Q1 2024 Desktop Metal Inc Earnings Call

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Operator: Greetings and welcome to the Desktop Metal First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Michael Jordan, Vice President, Finance, and Treasury. Please go ahead.

Speaker Change: Greetings and welcome to desktop metal first quarter 2024 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Speaker Change: Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: Reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Michael Jordan, Vice President Finance and Treasury. Please go ahead.

Michael Jordan: Good morning, and thank you for joining today's call. With me today are Ric Fulop, Founder and CEO of Desktop Metal, and Jason Cole, CFO of Desktop Metal.

Michael Jordan: Good morning, and thank you for joining today's call.

Michael Jordan: <unk> today are Rick <unk>, founder and CEO of desktop metal and Jason Cole CFO of desktop metal. Please note our financial results press release and presentation slides referred to on this call are available under the events and presentations section of our Investor Relations website. This call is also being webcast live with a link at the same site the webcast.

Michael Jordan: Please note, our financial results, press release, and presentation slides referred to on this call are available under the Events and Presentations section of our Investor Relations website. This call is also being webcast live with a link on the same site. The webcast and accompanying slides will be available for replay for 12 months following this call. The content of today's call is the property of Desktop Metal. It cannot be reproduced or transcribed without our prior consent.

Michael Jordan: These slides will be available for replay for 12 months. Following this call. The content of today's call is the property of desktop metal it cannot be reproduced or transcribed without our prior consent.

Michael Jordan: Before we begin, I'll refer you to our safe harbor disclaimer on slide three of the presentation. As a reminder, today's call will include forward-looking statements. These forward-looking statements reflect desktop mental's views and expectations only as of today, May 9th, and actual results may vary materially based on a number of risks and uncertainties. For more information about the risks that may impact Desktop Metals' business and financial results, please refer to the Risk Factors section on Form 10-Q, in addition to the company's other filings with the SEC.

Michael Jordan: Before we begin I will refer you to our safe Harbor disclaimer on slide three of the presentation. As a reminder, today's call will include forward looking statements. These forward looking statements reflect desktop metals views and expectations only as of today may nine and actual results may vary materially based on a number of risks and uncertainties.

Michael Jordan: We assume no obligation to update or revise the forward-looking statement. Additionally, during this presentation and the following Q&A session, we may refer to our results on a non-GAAP basis. Non-GAAP measures are intended to supplement but not substitute for performance measures calculated in accordance with GAAP. Our financial results press release contains the financial and other quantitative information to be discussed today, as well as a reconciliation of the GAAP to non-GAAP measures. I'll now turn the call over to Ric.

Michael Jordan: For more information about the risks that may impact desktop metals business and financial results. Please refer to the risk factor section on Form 10-Q. In addition to the company's other filings with the SEC.

Michael Jordan: We assume no obligation to update or revise the forward looking statements.

Michael Jordan: Additionally, during this presentation and following Q&A session. We may refer to our results on a non-GAAP basis non-GAAP measures are intended to supplement but not substitute for performance measures calculated in accordance with GAAP.

Michael Jordan: <unk> financial results press release contains the financial and other quantitative information to be discussed today as well as a reconciliation of the GAAP to non-GAAP measures I'll now turn the call over to Rick.

Ric Fulop: Thank you, Michael. Welcome to our first quarter 2024 conference call, everyone. I'll start by providing a high-level overview of our results and cost structure, followed by an update on the demand environment today and the progress we've made commercially in 2024. I'll then turn the call over to Jason to cover our results in more detail.

Rick: Thank you Michael welcome to our first quarter 2024 conference call everyone.

Rick: I'll start by providing a high level overview on our results and cost structure, followed by an update on the demand environment today and the progress we made commercially in 2024.

Rick: I will then turn the call over to Jason to cover our results in more detail.

Ric Fulop: I'm super excited about the progress. We have worked very hard over the last few quarters to reduce our cost structure so that it can fit our revenue run rate and near-term opportunities. This now marks eight consecutive quarters of OPEX reduction and nine quarters of year-over-year adjusted gross margin expansion with our adjusted margins nearly doubling year-to-year. First quarter 2024 revenue was $40.6 million, compared to the prior year period of $41.3 million.

Jason: I am Super excited about the progress as we have worked very hard over the last few quarters to reduce our cost structure. So that it can fit a revenue run rate and near term opportunities.

Jason: This now marks eight consecutive quarters of Opex reduction in nine quarters of year over year adjusted gross margin expansion with our adjusted margins nearly doubling year to year.

Jason: First quarter 2024 revenue was $40 6 million compared to the prior year period, or <unk> $41 3 million.

Ric Fulop: While we saw a very slight decline in year-over-year revenue, this is a major improvement over the last year, when our entire industry is so much larger. In fact, if you exclude business lines that we exited last year, such as AirScent and our North Huntington EAC, our revenue was closer to flat.

Jason: While we saw a very slight decline in year over year revenue. This is a major improvement over the last year, where our entire industry. So much larger declines in fact, if you exclude business lines that we exited last year such as Ericsson.

Jason: North Huntington EAC, our revenue was closer to flat.

Ric Fulop: Our industry is not fully out of the woods yet, and one data point doesn't make a trend, but we're heartened that all the hard work and sacrifices our team has made is paying off. As our funnel grows, we're confident that the overall demand environment is getting more constructive, and we should begin to see incremental growth in the coming quarters. Driven by digital casting, entry-level metal binder jet systems, and growing technical ceramics binder jet applications in a new figure sheet metal platform.

Jason: Our industry is not fully out of the woods yet.

Jason: And one data point doesn't make a trend, but we're heartened that all the hard work and sacrifices. Our team has made is paying off.

Jason: As a final growth, we're confident that the overall demand environment is getting more constructive and we should begin to see incremental growth in the coming quarters.

Jason: Driven by digital casting entry level metal binder jet systems growing technical ceramics binder jet applications.

Jason: No figure sheet metal platform.

Ric Fulop: We also see great traction in the use of our products as evidenced by recurring revenue, reaching a record 43% of revenue. As you know, recurring revenues have a higher margin and are generally a demonstration of the utilization of our products in the field. As we discussed on our prior call, we believe we're just beginning to see the benefits of our expanded global installed base using added manufacturing equipment for real production. Utilization of desktop metal products at our customer sites is increasing, as evidenced by growth in our recurring revenues.

Jason: And we also see great traction in the use of our products as evidenced by recurring revenue, reaching a record 43% of revenues.

Jason: As you know recurring revenues have a higher margin and are generally a demonstration of the utilization of our products in the field.

Jason: As we discussed on our prior call. We believe we're just beginning to see the benefits of our expanded global installed base using additive manufacturing equipment for real production.

Jason: Utilization of desktop metal products at our customer sites is increasing as evidenced by the growth in our recurring revenue streams.

Ric Fulop: Turning to our cost structure, we began our efforts in the second quarter of 2022, well before our competitors, and since then, we've implemented approximately $135 million of our $150 million in cumulative annualized cost-saving measures. We've been able to reduce our non-GAAP OPEX by 45% in that time, accelerating our path to profitability with only a modest revenue loss. Importantly, as we have executed these measures, we have built a more lean and efficient operation, which we believe will greatly benefit us in the long term. From an Adjusted Visa perspective,

Jason: Turning to our cost structure.

Jason: We began our efforts in the second quarter of 2022, well before our competitors and since then we've implemented approximately $135 million of our $150 million in cumulative annualized cost saving measures, we've been able to reduce our non-GAAP opex by 45% in that time accelerating our path to profitability.

Jason: We only modest revenue losses importantly.

Jason: As we have executed these measures we have built a more lean and efficient operation, which we believe will greatly benefit us in the long run.

Jason: From an adjusted EBITDA perspective.

Ric Fulop: Q1 2024 was a record Q1 in our history. That's our best at JoshTV.Quarter, recognizing a $13.6 million loss for this quarter, a $10.8 million improvement over the prior year's period. From Q1 2022, the last full quarter since commencing our cost reduction efforts, adjusted EBITDA losses have decreased 53%. These losses have shrunk dramatically from 41.6 million to 13.6. One of the most impressive improvements to our business has been the growth in adjusted gross margins. We have a record Q1 margin of 30.5%. This is a massive improvement of 1,200 basis points. Q1 2023.

Jason: Q1, 2024 was a record Q1 in our history as our best adjusted EBITDA quarter.

Jason: Recognizing a $13 6 million loss for this quarter.

Jason: At $10 $8 million improvement over the prior year's period.

Jason: From Q1 2022, the last full quarter since commencing our cost reduction efforts adjusted EBITDA losses have decreased 53%.

Jason: These losses have shrunk dramatically from $41 6 million to $13 6 million.

Jason: One of the most impressive improvements to our business has been the growth in adjusted gross margins.

Jason: We have a record Q1 margin of 35%.

Jason: This is a massive improvement of 200 basis points from Q1 2023, as we have integrated our operations and deemphasize lower margin portions of our business to focus on IP centric segments that are growing faster, where our products have the leading market share and have the high ground.

Ric Fulop: As we have integrated our operations in the emphasize lower margin portions of our business to focus on IP centric segments that are growing faster, where our products have the leading market share and have the high ground, hindsight is always 2020. But as I look back on the past 18 months, I think we have gained important, The added manufacturing industry has averaged double digit growth since inception. And there are no signs of abating that in the next decade as it permeates the $12 trillion manufacturing sector. But there are cyclical patterns that we can deduce for large capital expenditure purchases in the industrial sector.

Jason: Hindsight is always 2020, but as I look back over the past 18 months I think we have gained important context.

Jason: The additive manufacturing industry has averaged double digit growth since inception.

Jason: And there are no signs of abating that in the next decade as it permeates the 12 trillion dollar manufacturing sector, but there are cyclical patterns that we can reduce.

Jason: Our large capital expenditure purchases in the industrial sector.

Jason: <unk> added manufacturing, where we're the leader it is highly sensitive to rates and the sudden cost of capital increases.

Ric Fulop: This surprised me and my peers last year as it lengthened some of our sell cycle. The result was slightly lower productivity per sales rep, but enough to drive 2023 into a slight contraction. If you take the average of our reps on the large format industrial bondage side, they each do approximately $7 million a year. This contrasts with less than $2 million for many of our peers. This means two things.

Jason: This surprised me and my peers last year as it lengthened some of our sales cycles. The result was slightly lower productivity per sales rep, but enough to drive 2023 into a slight contraction.

Jason: If you take the average of our reps in the large format industrial bandages side for each grew approximately $7 million a year in sales.

Jason: This contrasts with less than $2 million for many of our peers.

Jason: This means two things first.

Ric Fulop: First, we do not have enough go-to-market coverage in many of the regions we serve. In the regions with mature adoption, we now have many customers adopting multiple systems for mass production, making existing wrappers more productive. So our strategy going forward as we continue to execute our cost reductions is to also begin to reinvest in go-to-market. We have a new internal plan where we're adding sales capacity and go-to-market capacity around the world. We're in the process of adding an additional 30 reps around the world over the next few quarters.

Jason: We do not have enough go to market coverage in many other regions we serve.

Jason: <unk>.

Jason: In the regions with mature adoption, we now have many customers adopting multiple systems for mass production, making existing reps more productive.

Jason: So our strategy going forward as we continue to execute our cost reductions is to also begin to reinvest in go to market.

Jason: We have a new internal plan, where we're adding sales capacity and go to market capacity around the world. We're in.

Jason: The process of adding an additional 30 reps around the world over the next few quarters.

Ric Fulop: And as these become more productive, we believe they will yield double-digit incremental growth to our BinderJet business. No matter how you slice it, we're still in the early innings of added manufacturing adoption, and we'll see a long-term bright future where we have a multi-billion dollar opportunity with a rapidly growing installed base. Just in the printed digital casting space, where technology leads, there are very big, multi-billion dollar opportunities. Today, the technology is proven and is used in products like the F-35, submarines, jet engines, rockets, advanced cars like Teslas and BMWs, but it's still only being used at the tip of the spear and only in less than 5% of foundries globally. I firmly believe that every single foundry should have at least one printer.

Jason: And as these become more productive we believe that will yield double digit incremental growth to our binder jet business.

Jason: No matter, how you slice it were still in the early innings of added manufacturing adoption and we see a long term bright future.

Jason: We have a multibillion dollar opportunity with a rapidly growing installed base for example.

Jason: Just in the printed digital casting space, where our technology leads there are very big multibillion dollar opportunities today.

Jason: Today, the technology is proven and is used in products like the F 35 submarines jet engines rockets advanced cars like Tesla and BMW, but it's still only being used at the tip of the spear in only in less than 5% of foundries globally.

Jason: I firmly believe that every single foundry should have at least one printer and once you do the back of the envelope math with over 25000 foundries globally Theres, a $25 billion capex cycle that will probably go over the next 10 to 15 years.

Ric Fulop: And once you do the back of the envelope math with over 25,000 foundries globally, there's a $25 billion CAPEX cycle that will probably go on for the next 10 to 15 years. This creates an opportunity for more than a billion dollars in revenue a year for this market, just in this second. This is a fantastic opportunity.

Jason: This creates an opportunity for more than $1 billion in revenue a year for this market just in the segment.

Jason: This is a fantastic opportunity.

Ric Fulop: Since we're the 80% market share leader in this space with best-in-class products and fully automated solutions, so, in hindsight, I think revenue was slightly down last year for us and our peers in the industrial added manufacturing market because we focused only on cost reductions, and as rates went up, we should have also expanded our go-to-market aggressively as the lengthened sales cycle affected sales productivity. The good news is that projects are not being canceled. They're simply taking a little bit longer to close, but they're still in the funnel.

Jason: Since we are the 80% market share leader in this space with best in class products and fully automated solutions.

Jason: In hindsight I think revenue was slightly down last year for us and our peers in the industrial added manufacturing market because we've only focused on cost reductions and as rates went up we should have also expanded our go to market aggressively at the lengthened sales cycle affected sales productivity.

Jason: Good news is the projects are not being cancelled there is simply taking a little bit longer to close but theyre still in the funnel.

Ric Fulop: Our goal is to increase the number of projects under consideration by expanding the go-to market globally. We're at under 5% penetration in this market. And we believe we have a huge growth opportunity ahead. We continue our relentless marathon to adjust our cost structure and reach profitability, and we're making excellent progress in this effort. We're not totally out of the woods yet and don't have full visibility into what will happen for the next year, but we're focusing on execution and controlling what we can control, and we're looking forward to letting our results speak for themselves this year.

Jason: Our goal is to increase the number of projects under consideration by expanding the go to market globally.

Jason: Whereas under 5% penetration for this market and we believe we have a huge growth opportunity ahead.

Jason: We continue our relentless marathon to adjust our cost structure and reach profitability and we're making excellent progress on this effort.

Jason: We're not totally out of the woods, yet and don't have full visibility to what will happen for the next year, but we're focusing on execution and controlling what we can control and we're looking forward to leading our results speak for themselves. This year.

Ric Fulop: We're looking forward to crossing the Adjusted EBITDA profitability threshold this year and getting back to growth as we focus on the parts of our business where we have best-in-class solutions that solve important problems. Before turning to the demand environment, I wanted to provide a quick update on our previously announced strategic alternatives process that we're running for some of our photopolymer technology. It's been approximately eight weeks since we kicked off this process, and we're having many active discussions and are pleased with the level of interest. We'll continue to provide additional updates as appropriate.

Jason: We're looking forward to crossing the adjusted EBITDA profitability threshold this year and getting back to growth as we focus on the parts of our business, where we have best in class solutions that solve important problems.

Jason: Before turning to the demand environment I wanted to provide a quick update on our previously announced strategic alternatives process that we're running for some of our photopolymer technologies.

Jason: Approximately eight weeks since we kicked off this process and we have many active discussions and are pleased with the level of interest.

Jason: We will continue to provide additional updates as appropriate our goal is to help accelerate our path to get cash flow positive.

Ric Fulop: Our goal is to help accelerate our path to get cash deposits. I'd like to reiterate that we continue to believe in the strength of these technologies and their long-term potential. While difficult, this decision helps us trim cash-consuming businesses and focus on more profitable products. And we believe this will further accelerate our path to adjust to be that profitable and eventually cash flow positive. We continue to have the industry's leading portfolio for mass production, with nearly 100% of our products focused on end-use parts.

Jason: I'd like to reiterate we continue to believe in the strength of these technologies and their long term potential while difficult. This decision helps us cash consuming businesses and focus on more profitable product lines and we believe this will further accelerate our path to adjusted EBITDA profitability and eventually cash flow positive.

Jason: We continue to have the industry's leading portfolio for mass production with nearly 100% of our products focused on end use parts.

Ric Fulop: And any small amount of growth at this cost structure is going to yield excellent results for the bottom line, especially given the high margin and high rate of consumer consumption tied to our production. Moving on to the demand environment, as I explained in the previous few minutes, we're not demand constrained.

Jason: And any small amount of growth at this cost structure is going to yield excellent results to the bottom line, especially given the high margin high rate of consumable consumption tied to our production users.

Jason: Moving on to the demand environment as I explained in the previous few minutes, we're not demand constrained in the past two years. We've been go to market constraints. We believe there remains substantial near and long term growth opportunity available to us in additive manufacturing to point out and our goal will be to resume double digit growth.

Ric Fulop: In the past two years, we've been going-to-market. We believe there remains a substantial near and long-term growth opportunity available to us in added manufacturing 2.0. And our goal will be to resume double-digit growth as we add go-to-market resources. We're already the global market share leader in binder jets by sales and installed base with the broadest set of products and capabilities for mass production in the industry. We also hold the leading market share position in class two healthcare applications across a wide array of dental materials and End Uses, which is highly profitable as a business for DM. We believe we're the only company in the world with commercial solutions for binder jetting of reactive materials like aluminum, titanium, and advanced refractories like carbides and tungsten.

Jason: We added go to market resources.

Jason: Already the global market share leader in Binder jet by sales and installed base with the broadest set of products and capabilities for mass production in the industry. We also hold the leading market share position in class two health care applications across a wide array of dental materials.

Jason: And end users, which is highly profitable as a business for Dan.

Jason: We believe we're the only company in the World with commercial solutions for Binder jetting of reactive materials like aluminum titanium in advanced refractories like carbides and tungsten.

Ric Fulop: We've continued to reorganize strength in our digital casting business, where we just attended a very successful metal casting Congress in Milwaukee. Our figure sheet metal launch, which began late in q4 is fully underway with a healthy pipeline. Our entry-level metal binder jet systems are also seeing renewed growth with some investments and changes in our go-to market. Production of large silicon carbide parts and other technical ceramics on our large format binder jet systems like the 160 Pro and S-Max also continues to be a bright spot. However, in conversations with customers, the high cost of capital continues to make larger investments challenging.

Jason: We've continued to reorganize strengthen our digital casting business, where we just attended a very successful metal casting Congress in Milwaukee and our <unk>.

Jason: Sheet metal launch, which began late in Q4 is fully underway with a healthy pipeline.

Jason: Our entry level metal Binder jet systems are also seeing renewed growth with some investments and changes in our go to market.

Jason: <unk> of large silicon carbide parts and other technical ceramics on our large format by engineered systems like the 160, <unk> and S. Max also continues to be a bright spot.

Jason: In conversations with customers.

Jason: High cost of capital continues to make larger investments challenging.

Ric Fulop: That said, the proven high value benefit of some of our more mature products is still extremely compelling for customers and has excellent return on investment leading to the adoption that we're seeing in the market. This industry is a marathon, not a sprint, and we're confident in the long-term compounding opportunity in front of us. Overall, I'm extremely pleased with our performance this quarter and with the opportunities and large projects ahead. We are better positioned than ever to capitalize on growth.

Jason: That said.

Jason: The proven high value benefit of some of our more mature products is still extremely compelling for customers and has excellent return on investment leading to the adoption that we're seeing in the market.

Jason: This industry is a marathon not a sprint and we're confident in the long term compounding opportunity in front of US overall I'm extremely pleased with our performance this quarter and with the opportunities and large projects ahead.

Jason: We're better positioned than ever to capitalize on growth.

Ric Fulop: Moving to the commercial side of things, in the first quarter, we had several new exciting opportunities. We announced that our Flexera family of FDA-cleared residents for permanent and removable dental restorations continues to expand its reach in the growing digital dentistry market. Leveraging our foundational intellectual property in printing, we have formed Consumable Materials Distribution Partnerships with major players. In addition to Carbon and SprintRay, another premium dental printing hardware provider, Astiga, has now validated Flexera for use in its system. This is a testament to the performance of our products in a major group. Rarely do printer manufacturers sell other people's.

Jason: Moving to the commercial side of things in the first quarter, we had several new exciting updates, we announced that our <unk> family of FDA cleared presence for permanent and removable dental restorations continues to expand its reach in the growing digital dentistry market.

Jason: Leveraging our foundational intellectual property and printing we are formed.

Jason: Super Bowl materials distribution partnerships with major players.

Jason: In addition to carbon and sprint Ray premium dental printing hardware provider as Sega has now validated like Sarah for use in its systems.

Jason: This is a testament to the performance of our products and a major coup rarely the printer manufacturers sell other People's Inc.

Ric Fulop: In this case, Aciga can now offer materials to its thousands of dental labs and practices that use 3D printers across the world. We also expect to continue distribution expansion with other 3D printing companies as they seek to adopt our breakthrough Flexera materials for their best-in-class mechanical properties and take advantage of our strong blocking and foundational intellectual property position in area-wide photopolymer printing. This is great validation of the very high value in our large intellectual property portfolio of close to 1000. The dental 3D printing market is projected to hit $8.1 billion by 2029 with a compounded annual growth rate of 19% from 2023 to 2029, and is primarily driven by increasing demand for permanent restorations or cosmetic procedures like veneers and functional applications like dentures and implants, which are enabled by our product.

Jason: In this case of Sika can now offer materials to their thousands of dental labs and practices that use three D printers across the world.

Jason: Also expect to continued distribution expansion with <unk> printing companies as they seek to adopt our breakthrough flick Sarah materials for their best in class mechanical properties and take advantage of our strong blocking and foundational intellectual property position in area wide photopolymer printing.

Jason: This is great validation in the very high value in our large intellectual property portfolio of close to 1000 patents.

Jason: The dental <unk> printing market is projected to hit $8 $1 billion by 2029 with a compounded annual growth rate of 19% from 23 to 2029 and is primarily driven by increasing demand for permanent restorations for cosmetic procedures like veneers and functional applications like ventures, and implants, which are enabled by our products.

Ric Fulop: We're very proud of the strong market position of Flexera and our other products in this segment, and it is only expected to strengthen in the stretch ahead. Another promising growth area of recurring revenue is our scanapp.org digital dentistry adoption product, which we are doing in partnership with Align Technologies. We continue to see good demand for this product. We expect this new business model to be a meaningful part of our company by the end of 2024, and it's an attractive way for DSOs and dentists to digitize their practices and adopt printed permanent restorative parts.

Jason: We're very proud of the strong market position of like Sarah in our other products in this segment and only expected to strengthen in the stretch ahead.

Jason: Another promising growth area of recurring revenue is our scan outdoor digital dentistry adoption products.

Jason: Which we are doing in partnership with align technologies, we continue to see good demand for this product. We expect this new business model to be a meaningful part of our company by the end of 2024, and it's an attractive way for Dsos and dentists to digitize their practices and adopt printed permanent restaurant of parts.

Ric Fulop: Restorative Dentistry is poised to go 100% printed and digital over the coming decade, and this represents a $30 billion a year global opportunity, especially since insurance reimbursement for printed parts has begun to be approved in the U.S. in the past year. Last quarter, I talked briefly about the human or robot.

Jason: Dentistry is poised to go 100% printed and digital over the coming decade, and this represents a $30 billion a year global opportunity.

Jason: Especially since insurance reimbursement for printed parts has begun to be approved in the U S. In the past year.

Jason: Last quarter I talked briefly about humanoid robotics.

Ric Fulop: We believe our low-cost printed castings technology is a great solution for mass-producing low-cost limbs, and we're looking forward for these new products to eventually get to market. We think it's a huge, huge market opportunity. We're working on many ways to make printed die cast molds for this market with a process similar to the technology we offer today to make molds for automotive bodies in white giga cast.

Jason: We believe our low cost printed casting technology is a great solution for mass producing low cost limbs and we're looking forward for these new products to eventually get to market.

Jason: We think it's a huge huge market opportunity.

Jason: We're working on many ways to make printed dicast malls for this market with a process similar to the technology, we offer today to make molds for automotive body in white Giga casting.

Ric Fulop: As I mentioned on the last call, we have several product launches scheduled for the rest of the year, which are the result of many years of work. In recent quarters, we began shipping our Figure systems, and we launched new versions of Flexera.

Jason: As I mentioned on the last call we have several product launches scheduled for the rest of the year.

Jason: Which are the result of many years of work.

Jason: In recent quarters, we began shipping our figure systems, we launched new versions of like Sarah and this week, we are launching our commercial aluminum and titanium binder jetting solution.

Ric Fulop: And this week, we're launching a commercial aluminum and titanium binogenic solution. I look forward to the many exciting product introductions that we have scheduled for the rest of the year. Me and our team are extremely grateful to the U.S. government for their support in our sector. DM is working in many areas to support the Department of Defense and the Department of Energy across many critical segments like ship building and submarine building with advanced casting technology, aerospace parts in metal and technical ceramics for multiple airplane platforms and space platforms, nuclear fuel materials printing for SMRs and for space propulsion, printing of refractory materials for advanced defense applications, and manufacturing of large aluminum and magnesium parts for the light weighting of many of our vehicle platforms.

Jason: I look forward to many exciting product introductions that we have scheduled for the rest of the year.

Jason: Finally.

Jason: Me and our team are extremely grateful to the U S government for their support in our sector.

Jason: It's working in many areas to support the department of Defense and the department of energy across many critical segments like shipbuilding and submarine building with advanced gasoline technology aerospace parts in metal and technical ceramics for multiple airplane platforms and space platforms.

Jason: Clean fuel materials printing for <unk> and for space propulsion printing of refractory materials for advanced defense applications and manufacturing of large aluminum and magnesium parts for light weighting of many of our vehicle platforms.

Ric Fulop: At a time when defending democracies around the world and our way of life has become more important than ever, we look forward to supporting the defense industrial base to help our country and our allies. In closing, I'm very grateful for all of the hard work our team has put in and looking ahead to the balance of 2024. I'm very excited by our progress and our focus on reaching profitability through the realization of our cost saving initiatives, which we began well ahead of our competitors.

Jason: At a time when defending democracies around the world and our way of life has become more important than ever we look forward to supporting the defense industrial base to help our country and our allies.

Jason: In closing I am very grateful for all of the hard work. Our team has put in so looking ahead of the balance of 2024, I'm very excited about our progress and our focus on reaching profitability through the realization of our cost saving initiatives, which we began well ahead of competitors.

Ric Fulop: It amazes me that there are no truly profitable printing companies at the moment, and none of them are large scale yet. But with eight consecutive quarters of optics reduction and nine quarters of adjusted gross margin expansion, we're closer than ever to getting there later this year. In the long term, additive manufacturing is the future, and desktop metal is supposed to emerge from this cycle as the clear leader in mass production with a very profitable business in the long run. And like our competitors, who make their money on prototyping and tooling, which are now commoditized markets with lots of competition.

Jason: It's amazing to me.

Jason: There are no truly profitable printing companies at the moment and none of them are large scale yet.

Jason: But with eight consecutive quarters of Opex reduction in nine quarters of adjusted gross margin expansion, we're closer than ever to get there later this year.

Jason: In the long term additive manufacturing is the future and desktop metal is poised to emerge from this cycle.

Jason: Clear leader in mass production with a very profitable business in the long run.

Jason: Unlike our competitors, who make their money on prototyping and tooling, which are now commoditized markets with lots of competition.

Ric Fulop: We're a leader with high market share in markets with under 5% penetration and very massive TAMs ahead. Our optimized cost structure will prove invaluable as growth materializes, and we realize leverage on sales as we implement our vision in our go-to-market expansion program. We're extremely optimistic about our go forward path in the future with added manufacturing. I want to really thank our employees again, our customers, our partners, and all of our shareholders for their continued support over the years and the sacrifices they've made. We look forward to updating you on our progress next quarter.

Jason: We're a leader with high market share in markets with under 5% penetration and very massive tans ahead.

Jason: Our optimized cost structure will prove invaluable as growth materializes, and we realized leverage on sales as we implement our vision and our go to market expansion programs.

Jason: We're extremely optimistic on a go forward path and future of additive manufacturing.

Jason: I want to really thank our employees again, our customers our partners and all of our shareholders for their continued support over the years and the sacrifices. They have made we look forward to updating you on.

Jason: On our progress next quarter with that I'll turn it over to our CFO Jason Cole.

Jason Cole: Thanks, Rick, and thanks, everyone, for joining us. Beginning in the Financial Summary section, you will see our performance for the first quarter of 2020. Please note, we will be referring to several financial metrics on a non-gap basis. Reconciliation to GAP data is included in the file dependent.

Jason: <unk>.

Jason Cole: Thanks, Rick and thanks, everyone for joining us today, beginning in the financial summary section you will see our performance for the first quarter of 2024. Please.

Jason Cole: Please note, we will be referring to several financial metrics on a non-GAAP basis reconciliation to GAAP data is included in the filed appendix.

Jason Cole: Before walking through our financials, I think it's important to recap the strategic actions we've taken over the last couple years, which will further contextualize the results and serve as the foundation for our confidence in our outlook. While the additive manufacturing industry has remained challenged, we took decisive action to right-size our cost base and accelerate our path to profitability. In June of 2022, we announced a $100 million cost reduction. As the demand environment continued to deteriorate as a result of higher interest rates, we announced an additional $50 million of annualized reductions in January of this year for a total of $150 million in cumulative annualized reductions.

Jason: Before walking through our financials I think its important to recap the strategic actions we've taken over the last couple of years, which will further contextualize the results and serve as the foundation for our confidence in our outlook, while the additive manufacturing industry has remained challenged we took decisive action to rightsize, our cost base and accelerate our path to profitability.

Jason Cole: These reductions directly drove efficiencies across cost of sales and OPEX, which has steadily improved our operating leverage across 2023 and into 2024. With respect to the $50 million cost-out program announced in January, we realized the majority of these savings in the first quarter, with the balance completed through year end. These measures included a further 20% reduction in our workforce, three additional site consolidations, continued efforts to streamline centralized costs, and the sunsetting of several slow-moving products. In March, we took things a step further and announced our intention to de-emphasize select business lines, principally within our portfolio, where a lack of growth and scale has been a headwind to profitability. These actions are above and beyond the previously announced $150 million.

Jason: In June of 2022, we announced a $100 million cost reduction program as the demand environment continued to deteriorate as a result of higher interest rates, we announced an additional $50 million of annualized reductions in January of this year for a total of $150 million in cumulative annualized reductions these reductions.

Jason: Directly drove efficiencies across cost of sales and Opex, which have steadily improved our operating leverage across 2023 and into 2024.

Jason: With respect to the $50 million cost out program announced in January we realized the majority of these savings in the first quarter with the balance completed through year end.

Jason: These measures included a further 20% reduction in our workforce three additional site consolidations continued efforts to streamline centralized costs and the sunsetting of several slow moving product offerings.

Jason: In March we took things a step further and announced our intention to deemphasize select business lines, principally within our portfolio, where a lack of growth and scale has been a headwind to profitability. These.

Jason: These actions are above and beyond the previously announced $150 million.

Jason Cole: As Rick mentioned earlier, we have strong belief in these products. But given the time to scale, the business lines would more directly benefit from new ownership. We have been engaged in running a process to find alternatives for these businesses, and we'll continue to update you when we have more to report. Overall, I am pleased with the progress we are seeing since 2023. And the following slides will demonstrate the progress we have continued to make.

Jason: As Rick mentioned earlier, we have strong belief in these products, but given the time to scale the business lines with more directly benefit from new ownership, we have been engaged in running a process to find alternatives for these businesses and we will continue to update you when we have more to report.

Jason: Overall I am pleased with the progress we are seeing since 2023 in the following slides will demonstrate the progress we have continued to make.

Jason Cole: Consolidated revenue for the first quarter of 2024 was $40.6 million, compared to $41.3 million in the first quarter of 2023. Product revenue decreased primarily due to a reduction in units shipped during 2024, driven by the macroeconomic conditions impacting the additive manufacturing industry. This was partially offset by strength in our recurring revenues, which grew 2% year-over-year. Non-GAAP gross margins were 30.5% for the first quarter of 2024, compared to 18% in the prior year period. Gross margins improved 1250 basis points versus the prior year period, driven by improved absorption of fixed costs. However, sequentially, gross margin decreased from 34% in the fourth quarter of 2023 on lower revenue in Q1.

Jason: Consolidated revenue for the first quarter of 2024 was $40 6 million compared to $41 3 million in the first quarter of 2023 product revenue.

Jason: <unk> decreased primarily due to a reduction in units shipped during 2024, driven by the macroeconomic conditions impacting the additive manufacturing industry. This.

Jason Cole: On the next slide, non-GAAP operating expenses were $28.6 million for the first quarter of 2024. Through cost optimization, we reduced non-GAAP operating expenses sequentially by $2.9 million and year-over-year by $6.3 million, improving by 9.4% and 18.1%, respectively. Adjusted Ivedah for the first quarter of 2024 was negative 13.6 million, improving year-over-year by 10.8 million compared to the first quarter of 2020.

Jason: 2023.

Jason Cole: We continue to make progress towards our goal of adjusting EBITDA positive in the second half of 2024. Turning to the balance sheet, this quarter's cash consumption from operations was down 69% when compared to $56.3 million consumed in the first quarter of 2022. As a reminder, 1Q22 is our comparison point, as it was the last full quarter of results before commencing our cost reductions, with continued improvement throughout. We finished the quarter with $83.1 million.

Jason: We continue to make progress towards our goal of adjusted EBITDA positive in the second half of 2024, turning to the balance sheet. This quarter's cash consumption from operations was down 69% when compared to $56 3 million consumed in the first quarter of 2022 as a reminder, <unk> 'twenty two is our comparison point as it was the <unk>.

Jason: Last full quarter of results before commencing our cost reductions with continued improvement throughout we finished the quarter with $83 1 million in inventory, we are well positioned to execute unexpected first half demand and remain committed to optimizing inventory management monetizing the inventory, we have an improving cash flow and working capital in 2024.

Jason Cole: We are well-positioned to execute on expected first-half demand and remain committed to optimizing inventory management, monetizing the inventory we have, and improving cash flow and working capital in 2024. We expect inventory to be a source of cash for the company. Additionally, we have accounts receivable of approximately $35.4 million, which we expect to turn through the next two quarters. Moving to our financial outlook section, we are reiterating our financial guidance for 2020. We anticipate generating revenue in the range of $175 million to $215 million for 2024.

Jason: We expect inventory to be a source of cash for the year.

Jason: Further we have accounts receivable of approximately $35 4 million, which we expect to turn through the next two quarters.

Jason: Moving to our financial outlook section, we are reiterating our financial guidance for 2024, we anticipate generating revenue in the range of 175 million to $215 million for 2024.

Jason Cole: We expect the momentum in the improvement of adjusted EBITDA to continue throughout 2024. And as such, we expect full year 24 adjusted EBITDA to be negative 30 to negative 10 million. We do expect that in the second half of 2024, we will begin recognizing positive adjusted EBITDA as we realize the nearly full benefit of our $150 million cost savings program. Additionally, the guidance reflected today does not include any businesses which may roll off as part of our strategic review process. With that, we will ask some questions. Operator?

Jason: We expect the momentum and the improvement of adjusted EBITDA to continue throughout 2024, and as such we expect full year 'twenty for adjusted EBITDA to be negative 30 to negative $10 million.

Jason: We do expect that in the second half of 2024, we will begin recognizing positive adjusted EBITDA as we realize the nearly full benefit of our $150 million cost savings programs. Additionally.

Jason: Additionally, the guidance reflected today does not include any businesses, which may roll off as part of our strategic review process.

Speaker Change: With that we will take some questions operator.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any key.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone.

Speaker Change: We'll hear with Sweet home farm technology of our quest.

Speaker Change: If you are using a speaker phone please lift the handset before pressing any case.

Operator: The first question comes from Troy Jensen at Kantor. Please go ahead. Hey, gentlemen.

Speaker Change: First question comes from Troy Jensen at Cantor. Please go ahead.

Troy Donavon Jensen: Hey, gentlemen, congrats on the decent results here in a tough market. Thanks, Troy.

Troy Donavon Jensen: Hey, gentlemen, congrats on a decent results here in a tough market.

Troy Donavon Jensen: Thanks, Chris.

Jason Cole: Hey, Jason, just quick for you on gross margins, which were pretty impressive. I was modeling 2070 to 30.5 here adjusted. So I mean, going forward with revenue growth, I'm assuming you're going to expect gross margin expansion. And I'm just kind of curious if you could give us any flavor of guidance for what, you know, the next quarter or the full year could look like.

Troy Donavon Jensen: Okay.

Troy Donavon Jensen: Jason just quick for you on I guess gross margins were pretty impressive I was wondering in 2017 third.

Troy Donavon Jensen: <unk> 35 here adjusted so I.

Troy Donavon Jensen: I mean going forward with revenue growth I'm, assuming you're going to expect gross margin expansion and.

Troy Donavon Jensen: I'm just kind of curious if you could give us any flavor guidance for what you know in the next quarter or the full year. It looks like that this wasn't like.

Jason Cole: Yeah, thanks, Troy. I appreciate it. You know, we generally stay away from giving direct guidance on gross margin.

Speaker Change: Yeah, Thanks, Terry I appreciate it.

Speaker Change: We generally stayed away from giving direct guidance on gross non-GAAP gross margin. However, I think we've been pretty consistent that we thought we could get this thing in sort of our typical quarterly levels right around 50 million plus to be in the mid 30. So.

Jason Cole: However, I think we've been pretty consistent in thinking we could get this thing in sort of our typical quarterly levels right around 50 million plus to be in the mid-30s. So I think that's definitely a trend that we can continue. You know, one cue over one cue.

Speaker Change: I think thats definitely a trend that we can continue.

Speaker Change: <unk> a great its impressive a lot of hard work goes into that.

Jason Cole: I agree. It's impressive. A lot of hard work goes into that. And then the prior quarter, which is before some of the more recent cuts, we did 34 on a 52 million number. So I think the last two quarters are reflective of a lot of the savings we've expected to see. And, you know, hopefully, we can continue to drive it a little further as well.

Speaker Change: And then the prior quarter, which is before some of the more recent cuts. We did 34 on a $52 million number. So I think the last two quarters are reflective of a lot of the savings we had expected to see.

Speaker Change: And hopefully we can continue to drive it a little further as well.

Jason Cole: And then on non-GAAP on OPEX, so $28.6 million in Q1. I know you probably got the tail end of some cost reduction efforts, but now you've got these investments and go-to-market strategies. So do we think non-GAAP OPEX as a dollar amount is bottomed here? Is there growth now because of the investments or just gives some color on OPEX?

Speaker Change: Okay Cool and then on a non-GAAP on Opex, So $28 6 million in Q1, I know you're probably at the tail end of some cost reduction efforts, but now you've got these investments in go to market strategy. So do we think non-GAAP opex on a dollar amount has bottomed here because their growth now because of the investments or just give some color on opex.

Speaker Change: Susan.

Jason Cole: Yeah, I don't think it's bottomed. I think we have a little bit more down, even with some of the strategic investments we're making. The strategic investments are very targeted. We think they're going to drive strong returns, and we're trying to make sure they can do that rapidly. OneQ, we announced some changes in OneQ, so you don't get the full quarter effect of that, so we do expect it to come down. Some of these cuts are being managed very carefully, so I'll stop short of kind of saying exactly how it went further down, but I would not call this a

Susan: Yes, I don't think it's bottomed I think we have a little bit more down even with some of the strategic investments, we're making the strategic investments are very targeted we think they're going to drive strong returns and we're trying to make sure. They can do that rapidly <unk>.

Susan: <unk>, we announced some changes in <unk>. So you don't get a full quarter effect of that so we do expect it to come down.

Susan: Some of these cuts are being managed very carefully so I'll I'll stop short of saying exactly how much further down but I would not call. This a floor.

Ric Fulop: Okay, perfect. And the last one here for Rick. Rick, I'd love to just hear you talk a little bit about just the powder bed metal business and Studio Shop, you know P1, P50, you know the other products too, but what is powder bed?

Speaker Change: Okay, Perfect and then last one here for Rick Rick I'd Love to just hear you talked a little bit about just the powder bed metal business and studio shop.

Speaker Change: One P 50 the.

Susan: The other products too but.

Susan: But how is part of the metal.

Ric Fulop: So, actually, we're quite happy with the results for Q1 in that part of the business. It was up roughly 9%, and, you know, when we had the move from channel to a more direct Salesforce for a period of time, we let the Salesforce sell all the products and, obviously, the more expensive systems on the printed casting side, which are, you know, over a million dollars. They, it, you know, the sales team will sell what generates the most, usually the lowest hanging fruit and generates the fastest, largest sort of return for them.

Rick: So actually we are quite.

Rick: Happy with the results for Q1 in that part of the business was up roughly 9%.

Susan: And.

Susan: You know when when we.

Susan: Had the move from channel to a more direct sales force for a period of time, we let the.

Susan: The sales force sell all the products and obviously the more expensive systems.

Susan: The casting side, which are you know.

Susan: Over $1 million they it.

Susan: The sales team will sell what what generates the what is usually the lowest hanging fruit and generates the fastest.

Susan: But just a.

Susan: Sort of a return for them and I think that.

Ric Fulop: And I think that maybe we should have split the sales teams at that time, so you had dedicated resources for the direct metal side and then dedicated resources for the printed casting side. And I think we've done that now since Q4, and I think you're seeing results that I think are quite good.

Susan: Maybe we should have split the sales teams at that time. So do you have dedicated resources for.

Susan: The direct metal side, and then dedicated resources for the printed casting side and I think.

Susan: We've done that now since Q4, and I think youre seeing the results that I.

Susan: I think are quite good.

Susan: In that segment.

Susan: We have a very competitive position we have over 30 materials. We are the only people who do reactive we're the only people who do.

Ric Fulop: And in that segment, we have a very competitive position. We have over 30 materials. We're the only people that do reactives. We're the only people that do high performance refractories that do carbides, and our customers are in mass production. If you, you can order Sandvik and any kind of metal components that are mass produced in these classes of products.

Susan: High performance Refractories due carbides.

Susan: And.

Susan: Our customers are in mass production, you can order a sandwich and kind of metal components that are mass produced in these classes of products. So I think we were very very strong position.

Susan: It is.

Ric Fulop: So, I think we were in a very, very strong position. Uh, it is a group of solutions where we offer the lowest lowest cost, per CC, even lower than the other folks that are in the market. We have a much larger installed base. Whereas all the folks in the market may have just one machine, and it only does one thing. And so it's very niche. You may only print stainless steel.

Susan: A group of solutions, where we offer a lowest.

Susan: Louis cost.

Susan: For Cc and.

Susan: Even lower than the other folks that are in the market, we have a much larger installed base.

Susan: Then that but by a huge margin.

Susan: And so the products are mature.

Susan: They're getting better material.

Susan: Material sets are getting better we have a number of exciting things coming up in the future you'll see as the year progresses. So it is still an important part of our business and we're very proud of those offerings and we're better portfolio. You can go from half a liter up to a 160 leaders, whereas other folks in the market may have just one machine and it only does one thing and so its very niche email only print.

Susan: The steel I mean, we have a pretty broad portfolio you've been on the studio side I think I still think we're the only people who do titanium in that class of product, whereas our competitors don't do.

Ric Fulop: I mean, we have a pretty broad portfolio, even on the studio side. I think I still think we're the only people that do titanium in that class of product, whereas our competitors don't do that class of materials. Anyway, so we're committed to continuing to grow the business and scaling it, and we're very happy with the results that we're back to. We had growth again in that segment, which last year was tough. All right, guys, well, good luck going forward.

Susan: Those class of materials and anyway, So we're committed to continuing to grow the business and scaling it.

Susan: And.

Susan: Yeah.

Susan: Very happy with the results that we're back to growth again in that segment, which last year was totally understood.

Troy Donavon Jensen: Alright guys, well, good luck going forward.

Speaker Change: Alright, well good luck going forward.

Troy Donavon Jensen: Thank you Troy.

Operator: Thank you. The next question comes from Jacob Stephan at Lake Street. Please go ahead.

Speaker Change: Thank you. The next question comes from Jacob Stephen At Lake Street. Please go ahead.

Jacob Michael Stephan: Yeah, thanks for taking my questions. Rick, I think you talked about a little bit in your demand environment section about adding some go-to-market resources, but, you know, at the same time, you're making cost reductions. So, maybe if you could just kind of help us bridge the gap between some of the resources you're adding, are these baked into your kind of assumptions already, and just kind of any commentary around that.

Jacob Michael Stephan: Yeah, Hey, guys. Thanks for taking my questions.

Jacob Michael Stephan: Rick I think you talked about a little bit in your demand environment section about adding some go to market resources.

Jacob Michael Stephan: At the same time, youre, making cost reductions. So maybe if you could just kind of help us bridge the gap between some of the resources, you're adding are these baked into your kind of assumptions are ready.

Jacob Michael Stephan: And then just kind of any commentary around that.

Ric Fulop: Absolutely. Look, if you think about it as a as a full system, and the cost of capital goes up, the effect of that is that the selling cycle tends to lengthen in a capital-intensive product like ours. And that means that it takes longer for for this. If you have a certain number of salespeople, it takes you longer to close the number of deals that you have in your pipeline.

Rick: Absolutely look if you if you think about it as a as a as a full system.

Rick: And the cost of capital goes up.

Rick: The effect of that is that the sales cycle tends to lengthen.

Rick: Capital intensive.

Rick: A product like ours and that means that it takes longer for this.

Rick: If you have a certain number of salespeople, particularly longer to close the number of deals that you have in your pipeline and that's what I think caught our industry Flatfooted last year, a little bit we should've been adding capacity there, while we were reducing our costs, but we were 100% laser focus on cost reduction first.

Ric Fulop: And that's what I think caught our industry flat footed last year a little bit. We should have been adding capacity there while we were reducing our costs, but we were 100% laser focused on cost reduction first. Now, I think we are ready to start expanding. And, you know, we average roughly $7 million per rep in our business.

Rick: Now I think we are.

Rick: Ready to start expanding and you average roughly $7 million per.

Ric Fulop: And, you know, we want to add capacity. We don't have enough capacity in several regions in the US. We don't have enough capacity in different parts of the world where there is growth in this area. There are manufacturing hubs around the world for this class of products that are made with our machines.

Rick: For wrap in our in our.

Rick: Business.

Rick:

Speaker Change: We want to add.

Rick: The capacity, we are we don't have enough capacity in several regions. The U S. We don't have enough capacity in different parts of the world, where there's growth in this area with their manufacturing hubs.

Rick: <unk> and around the world for these.

Rick: These class of products that are made without machines. So I think it's a great opportunity and I think.

Ric Fulop: So, I think it's a great opportunity, and I think now is the time to start thinking about how we can get this company back to double-digit growth. And obviously, it takes time once you make an investment for those resources to become productive. But we are making the transition now from sort of stemming, basically stopping the losses, and then now getting back into a growth mindset. And we've got a much-improved cost structure. And I'm surprised that many of our peers still have optics north of, and it is larger than revenue. And I think it's very hard for them to kind of break that cycle.

Rick: Not to start not the time to start thinking about how do we get this company back to <unk>.

Rick: Double digit growth and obviously it takes time once you make the investment for those resources to become productive, but we are.

Rick: Making the transition now from.

Rick: Sort of stemming.

Rick: Basically stopping the losses, and then now getting back into a growth.

Rick: Mindset, and we've got a a much improved cost structure and I'm surprised for many of our peers. They still have opex north of.

Rick: Opex is larger than revenue and I think it's very hard for them to kind of break that cycle, we focused.

Ric Fulop: We focus on bringing down our optics now to a number that's manageable and for the size platform we have. And we are very happy we still have leading market share in our segments. In MinerJet, we're still kind of near an 80% market share, and I think from here, growth and investment in go-to-market are going to drive returns and leverage. And we saw some of that in Q1, with roughly 15% on the printed casting side year-over-year and 9% on the metal or powder bed products.

Rick: To bring down our our Opex now to a number that's manageable and for those nice platform we have in.

Rick: We are very happy we still have leading market share in our segments and binder jet, we're still kind of near 80% market share and I think from here.

Rick: Growth in investment in go to market is going to drive.

Rick: The returns on the leverage and we.

Rick: We saw some of that in Q1 with roughly 15% on the <unk>.

Rick: Printed casting side year over year, and 9% on the metal and oil.

Rick: Part of it.

Rick: Products and so I'm thinking it's time to start stepping on the gas again.

Ric Fulop: And so I think it's time to start stepping on the gas again. You know, it won't be like a straight line. So I think, you know, maybe a little lumpy, but I think If you give it, you know, a couple of quarters, that small amount of investment is going to yield a meaningful upside as we get leverage on this new cost structure.

Rick: And as we won't be like a straight line. So I think maybe a little lumpy, but I think.

Rick: If you gave it.

Rick: Couple of quarters.

Rick: The amount of investment I think is going to yield a meaningful upside as we as we get leverage on this new cost structure.

Jason Cole: Okay, understood. And then maybe, Jason, if you could just kind of help us understand, does 2024 look a lot like kind of 2023 with regard to seasonality, with kind of Q2 up and Q3 down? Maybe if you could just kind of help us think about how we should break out the revenue quarterly here. Yeah.

Speaker Change: Okay understood and then maybe Jason if you could just kind of help us understand.

Rick: This 2024 look a lot like 2023 with regards to seasonality.

Jason Cole: We're kind of Q2.

Jason Cole: Q3 down maybe if you could just kind of help us think about how we should break out the revenue quarterly here.

Jason Cole: Yeah, thanks, Jacob. Yeah, I think the seasonal patterns have been pretty steady, even despite kind of year-on-year comps being down across 23. So I still expect sequentially to be, you know, 2Q to be stronger over 1Q, 3Q to be a little bit more muted, with our largest quarter being 4Q. That seems like a seasonal pattern that we can depend on.

Jason Cole: Yeah, Thanks, Jacob I think.

Jason Cole: The seasonal patterns have been pretty steady.

Speaker Change: Even despite kind of year on year comps being down across 23.

Jacob Michael Stephan: So I still expect.

Speaker Change: Sequentially to be <unk> be stronger over one two <unk> to be a little bit more muted with our largest quarter being <unk> that seems like a seasonal pattern that we can depend on I think the degrees of the highs into an <unk> or something we are still proceeding with great caution and I think that's reflected in our guidance. So we will continue to.

Jason Cole: I think the degrees of the highs in 2 and 4Q are something we're still proceeding with great caution, and I think that's reflected in our guidance. So, you know, we'll continue to, we're re-upping our guidance today. We'll keep you apprised of that as it unfolds. But I think we saw some signs of stabilization in 1Q, but we've still got a long way to go, and we're going to continue to manage this with a lot of care and attention as we navigate through.

Jacob Michael Stephan: Re upping our guidance today.

Jacob Michael Stephan: We will keep you apprised to that as it unfolds, but.

Jacob Michael Stephan: We saw some signs of stabilization in <unk>, but we've still got a long way to go and we're going to continue to manage this with a lot of care and attention as we navigate through this.

Jacob Michael Stephan: Okay, very helpful. Good luck, guys. Thank you. Thanks, Jacob.

Speaker Change: Okay very helpful. Good luck guys. Thanks.

Speaker Change: Thanks Jacob.

Speaker Change: Yeah.

Ric Fulop: Thank you. We have no further questions. I will turn the call back over to Ric Fulop for closing comments.

Speaker Change: Thank you we have no further questions I will turn the call back over to Mike followup for closing comments.

Ric Fulop: Thank you very much to all of our investors and employees for joining us today and for all of your interest in the company. And, as always, if you have any follow-up questions, we're happy to talk to you, and don't hesitate to call us. If you're in the Boston area, please come visit and see our technologies in person, and thanks again for joining us on this call.

Speaker Change: Wonderful well.

Mike: Thank you very much to all of our investors and employees and for joining us today.

Mike: For all of your interest in our company and as always if you have any follow up questions. We're happy to.

Mike: To talk to you and don't hesitate to call us.

Mike: If you're in the Boston area, please come visit and see our technologies in person and thanks again for joining our call.

Operator: Ladies and gentlemen, this concludes our conference for today. We thank you for participating, and we ask that you please disconnect your lines.

Speaker Change: Ladies and gentlemen, this concludes our conference for today, we thank you for participating and we ask that you. Please disconnect your lines.