Jeffrey A. Graves - Chief Executive Officer, President & Director, 3D Systems Corp.
Great.
Alek Valero - Loop Capital Markets
It’s Alek on for Ananda. My question is – so to what degree does your desire to combine with Stratasys has to do with accelerating key industry adoption? And if so, how would that adoption look like and where?
Jeffrey A. Graves - Chief Executive Officer, President & Director, 3D Systems Corp.
And if I heard you correctly, is it influenced by industry adoption of 3D printing?
Alek Valero - Loop Capital Markets
That’s right, what is your desire to...
Jeffrey A. Graves - Chief Executive Officer, President & Director, 3D Systems Corp.
Yeah.
Alek Valero - Loop Capital Markets
...combine with Stratasys. Yeah.
Jeffrey A. Graves - Chief Executive Officer, President & Director, 3D Systems Corp.
Well, sure. Yeah, absolutely. It’s an accelerator. So what – as a standalone company, what we’re doing right now is trying to replicate what we’ve done in orthodontics across other market verticals, and the scale that you get to by combining with a company of Stratasys’s size and it brings in very complementary technologies, it gives you more horsepower to do that more quickly.
So it doesn’t directionally change things, but it does allow you to move faster. So that’s what I love about this combination is strategically it’s the same path that we’re on, and ultimately I believe they’re on too, but it just allows it to occur much more quickly. And the window of opportunity right now for customers to look at 3D printing in factories, it’s open right now.
Coming out of COVID, our customers, it’s the same thing we did. They were all worried about their supply chain. And the bigger the customer, the more worried they were, because most of those supply chains, if you go outside of healthcare, most of them are extended around the world. So you got parts coming out of Asia. You’ve got assembly operations all over the world. You had tons of labor and component shortages during the COVID period, and it’s caused everyone to relook at their supply chain.
And once you do that, you look at the location. You also look at the [ph] account (00:47:35), you look at what technology you’re using to make parts. And with 3D printing, they get an improvement in performance of the part and now they get very good economics. But you’ve got to go out and touch them, and you’ve got to demonstrate the technology for them. Many of these guys have never used 3D printing in a factory before at all. They’ve never used it.
So that’s why I pointed out the customer has really changed. It’s now factory managers. And if you’ve ever – I grew up part of my career in factories and if you ever meet a factory manager, they are some of the most focused conservative people in the world. They do not want to miss a delivery. So, if they’re going to bring in 3D printing, a new technology, you have to demonstrate it for them, solving the economics, the risk, and the complete workflow economics.
So what Stratasys combination with us does is it just increases the pace of that capability and it makes it more robust because it’s, again, a broader technology offering gives us a better financial profile for continued investment. The cost synergies are amazing to me, $110 million to the bottom line. So you’ve got a good, sustainable, profitable business. And that, again, from a customer standpoint, that’s what you want to see in a supplier.
We have to serve these guys on multiple continents. most of the big ones where the real volume is at, they’re on multiple continents. So you’ve got to have a footprint where you could support that and we’ll get there on our own. Market vertical-by-market vertical, it’s fine. But if we can combine with Stratasys, we get there a whole lot faster, with a whole lot more efficiency. That’s why we’ve been working at it for two – that’s why we’ve been working at it for two years. Honestly, the logic’s been there for two years since we reorganized this business, so I hope we can make it happen.
Alek Valero - Loop Capital Markets
Awesome. Thank you so much for that. Really appreciate it.
Jeffrey A. Graves - Chief Executive Officer, President & Director, 3D Systems Corp.
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