufacturing factory in China.
These slowly are are ramping it up <unk> on demand manufacturing facilities in Italy, and France. The Netherlands are also this little Lee you know coming up.
Facilities in Seattle and Lawrenceburg.
In U.S. also is operating so I think it's really now you know can we get the demand. So that we will be able to fulfill that's what I think that's where we are.
Okay got it well just to follow up on the demand side. You know is it a lot of the is a lot of the push out in in potential revenue is is it differing of orders is it cancellations a combo of both what are the customers kind of.
Giving you a sense of in terms of timing so far right now what we are seeing is over a pipeline is healthy.
And we are not hearing lotto cancellation is really pushing out because everybody is really paying attention to the capital spend and so the good news is I think they're interested in other technology. They have you know really believe especially with the value proposition now that we have shown this stuff <unk>.
Positive sign was the power of editing manufacturing. So I think they are all very much interested in making sure. They continue to invest in order to manufacturing. So it's more about bush out.
Then cancellation.
Okay got it. Thank you so much of the time thanks, Chris.
Thank you. The next question comes from General Judy need and then company. Please just you with your question.
Hi, Jim.
[noise] and your line is fighting they proceed with your question.
[laughter] I'm, sorry, headed by phone I'm you'd I apologize. Good afternoon question is regarding the channel I'm wondering you know how much of.
Swaption or they facing even in terms of getting to customers getting on site with customers has that been an issue that you're hearing from your channel partners. So I think it's different by or regions you know clearly in.
Earlier part from China, The Chinese channels, you know had a lot of difficulty in reaching customers and.
Then it went to Europe. So you know I've already European Channel partners, but you know there very innovative in some cases they found a in some ways to communicate especially when there was a need to provide a certain materials for certain hardware.
Continue to you know a devil apart print.
Using other technology, but like a jewelry segment, you know clearly a that had the major impact because the demand was very different so I think depending on the and then on the dental side I think on the materials dental materials at least one Q1, we a lot a backlog so we were.
<unk> managing that.
But I do believe that the printing hardwood aside you know and that is a slow down because the overall as we talked about you know that that are not many dentist who are offices are open and people are delaying you know a lot of dental work right now so I think depending on the segment we saw very similar.
Things that what you're seeing it over a corporate level. So they start any different than what I talked about from the segments point of view.
<unk>, Yeah, you add to the year with I I'm sure higher expectations stronger new product portfolio and then you have this happening so I'm wondering how you how you going to.
Given the demand environment, how do you strike a balance between continuing to make the investments in marketing.
R. and D. with this environment, which was pretty unknown at this point in terms of how long. It continues yeah, no I think you're you're you're right on Jim. So I think what we are doing it a balanced approach.
It's very clear that the that he's impact on revenue you know and I think what we need to do is really have work on the cost structure. So if you saw that over you know cost structure point of view.
To go operating expenses down yodel, what are your 13%.
It will continue doing that in q. too because v. as I said, you know will be more impact in kutusov, you need to take more cost out in cute too and that will have I mean, I think I talked about it will have impact on on what our in D. programs. Because you know when you take so I think we need to just be very privatizing, saying you know these.
The programs and then we need to protect and these other programs that we can lead to slip because he just studies no. Other alternative same thing with our marketing cost you know you know.
They're not going to be any shows so we cancel the coming out off all the shows you know major shows because that's not going to happen. So we put all of our marketing dollars on digital because I.T.V. think that that's where we can really drive the demand generation and lead generation because you need to really drive revenue.
Revenue line is going to be very important and you know as a matter of fact be tall decided to manufacturing attention.
Web traffic on over the website has increased significantly and so we think that have already investment needs to be really focused on digital because of you'd think that that is the way. So I think we are taking out all other marketing spend that we were doing on shows because we believe that this is the right way to approach.
To really dry the lead generation engine and with respect to you know B.O. put I think I talked about it the all it eggs he could do level have taken 10% pay cut.
Done furloughs, you know depending on the region because we absolutely believe that we have incredible talent and then we want to preserve the talent. So in the market comes back you know, but at the same time, we need to take the cost out so focusing on costs and the last parties cash you know I think we are in a good place in the cash right now, but we need to make sure.
So we took the able to capital expenditure down in Cuban and you're going to continue to take it down in Q2, Q3 Q4, because we must make sure that you know and we are very comfortable with over current cash position and but if you want to be very prudent with respect to that so I think that's what we are doing finding that right balance.
Safety offer employs about highest priority and then you know doing these things. So that you know as the revenue comes down we take the opic's down and the price of the cash.
Okay that that makes sense good luck and by the way. Thank you yeah. So what you guys have done in this this whole <unk>. Thanks.
A lot to us thank you.
[noise]. Thank you. My next question comes from an end up Aurora capital market place to see that your question go ahead on it [noise].
Hey, Thanks, guys, making the question Hey, <unk> is there any way you can give us some sort of sent yeah, maybe with the April Runrate was not dollar around right me a great job.
Growth the gross run rate for the various businesses and in some kind of Thanksgiving as we are sort of what the rubber wake up for April So we can get a sense of what.
Quarter may look like and they are not giving guidance, but that that would be helpful.
Following as well so let me start here with on April you know clearly I think I talked about it we are seeing the new printing hardware and use software licenses are really slow.
And the impact.
He's also an on demand services, because you know the manufacturing companies not really auditing dueling there are some r. and d. projects, but they have slowed down. So those three businesses you know definitely we are seeing the impact globally.
All the regions, because even though China may come back, but they are not really changing the order. So I I would say the in April is very much you know what I talked about what medical devices, you know that businesses doing well and continue to grow in April.
And you know the.
Elective surgeries are down so over dental business and you know what a line of business and over.
Surgical planning business is infected.
And <unk> you guys can you say if you were <unk> like through February.
If you were tracking your revenue expectation I I'm, just trying to be able to develop a sense, where I'm sure. You know ourselves we're trying to do that yeah sort of what what instead of the sort of the acceleration raided decline was.
In March and and I'm happy to back into the numbers that you can tell me just sort of tracking peering turtle plan.
February we can do that if you remember when we heard over a conference call. In February we said, we had not seen any material impact at that time, but things change very very is radically.
Starting second Rico February.
And March.
So I think you could just understand that up to up to that point, we were doing okay. And then the kind of the revenue decline you are seeing I think you could model that way.
Okay that that's great and then just my quick follow up is you know in the past a decent portion of Ah.
Your customer base isn't included you know.
<unk> engineering from <unk> from.
Some of whom could be considered to be small medium Bismol says and then maybe some of the channel partners.
As well so I guess my questionable whether you in touch with those guys yeah.
Do we consider that could be yeah sort of a a meaningful wildcard from a risk perspective.
The new go over here given that.
So the small business and then kind of more more in the heart of what's been going on.
Well, thanks, Yeah, but I think you know, it's not about a small and medium business because even the enterprise customers are seeing so like auto industry Aerospace industry. You know there is a major impact going on at least one of my work customer base point of view, yeah, small and medium businesses from jewelry segment that you could say you know that either.
Big impact the dental segment.
The labs is a big impact, but it's not just limited to small and medium businesses because the enterprise customers in automotive.
You know you know some of the companies in the United States, they're not doing any more you know producing autos, they're producing ventilator. So you know I I just think that you have to look at our segment. So I think impact is more much more a broader than just.
You know the small and medium businesses.
I appreciate that I, I guess really what I'm asking is do you guys have incremental concerned that some portion of your customer needs may not come back.
Well I think it all depends on a segment I think jewelry segment will come back I'm not very worried about dental customers will come back. So you know these small design firms and that's not a very big part of our business and I I don't think that that sort of concern not mean on demand.
Transactions that people will be doing but I think it will be doing different transaction because it is actually the value for editing manufacturing in doing these in designing <unk>, but I think we may get different set of customers, but I'm not as much worried about that kind of a risk profile. Okay. That's helpful.
Thank D.J. Hmm Hmm.
Thank you are next question comes from Brian drop Whistling and Blair pleased to see that your question Hey, Brian I. Thanks for taking my questions first on the materials scene I'm curious how though.
Really well in the first quarter, Yeah, Yeah, really just a touch below the runway quarterly round right to you had throughout 2019.
And I'm I'm wondering V.J. if in some other way besides just saying that.
[noise] slow in April can you give us a sense more specifically what you saw in terms of declines like down double digits down more than 50% and materials and [noise].
I won't give you any specific numbers like that but I can give you directional leave their material so okay, and where the materials you know have impact.
So I think the dental materials, because I said, so the backlog real feeling for the next didn't we are doing okay, but the you know the other orthodontic you know I think you heard from the enterprise customers. They aren't seeing impact. So there is some impact of that you know in a cue too.
<unk>.
That is the impact because a lot of auto companies and their suppliers use S.L.A. for a lot of prototype being and as I said earlier, the automotive businesses, you know have impact and so that we are seeing on D.S.L.A. side.
The jewelry segment as I mentioned.
So we choose over backs materials.
That's slow down is not all not now also showing up.
In the decline.
In April and <unk> too.
SLS and they'll figure four because I think <unk> figure for a especially the new materials, which are.
Really very very powerful in doing the design. It <unk> you know acting you're holding up very well in those mosquitoes both S.L.S.
And the figure for materials. So that's the kind of a color that I can give you.
Alright, Okay. Thank you and then.
A couple of questions you Nasrallah ruled out backs marketing et cetera, but just wondering if anything more specifically say you know.
From fourth quarter to first quarter, you took out about 6 million.
In a.
Is there another.
Is there an opportunity to take out that much again or was that kind of the bigger.
And there's more to calm, but not you're not another cat that that significant so I think in the second quarter, you see the impact of 10% Gutter executive pay.
And be you will see the follow that we have implemented in q. too.
Do you want to say something more on the Olympics side.
Yeah. So you know there you have to the 10% that they just mention that executive level, but then you know the furloughs on average about two weeks across the company. So you will see a go lower and you too we don't give dollars.
Okay. Thank you very much.
Thank you on X. question comes from wandering Mohan West Bank of America Merrill Lynch. Please [noise].
Maybe yeah.
Okay.
Hey, Oh, so thing that you are a good good bridge the printer gross margins from.
Fourth quarter of 2019, two to the first quarter and I was wondering in particular were there any elements in Q1 that can help possibly soften the impact to to print or gross margins or.
Possibly be negative given your revenue commentary I'm just curious if there are there elements. So if you one that sort of how the Hell, let me make it a high level and then I would like dawn to add more color. Okay. Okay. So clearly you know when you have 35% decline yodel, whether you're in printing hardware.
You're factor utilization.
You know is going to be very different and I think the other other other very important part I talked about.
Within that you know when we are seeing fewer units like <unk> machines, you know you're going to have a a mix issue also which will be causing the printer margin going down and as we see continue to having.
You know this kind of a declining the hardware.
You're going to see the decline off a printer marching the other important part, but you know over materials was very good margin in Q1, and it was kind of flat as we see more material decline that mix between hardware in materials would be all the something that.
You know, we'll have to pay attention to tar do you want to add anything on that.
No I think B.J. Your car is that you know you've got to 35% drop a volume and then the mix and that that was driving in the queue for rescue one margin.
Okay. That's helpful and then as a follow up.
<unk> at material more broadly looks like Prizing and mix.
The impact on material twirls, a little bit larger and a quarter <unk> can you address what drove died and as we look into two q. or are you expecting something I mean, clearly that you're you're you're going to how.
Incremental volume head, but but as far as surprising and mix skinnier.
I'm not worried about the pricing and mix I think it's more about the overall as I said D.S.L.A.
Dental materials jewelry and materials, you know aren't going to have impact.
And so that makes could play out, but it's not because of about you know pricey, but aren't making any pricing movies I think it's more about and then the overall volume will go down and then the mix up between hardware revenue in the materials revenue.
Is going to be different so I think that we'll have.
Impact on the auto margin for the company.
Okay. Thank you [laughter].
Thank you are next question comes from Paul Costa, What J.P. Morgan clean, especially with your question <unk> Yeah.
Oh, Thank you very much inside she might questions like who comments or.
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Conceivable I'm just wondering do you see any kermit risking your accounts receivables.
When you think about the part blowing is there anything <unk> kind of worries you in some sort of credit risk.
The specific customer types that look a little vulnerable.
Why don't you take that.
Yeah, so well, we actually saw from Q. According to one is actually our past news greater than 90 days actually improved a little bit, but we do expect it to to a little bit the way on payments and so but from from a write off at this point right now we're not seeing our customers have been paying fairly well.
But we're we're on top of it but also as our revenue went down from Q. afford if you want our receivable plays with lower lower so there's a lot less risk on the credit <unk>.
Okay.
Did you look at the pipeline is there any substance across most you know you're concerned it'd be difficult close deals with.
Not at this point no.
Very good thank you very much thanks Paul.
Thank you we do have a follow up questions from the line of Great crank, Helen Please especially with your question go ahead Greg.
Yeah. Thanks, just you know you alluded a little bit sort of with the potential long term impacts from everything going on but obviously all of the disruptions globally on supply chains, and you've got customers, who are looking for [noise] on demand production, so I dunno might be a little bit early but any any.
Little commentary that you're getting from customers out there that you know suggested increased use or focus on digital manufacturing in three d. pretty and when we emerged from all this <unk> I, absolutely believe that what we have proven especially for supply chain disruptions or integration of R. and D. ideas you know.
We could use this technology I would say that in last.
You know two months I got more.
Hello.
Can you hear me.
I can still here.
Okay. So in last two months I think we got more interest from you know already do manufacturing capability in value proposition.
Then, let's see last six months. So you know I really think.
The long term potential and the value proposition office turn around time for design <unk> and bridge manufacturing you know the we have now we have very ruin track record.
I think that should help us to set up very well as we move forward.
Got it and and presumably a lot of out it was probably from some some new customers, but what what are you seeing from.
Some of your larger enterprise customers I mean, given everything going on you know any indications of you know expansion longer term, whether that's increasing the amount of printers out at existing sites or maybe even adding additional printing sites in the future you you're seeing or hearing anything or is it too early to know to <unk> I do believe.
Medical device manufacturing you know I I really thing I'm very excited about that segment that I, absolutely believe is going to be more expansion, but beyond that I will be you know I think we need to still see more signals.
Yep fair enough, okay. Thank backs and good luck on for.
Mmm.
Thank you we have an additional follow question from the line up and ended up.
Little markets. Please just eat go ahead on.
I think he is can be for viewing times as well.
You just get locked you the cash framework just for a second how much cast you guys want on hand to run the business and what they're revolver.
Yeah I at the high level I'm very comfortable where we are the cast position, let Todd talk more details talk talk yeah. So as you know we enter the corridor at $104.8 million of cash and then as I stated earlier that we have not drawn on the revolver as of today and so we have that availability as well.
And you know I feel comfortable with are available liquidity possession going for 2020 and be honest. We're we're we're in good shape right now.
Okay also they can you can you might just what what's available through the revolver.
Yeah. So we have a term loan which we've we've drawn and then there's a revolver. They revolver had availability. We we disclose that 10 q. There has availability we could have drawn up to 42 million to the end appear one based on our our that covenants and that as of today, we have the ability to draw on that up to about 90 million.
But we have not drawn on it.
Okay excellent. Thank you got thanks a lot.
Huh.
Thank you there are no other questions that this time I would like to turn the call back over to know any Solomon for closing remarks Melanie.
[noise]. Thank you all for joining us today in Thier continued support of Treaty systems. A replay just webcasts will be available after the call in the industry relations section of our website.
Stay healthy thank you everyone.
Ladies and gentlemen, just ask one could say teleconference. Again, we thank you for your participation and you may just connect your life at this time.
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