3D Systems Corporation Insider: Expect More Profitability in 2015

In the following video, 3D printing specialist Steve Heller interviews Stacey Witten, vice president of investor relations at 3D Systems (DDD -2.59%), during EuroMold 2014, the world's largest 3D printing conference, held in Frankfurt, Germany, last month. During the interview, Steve and Stacey talked about EuroMold, new products, Google's Project Ara, and making an investment case for 3D Systems.

On the investment case front, it came to light that while 2014 was a year of heavy investment for 3D Systems with acquisitions, research and development, and strategic partnerships, 2015 will be a year in which the company strives to fine-tune these investments, aimed at driving operating leverage and profitability. 3D Systems investors should expect to see the company's operating leverage and profitability improve in the coming year as the company's rapid pace of investment begins to normalize.

A full transcript follows the video.

Steve Heller: Steve Heller here. I'm joined today with Stacey Witten, vice president of investor relations at 3D Systems. Thank you for your time today. I really appreciate it.

I wanted to jump right in here. What is your feeling about this year's EuroMold, being one of the biggest 3D printing conferences in the world? What was the most surprising thing that you've seen this year?

Stacey Witten: EuroMold is always one of the biggest trade shows in the industry. Some of the exciting things that we've brought this year is the largest metals printer -- twice as large and twice as fast as anything that we had before, and the largest in the industry -- seeing a lot of continued advancement with fab-grade manufacturing, and really bringing 3D printing to the manufacturing floor and moving toward hybridization between traditional and additive manufacturing.

Heller: Walk me through some of your most exciting product releases. You said the ProX 400 -- it's around the corner. The thing is massive; it's like three of me stacked on top of each other.

What else is going on with your portfolio at this point? How many new products have you released, and what percentage of your portfolio is that going to be replacing?

Witten: I think we have about 10 new products here this year from printers, materials, software, and scanners. Some of them are upgrades and enhancements from previous generations. Others are completely new.

We have as I mentioned the ProX 400, which takes metal printing to a new level. This is the ProX 500 Plus, which brings three new materials, expanding the applications using selective laser sintering, primarily in end-use aerospace, automotive, medical parts.

Then we have the parts on display from the continuous fab-grade manufacturing platform that we're developing. It's truly manufacturing in on-track/off-track with traditional manufacturing and additive manufacturing in one modular platform that can be customized for nearly any application and your needs.

Heller: Yes, I want to talk a little bit more about the racetrack 3D printing design, where basically you're keeping the print head stationary and you're making the print beds run around a racetrack. It's supposedly 50 times faster -- I've heard that quote from 3D Systems.

I was wondering if you could update us a little bit. I know that project, the inspiration behind the scenes, the motivating factor was Google's Project Ara. I was wondering if you could update us on what's going on there.

Witten: So the racetrack design is well under way. It is modular in the design and the stable print heads.

Google Project Ara has been associated with it. It's one of the well-known areas of development that they were looking at using. What is happening with Google's Project Ara is more of a question for Google. This is a platform that we were beginning work on before that, and would have been developing anyway.

We're moving ahead with that. Expect to start to see some monetization in 2015. It's photo-quality, completely modular printing that is 50 times faster than the jetting technology of today.

Heller: At The Motley Fool, we are business-focused investors. We're not so concerned with what your next quarterly result's going to contain, whether or not you make or miss expectations. We're concerned with the long-term trajectory of your company; where it's going in the future.

I was wondering if you could make a business case for 3D Systems, owning it over the next five to 10 years: where this company's going, what investors should focus on, on maybe a cash flow basis, a market share basis, a profitability basis.

Internally, what are you targeting? Is it just market share? Is it revenues? I wanted to know some more insight into that if you could walk me through it.

Witten: As you've seen 2014 was a year of investment for us. We've made a lot of strategic acquisitions that have assembled a comprehensive portfolio from content to print -- the full digital thread and workflow -- and 2015 is going to be about really leveraging those investments, fine-tuning them, and really bringing them all together in a cohesive strategy.

You'll see more profitability, enhanced operating leverage, gross profit margin expansion as we move through the next phase of this to fine-tune scale and leverage these investments that we've made, specifically in medical, metal, materials, and manufacturing.