Good afternoon, everybody. Thanks for joining us again at The 26th Annual Needham Growth Conference. Today, we're gonna have a discussion with the management of 3D Systems. We have with us today, company CEO, Jeff Graves. Jeff Creech, the new CFO. John, when did Jeff-- Formally, when did you. A month ago yesterday. Yeah. So, I'm celebrating my anniversary here with you guys. All right. Well, nice to have you. Thank you. And we also have the company's VP of Investor Relations. Mick, where, where are you? Here we go. Okay, my name is Jim Ricchiuti, Senior Analyst in the Equity Research department at Needham, covering advanced Industrial Technology companies. So, welcome, gentlemen. Got some ground to cover. Jeff Graves, so it's been an eventful 2023. Is that the way I would characterize it? It's gonna be a 2024, Jim. Okay. So as you, as you go back to 2023, and, we saw a couple of things. We saw a fair amount of industry uncertainty, and we also saw the signs of, what people have looked for in this industry or felt that we needed to see, industry consolidation. You were, in part, looking to drive some of that. Didn't play out necessarily the way you thought. But, yeah, I'm just curious, your, your overall view. And, and by the way, we're still... And I think maybe this is the disconnect that investors have, Jeff. We still see market data suggesting this great market opportunity, where- Right ... it makes sense. We still see customers moving in that direction. But, anyway, just would be interested in your observations about this. Jim, first of all, thank you for having us. It's been a great day together, as always, here at Needham. It's a really interesting time in our industry. The technology, 3D printing, has been around for 40 years. Our founder was one of the inventors of the technology. And it—for those of you that have followed, it's gone through its evolutions. And for a long time, first, it was a prototyping technology, and it still does a wonderful job prototyping. But as engineering materials developed and the printing technology became more robust, you could actually make real parts this way. First, at very low volumes, and now increasingly at higher volumes. So what that's led to, and this is, this gets back to your question, Jim, about the industry dynamics, is there's been a pretty profound, and it's really in its early stages right now, shift in our customer base from being high-end engineers in a laboratory, that were chartered to either make prototypes or one-off parts, to factory managers. So our customer base literally now is predominantly factory managers that wanna bring 3D printers onto the factory floor. And for those of you that have probably never gone through that, their whole mental process is different. So the way those guys get fired is by production breaking down. So they have to know that the machine they're buying to make their parts is gonna be reliable, fast. If it does have an issue, you can have a service tech there fast, because for them, it's all about throughput, quality, and delivery. That's it. That's their life. So we've re-vectored our sales team in that direction. The technology in the industry, and it's not just 3D Systems, has matured to the point where there is a good economic proposition for those folks. And it's moving now from very high-end applications in medical or aerospace, into higher volume applications, automotive, consumer electronics, other parts of the human body, the orthopedic area of the body, like bone repair. So as the economics get better, the machines get more reliable, production applications become real. They become real, and that's really what's gonna drive this industry in the future. Now, get back to the question on the state of the industry. If you, if you looked at it when money was free, then there were a lot of startups, when these SPACs emerged, all that stuff. Anybody with a compelling technology vs... could raise money and start a business. Startup businesses burn a lot of cash, but, but there was a lot of fuel on that. So there's these little companies that have kinda grown up with an interesting, often niche technology. Then, there's the bigger of us that are going through this profound customer shift, so ourselves and, and our larger competitors that are either other peer plays or, or owned by a bigger OEM. So all of that screams to you, you need critical mass in order to service a customer base. Our largest customer has large factories where they use our equipment on three different continents, Europe, North America, and Asia. To service those folks, we have to have a global sales team, we have to have a global service team, all of this stuff that drives cost. So you have to have a certain scale to support that cost that's required for that customer base. So all of that screams around industry consolidation. We tried to drive some of that last year, and we tried really hard, not to count, but eight different times. And we were not successful in driving the consolidation we wanted to have happen. But that said, scale is necessary to service factories around the world, to sell to them, and to take care of the product. Our design life is 15 years on a printer, so it'll be out there a long time. And it's still a dynamic industry that requires large amounts of R&D investment. So you, you've got this drag, if you will, on the P&L of R&D. You've got to maximize the efficiency of your SG&A, and you've got to drive gross margin performance to be able to afford it. All of that cries out for scale. So the industry needs to undergo further consolidation. A few of us are big enough to be successful now. Could the economics be a whole lot better 'cause people are looking for profitable cash-generating businesses? Yes. And then, they undoubtedly, economics will win, and it'll happen at some point. And I, I think you'll see that in the future, Jim. Long-winded answer. Yeah. No, no, that, that's fine. And maybe for some folks who are not completely up to date, at 3D Systems, you, since you arrived at the company, you have gone, you know, really gone through the portfolio, made some changes, divested some businesses, added some others. Right. Maybe just give us a thumbnail of 3D Systems today? Yep. and we'll talk about the Industrial and Healthcare, you know, the chart. Sure. So my charter from the board, I arrived in May of 2020. I sat alone in a COVID world, in a 100,000 sq ft building, trying to figure out what to focus on. And because the charter from the board was: get us focused, get you know get the company scaled properly to be successful in what you define as a business. So we said, "Look, we are a 3D printing manufacturer. That's what we make machines, and we develop novel products to sell to customers in those machines. That's what we're good at." Predecessors had gone into much more of a broad digital manufacturing framework, which, and to their credit, the whole move from analog to digital in making parts is a tremendously big deal, but it's too broad of a charter. So we narrowed the focus. We said, "Let's build machines and sell printers, or sell materials, and provide services to those materials and the software that goes around it, and get out of everything else." So we sold a bunch of stuff. We paid off our debt, put a bunch of cash on the balance sheet, and we right-sized the business, which we're still going through today, to get the business to where it can be profitable with that kind of a focus. So those are the changes we've made. Among those changes, you took a look at the 3D Systems had a service bureau business, Quickparts. Yeah. You said that's not necessarily strategic, and- Yeah ... others have said that's still a viable market for- Sure for, yeah. It is. It's a very viable market for a different company. I, you know- Mm-hmm ... well, there's a real need in the world for businesses that just take in a computer-generated file and print a part or print 10 parts. That's a really interesting industry, and there are people really good at it. Okay. That's different than selling equipment- Right ... for manufacturers. We view the service bureau business, you know, like I said, those are customers of ours. We shouldn't be in that business. Those are customers of ours. So we sold off those assets, and now we have a thriving service bureau business selling them equipment. And also, apart from the larger acquisition you're pursuing, you've also been adding to the hardware portfolio. Yes ... with some smaller strategic acquisitions. Maybe talk to some of those and, and- Yep. So our model, and I really believe this is the obviously model of success. I'm completely biased. But customers, oftentimes these days, when they come in, they say, "Well, I've heard a lot about 3D printing. I think it can add value in my factories, but I don't know where to start. I've got some things I think could be made that way." They don't know, sometimes even between plastic and metal, which would they'd really like to have, because we have some really high-performing plastics that can compete with metals now. Within the metal framework, we, there's five different platforms we have for making parts, all different technologies, which can be used. So our approach to the market is: "Look, customer, you can come in. You don't have to know what the printing technologies you want. We'll model it for you. We'll demonstrate it for you in our application center, and then, if you like that, and the economics, we'll sell you machines." So that's what... That's the way our business model works. It's a high-touch sale to customers that are really just exploring 3D printing for production for the first time. And you churn through a lot of those kind of customers. You're trying to pick very carefully, and that what I've said today to a number of people is, what we're trying to capture now are the tail of the curve in terms of low-volume, high-mix parts that are very valuable. So today, they're having to be made with plastic injection molding. Tomorrow, they'll be printed, on-demand printed, the tail of the curve, and if you pick the market right, it's a big tail. What is to that customer a tail is, to us, a giant vein of work for us. It can be $100 million, $200 million kind of customer if you target it correctly. So we have several of those initiatives going on. As you mentioned, Jim, we divide our business into Healthcare and Industrial markets- Mm-hmm ... because there's two different sets of requirements for those markets. And maybe let's spend some time on that. Industrial, we're almost, what, 55%-57% of your revenues through the first nine months. And it's interesting, we've seen a lot of the industry players focused on that market have had some real challenges. It's the market is soft. You guys actually showed in Q3 some growth, both year-on-year and sequentially, and I think it was a little surprising, just given the macro. Yeah. You know, what's contributing to what's happening in that market? Obviously, you want it to grow faster, but- Thanks for noticing the growth, Jim. It was modest by all measures. Yeah ... but it was positive. So that was a good thing when most people were shrinking. What's really... And I didn't directly answer your prior question. We filled in gaps in our product line through these bolt-on niches. Right. But they're little, they're small gaps, niche kind of products that can scale, but we've generally got the platforms we really need. It's a matter of scaling those niches. Yeah. To your point about the Industrial markets are so big that even in a modest economy, if you, you know, work it hard enough with applications, you can find pockets that are strong. For us, for example, semiconductor equipment manufacturing, it's in the news all the time now to make chips, right? Trying to onshore and all of that. We can take a 15, I won't bore you with examples, a 15-component assembly for a multi-million-dollar, probably $10s of millions machine to make chips, computer chips. We can reduce that to a one print. So you go from 15 parts to one. And you can improve the performance of that part by putting in some heat transfer characteristics and things, all a part of printing. They save money, they save cycle time, and you can build a better machine from it. That example, even in a weak economy, is repeated over and over. So we're happy to wring out some modest growth in a difficult environment. When the economy really does turn and then hopefully interest rates start coming down, people will spend more on CapEx doing that same thing. So Industrial, I would tell you we had a you know really good year in semiconductor equipment in niches around aerospace and defense, even automotive, electric vehicles, there are some same motivation, going from multiple part assemblies to single piece construction, if you will, through printing. And a market that's not talked about very much is. It sounds mundane, but it's very interesting, is the metal casting market. They're still casting metal, but what they cast it around, the core is printed. And it's a wonderful business. You can print exotic cores. They're one-time use. You burn them out or throw them away, and they've eliminated all this labor that goes into core manufacturing. They still have this very inexpensive casting process that goes around it, and there are 1,000s of factories around the world that can benefit from this, with machines that cost $100,000, $200,000. So you're not asking people to write huge capital checks, but it's a very big market and a very active market for 3D printing right now. So within that industrial piece of the business, which of the printing technologies are you getting some- Uh ... the most traction from? And this gets back to our business model, Jim. I'm, I'm a firm believer that the solution for every customer is gonna be slightly different. So we have five major polymer printing platforms, different technologies, and then we have one major metal printing- Yeah - technology. Customers often come in, they don't know which one they want. We wouldn't know coming in, but we can sample a few of them and try. So we are sometimes we're a mile wide and an inch deep. Well, more than an inch deep, but we go broad in terms of our technology offerings, whereas most of our competitors are extremely focused on one technology. And that's, in my opinion, much too narrow. I mean, our customers aren't to the point where they know what they really want yet, or what'll work in their factory, so we plan to stay broad. The penalty we pay is it drives up R&D cost, 'cause we've got to support multiple platforms. The advantage we have is we rarely can't solve a customer's problem. Now, they may run out of money, they may not. They may choose a different path, but rarely can we not solve their problem with 3D printing on an industrial scale. The other segment of the market, and we'll talk, I think, a little bit more at length about some of the developments in the Healthcare Solutions. It, you know, roughly 40%, a little over that. It's been a mixed picture somewhat for the company and, you know, obviously, the biggest headwind, I think, for people who know the company, is what's happened with your largest customer. You know, sales, I think, with that customer down almost 45% or so- Right ... through the first three quarters of the year. Talk to us about that market and maybe that customer. There's been concern, as you know, about the relationship with that customer. You know, we've, we've seen Align acquire a company in that space, Cubicure. They did issue a joint press release with you, I guess, talking about the fact that they still view you as a strong partner. So maybe just let's start there. Sure. So as you mentioned, Jim, 40% of our revenue is Healthcare related, okay? And we treat that as a separate business unit. 1/2 of that number is orthopedics, so bone repair. 1/2 of it's dentistry. 80% of that 1/2 that's dentistry is one customer, okay? And it's the clear aligner market. So if you, you know, your children, your relatives, everybody, I mean, everybody you turn to now, if you look up closely, they seem to have a clear aligner on. They're fantastic products. Working with that customer, we helped invent the process, and we have supported them for almost 20 years now as they've grown it to a large scale. Nicely, their penetration in that market is still modest. It's still, like, 20% of the orthodontic market is clear aligners. The rest are the old-fashioned wires and things. But the technology, we've driven a lot of cost out of that technology working with them. It's that technology prints over 1 million parts a day today. 1 million parts a day. So if you want to know, can 3D printing do something at scale? Make 1 million parts a day with those guys on three different continents. So it's a wonderful business. We've gotten a lot of cost out, but the next evolution, the way aligners are made, basically, you make a mold of someone's mouth, and you thermal form a plastic layer on top of it. That's the aligner. I'm making it sound simple, but that's literally it. You print the mold, okay? So, a way to take another step out of the process would be to directly print the aligner itself, which is what- Mm-hmm ... a number of us are working on. To Jim's question about the, what the impact on us the last year or more, as we came out of COVID and inflation started racing up, during COVID, everybody looked at themselves on camera and said: "Wow, my teeth aren't as straight as they need to be." So people bought a ton of aligners. So through COVID, the aligner business screams. Everything was up, and, and, it had a lot of momentum. Coming out of COVID, when inflation went up, everyday consumers started spending more on gasoline and food, and they, they, they weren't looking at themselves all day. They were going back to work, so they didn't buy as many aligners. And, and so we they had to burn off a lot of inventory. The demand dropped. To Jim's point, the revenue fell virtually in 1/2 in the last 12 months. But it was an end demand problem. It wasn't anything to do with our integrity of the technology, the supply, the relationship, anything else. Strictly consumer demand. What they have said publicly now is, look, their business is bottoming. We agree with that. The business is bottoming, and it should be, if not up now, it should be up in short order if the trends continue. So that's a really good thing for us, and we've gotten so efficient at that process, extremely hard to displace. But that said, technology moves on. Someday, direct printing of aligners will be it. They're a big company, they don't wanna be sole source to somebody. They'd like to have multiple suppliers as well. So they're working with a number of people. They actually bought one small company. We have a technology ourselves for direct printing, which will go to market here in the next year or so. It's got a big challenge because we've gotten so much cost out of the current way of making it. So there's a big challenge in getting to the right cost point, because at the end of the day, if you buy one, you not only want it to be more effective, you want it to be cheaper than the last one you could have bought. So, so that's the challenge with any technology. That customer is rock solid with us. We've got a great relationship, and, and it's just a matter of looking over the horizon at the next thing coming, which is probably years away, quite frankly. There's FDA approvals to get through, there's all kinds of other barriers to entry in that market, but lovely market for us, and it's an example of what a customer can do when they adopt 3D printing. They literally run 100s of our printers a day on 3D Systems. So I love that as a model. I love the relationship with them, and it'll continue to grow over time. What about the other areas of the dental market? Oh, great, great question. No market is going digital as fast, in my, my opinion, no market is going digital faster than dentistry. And all you have to do is go to the dentist office these days. They don't even look like they did 10 years ago, because the dentist is now capturing so much value in your mouth, whether it's crowns or, or even full dentures. It's all going digital, and if you actually saw where those products were made today, not the aligners, but the other things that go in your mouth, you'd, you'd cringe a little bit because they're usually laboratories. They call them labs, dental labs, in cities, and it's a lot of hand work. It's a, it's an artisan business, and it's, it's archaic. I mean, it works, and people buy 4 million dentures a year, okay? As an example, 4 million are sold a year, but the way they're made has been archaic. It's going digital now. It's gonna be printed within five years, they'll all be printed, I'm sure, and it'll be a, it'll be a very large business. So crowns, dentures... Mm-hmm. Virtually everything that goes in your mouth will be digitally manufactured. 3D printing will be, I think, the dominant way it's made, quite frankly. But also a competitive market. Oh, yeah. You've got a bunch of folks- Sure. going after that market. Sure. What gives you guys the confidence that you're gonna be- Well, I would tell you, Jim, the key to making most of these applications work is a combination of the printer, which frankly, a lot of people are really bright people. They can assemble a printer, a one-off printer. It's the materials that the printer uses and that process that's developed jointly between the printer and the material, that's the magic. So with dentistry, like, if you say, dentures, what do dentures have to do? We think about chewing and all of the stuff. There's a lot of wear resistance, but the gum material and everything has to be very tough and strong because a lot of people drop dentures. They're designed to last 10 years, but the average denture lasts two to three years, is people drop them on the floor, and they break. So we have to produce a material that is at least as tough as that, that is cosmetically, and you would believe how much people focus on teeth, cosmetically beautiful, and that can last when you're chewing food for the whole time, and stays white over time. You don't want it to stain very easily. So there's an enormous amount of material science that goes into, which I love about our business, which goes into the products that our customers wanna make, and that's why we invest almost as much money today in advanced materials as we do machines. It's not just that it drives better margin and all of that, it's that's the magic of the application. That's what it takes. Now, shortly after you arrived at 3D Systems, you saw a potentially large, huge market opportunity in the form of regenerative medicine. And walk us through what you saw, and then we'll go into a little bit more detail. Sure ... about the investments you're making in this area. Sure. It's a long timeline, obviously. Sure. So bear in mind as a background, we have an orthopedic business today repairing bones, okay? So we take 3D scans from surgeons, and we help them design a surgery and repair a bone from cancer or trauma, typically, okay? So we've been in the human body experience, if you will, for years. So in 2017, United Therapeutics, which is our partner in this, came along and said, "Could you ever print a human lung and a working human lung?" And I suppose like anybody would say, "No, that's not possible." So but a year later, our founder, Chuck Hull, who just by the way, won the National Medal of Technology and Innovation from President Biden, it was presented in the White House. He's still incredibly active on regenerative medicine. A year later, he said, "Maybe. Maybe we can do this, but it's gonna take time and money." So they've been a big supporter of us developing the printing technology and materials to make a human lung. When I arrived at 3D Systems in 2020, remember, we owned a bunch of businesses that we wanted to get rid of, and they weren't core. We were in a focusing mode, so I didn't pay a whole lot of attention to Regenerative Medicine, this stuff of Star Trek, for six months. And when I finally did, I, I went I said, "Wow, you guys are serious. You, you really are gonna print a human lung, a working human lung?" And within months, I actually believed the story. It, it's and we've made incredible progress. Today, we can print the most complicated object in the world, literally, that's ever been made by mankind, that's the size of a gallon milk jug, that is the scaffold of a human lung, and we're working with United Therapeutics on putting human cells on that to turn it into an operating lung. A year ago, we said that'd take about five years to have human trials of a printed lung, and I believe fully that's gonna happen. You've got to get through all the FDA certification after that, but it's gonna be a real business. So, fill an incredible need in the world for lung transplants. There are seven organs in total that we will eventually work on. The lungs are the first, kidney and liver is behind it. And then from that base technology, we said, "Well, we can do other things with that." We could, we could print tissue, for reconstruction, for example, women that have had mastectomies, had cancer, had mastectomies. We could, we could print tissue for reconstruction, for breast reconstruction, for those women that have suffered that way. We could print large tissue replacement, we could print skin replacements, artery, vein replacements, all much easier, frankly, than a human organ. So we set out to explore that and do it. We put some of our own money into that. And then, as an offshoot of that, we said: Look, if you, if you can produce a little organ on a chip, you can use it for testing new drugs. So now we can produce vascularized tissue on a chip. You can put on that chip healthy tissue like liver to study how a drug. And remember, it's vascular, so you flow blood through this chip. You could study how a drug is metabolized, and then on the other end of the chip, you can plumb it into a cancer tumor mass, and see how that drug, having been metabolized, attacks cancer. You can do all that on a chip, and you can print that over and over 1,000s of times. So when you talk about AI and big data needing sources of data to analyze, that pharmaceutical application, if you will, for testing drugs, we're super excited about because frankly speaking, technologically, it's simple. If you can print a full-scale organ, you can print a little one and put it on a chip, okay? Our people would kill me for saying that, but it, but that's true. It's a much simpler step and a much more accepted entry into the market because there's no FDA certification. It's all about having an approved test for new drug development. So we would produce the specimen, the drug company would test the drug, and they own the data out of that. So we're exploring that in earnest, that pharmaceutical application in earnest. So I'm not sure where all this will take us. I will tell you, Jim, some of the technology for printing organs is now being piped over to our Industrial printers. So there's, because if you can print something at a scale that's one-fiftieth of a human hair, you can produce toys at a very high precision in mass. You know, it's. I make it sound simple, but you can pipe that technology over and do large-scale, high-precision printing for Industrial applications. So I'm super excited about regenerative medicine. I think it's gonna be a whole new field. Yeah, the hard thing is, it's expensive. Right. And how much are you investing in that? Last year, we probably put... United Therapeutics supports some of the research. If you set that aside, we probably spent $10 million of our own money in R&D- Yeah ... in that investment, to explore these other applications. They either need to take off or we need to find partnerships and things. So you'll hear from us, more about partnerships in the regenerative medicine area. I will tell you, to cap this off, I was very proud. In the last six months, we've landed two significant pharmaceutical contracts with two of the largest four pharma companies in the world, to take our technology and validate it for their specific drug applications. So we've signed two, two contracts. They The reason we didn't do press releases is, number one, they're very sensitive about it. Also, they're not big dollar contracts, but they're used to validate the technology. Once it's validated, we trust we'll do many more of these things. So we're really excited. Nearest term, pharmaceuticals, then tissue, and then obviously organs to follow. So what—Jeff, what are the milestones you'd recommend investors pay attention to in this? Yeah. So we will talk about the pharmaceutical initiative, we call Systemic Bio. So Systemic Bio, we will start. In fact, I just hired a new leader for that, as it moves from the lab now into real production. So we'll start talking about that, about contracts coming in on that. Well, I don't expect it to be a separate business unit, but we'll start from a milestone standpoint- Mm-hmm ... talking about landing contracts, demonstrating the technology, and what it's used for. Of the two contracts we've landed, one is to study cancer drugs that treat cancer, and the other one, a specific type of cancer. Patient-specific cancer, actually. So you take cancer cells from a specific person, you can test the efficacy of many drugs on that person's cancer, and you can do it 1,000s of times over. So we'll start talking about landing contracts like this with specific organizations for testing the treatment of disease, and also testing metabolism of drugs in human beings. Up until now, animals were used, and they still are broadly used. So animals are a very poor equivalent to a human body. So if you can do a human body essentially on a chip, you can cut out a lot of animal testing time and increase your hit rate of fielding new drugs, which is a billion-dollar kind of payoff for doing that. There's a third piece to that Healthcare Solutions, and that's the personalized- Oh, yes ... Solutions Business. Right. I guess that ties in, in part to the facility in Colorado? Correct. Correct. Talk to us a little bit about that. Correct. So we have a rapidly growing business in personalized health service, which I dearly love, because it touches 1,000s of people's lives every year. We work directly with surgeons. They'll call us up and say, "Look, I have a lady with a tumor in her jaw, and we need to do surgery on this person." So they'll send us the scan, the three-dimensional scan of her bone structure. We'll jump on the phone with them. We'll work about how to do the surgery. We'll manufacture guides for that surgery, and we'll manufacture the replacement piece for the jaw, literally the jawbone replacement, if you will. So within five days, we can go from that first call to finished parts for the surgery. The outcomes that we're seeing on that, and we've been at it for some time, the outcomes are improving every day. The economics are getting better every day. So when you think about extending it, we do a lot of work on the head and face. Our predominant revenue stream is everything above the neck. We're working our way down the body now, in the skeletal system, down the body in orthopedics, because the economics are better and better and better. So today, if you went in for a knee replacement, they wouldn't tell you probably, but you'd get... Well, you guys have better doctors than I do. They probably wouldn't tell you. Maybe there's choice A, B, and C in a knee replacement, okay? Yeah, you're about a B. Okay, we'll put a B in. In the future, those can be one-off printed to match your body, to match your skeletal system and do so economically. So we can produce a knee joint within days and have it ready for your surgery, and that's kind of custom-built to your bone structure, your weight, your, your bone structure. And what's driven that is not just the technology, but the economics have gotten down to the point. Reduces all the inventory, no more stock parts, and a better surgical outcome, we believe, a better surgical outcome for the patient. We love that business. Orthopedics is a thriving business for us. It's gotten so popular now that people like the VA are actually putting in production cells in their hospitals to make parts themselves. So we have a contract with the VA to set up production centers in 3 VA hospitals so they can make the parts themselves, and they don't even need us. So we sell them the machines, we train them in how to do it, and they do the same thing internally for veterans. So that's where orthopedic surgery is headed, primarily. Any questions in the audience, by the way, before I move forward? Question in the back. A question regarding the testing application. Can they also do that via computer simulation? And is that a risk or are physical tests still required? For the pharmaceutical testing? Yes. Yeah, it's largely still physically required. I mean, the human ecosystem is so hard to model. They do model it and stuff, and I'm sure those predictive models will get better and better. But if you think, I saw an interview yesterday morning with a venture capital person investing, a very successful person investing in AI for pharmaceutical use. They're very successful. They access massive quantities of data because everybody's body is different. So they access massive quantities of data because there's so much noise in it, and then they process it down. What we allow them to do is we say, "Look, we can sell you 1,000 of these chips where it's exactly made the same way, so you get really good, sharp statistics." So we're not gonna be in the AI business, but we wanna be in the data supply business to that industry. They take the data, they analyze it, they work with a pharma company themselves. So we'll be on the manufacturing side of that. I don't believe the human ecosystem will ever probably be modeled well enough with all of its variables to generate it, but I've been wrong about a lot of things in the past, too. Maybe it will get there, but not in the short term. Okay. What we can do a lot better is it is better than animal systems, right? Today, you know, they work their way from mice to pigs to these things, and it takes a decade and $1 billion to get a drug to market. So going back to the overall business environment, this has been a tough economic environment to be selling capital equipment. And, you know, we've seen, well, weaker demand, higher interest rates and, you know, talk to us a little bit about that. And I guess where I'm going with this, Jeff, is can you guys show enough of a recovery in 2024 without some change here in the financing environment? Well, yeah, we've got plenty of cash on the balance sheet, so we don't. We're not really affected by short-term interest rates. Well, I'm thinking about more for the demand for the customers- Oh, the demand. Yes the demand. Yes ... where- Absolutely. Yeah, there's been- Absolutely, Jim. No, that's a great point. Yeah. So customers, and again, our customers are generally well capitalized. The issue for them is predicting demand from their customers, which is much more interest rate dependent, basically. So how many cars will be sold, how many machines will have to be made? So they're anticipating what demand is gonna be and adjusting their capital spend, if you will. So in that sense, interest rates really do matter. What we saw through 2023 was conservatism on their part in looking at the world, not knowing where it was going, plus you have all these wars springing up and things. So it's been a very uncertain environment. With current conditions, I mentioned our regenerative medicine. It's near and dear to my heart. We're putting a lot of R&D money in there. If you looked at that separately, our core business can be very healthy, even in the current climate. By healthy, I mean we can... With our restructuring activities, we can get it to the point of generating cash, being profitable, and growing at least modest rates in this- 'Cause you've taken a lot of costs out. We've taken a lot of costs out. What, two rounds? Two rounds. Early in the year, we did a $50 million takeout. Late in the year, we announced another one, and that was really just to adjust to the economy. 'Cause a company, we should be maturing to the point of actually being profitable, you know? Yeah. And it's embarrassing to say, but it's true. This industry's never been profitable. Yeah. So we should be getting to the size, we're a $500 million company, of making money... and generating cash. So that's our goal, and whatever the economy's doing, that's our goal. I will say we do set some extra R&D money aside still for regenerative medicine, and that's gonna—I wanna see where that can go. So for growth-oriented people, that should excite you. For people that wanna talk about EBITDA performance and all of that, that's a drag on the P&L without a doubt. But the core business is very healthy and can grow and be profitable. Okay, we've got only a few minutes, but I wanted to touch on one thing. It surprised me a little bit, just given the fact that a couple of years ago, I thought software was gonna be more of a focus. Oh, yes. Tell me about the decision on Oqton. We may be out of time, Jim. Yeah. I'm just teasing. I'm just kidding. No, software is important to every company. When I first arrived at 3D Systems and customers started opening up after COVID, I wanted to know what were the barriers to getting into factories, because that's really where the money's at. So you go out and talk to customers, and at first it's a machine discussion, and machines have to be reliable, precise. They have to be really, really good economics on a per-part basis, okay? I said, "Great, okay, if we hit those goals, then you're gonna buy a lot of machines." He said, "Well, maybe." He said, "The other problem we have is building a little ecosystem in the factory to run these things, because right now, if I bought ten machines, I'd have to have ten engineers with materials degree or with master's degrees to run them." He said, "I can't have that. I can't run them off spreadsheets. I can't do that." So we invested in new machines, obviously. We'll have a record number of new products coming out in 2024, which are brand-new machines. They're gonna be great machines. We've invested in software to run those machines. We also went out and did an acquisition called Oqton, which was a little, an ecosystem, an enterprise software system, which could take groups of machines, up to 100s, and nest them all together within an SAP or Oracle environment. So plug and play, you buy the software, it interfaces with your ERP system, and you can plug our machines or anybody's machines into this ecosystem. That is the, the piece of our software, we've got five major software platforms. That piece has been a struggle- Okay. because I expected it to be a faster uptake by customers, frankly. Mm-hmm. In this economic environment, that's stretched out. Okay. I also wanted to drive an industry standard because everybody does something different in this industry. So emotions run deep, so that's been a little slower uptick as well. But so we continue to evaluate the whole portfolio. The enterprise piece is probably the one that's most on the bubble. Should we really be in that business, continue to invest or not? We're, again, we're trying to manage costs, so we'll continue to look at that and see where we go. The last question, just on capital allocation. December, you guys repurchased $135 million of the convertible senior notes. Just talk to us about that and about maybe M&A. We're gonna have to wind this up- Sure. But just real quickly. So I talked about industry needs to be more consolidated. People need to be bigger, even us. We've been as one of the biggest, we need to get bigger so over time, so we can get there organically, it just takes longer. We put a bunch of cash on the balance sheet. Well, we did a bond, a very successful bond offering a couple of years ago. And we've left that cash on the balance sheet, basically much more than we need to actually run the business. So with all the stocks being depressed, the bonds were depressed too. We went out and bought back some of them to retire some of the debt. We've still got a lot of cash on the balance sheet and a lot of cash-generating activities like inventory reductions and things. So we'll continue to look at it and see. We're not in a heavy M&A mode for little things that we'd have to fix. Sure. Big things that would bring scale are still of interest, but little things that we'd have to fix that are losing a lot of money. It's not the time of life where we really have a lot of appetite for that. But we have the cash on the balance sheet, so we'll deploy it as makes most sense. We may retire some more debt. If the opportunity came up to do something big, we would still have the flexibility to do it. So it's something we just evaluate every day. Okay, we're gonna end it there. Thank you. Yeah. Thank you, Jim. Appreciate it.