Voxeljet AG (VJET) 2021 Q3 法說會逐字稿

Greetings, and welcome to the voxeljet Third Quarter 2021 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Johannes Pesch, Director, Investor Relations and Business Development. Thank you. Mr. Pesch. You may begin.

Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, voxeljet's Chief Executive Officer; and Rudolf Franz, voxeljet's Chief Financial Officer.

Yesterday, after the market closed, voxeljet issued a press release announcing its third quarter results for the period ended September 30, 2021. The release as well as the accompanying presentation for this conference call is available in the Investor Relations section of the company's website at voxeljet.com.

During our call, we may make certain forward-looking statements about the company's performance, including expectations and results from our current order backlog. Such forward-looking statements are not guarantees of future performance, and therefore, one should not place undue reliance upon them. Forward-looking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed, including the risks and uncertainties caused by the current COVID-19 pandemic and the resulting uncertainty in the global economy.

For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the company's filings with the Securities and Exchange Commission.

With that, I would now like to turn the call over to Ingo, Chief Executive Officer of voxeljet.

Thank you, Johannes. Good morning, everyone. Thank you for joining us on our call today.

Let's turn to Slide 4. Our roots reach back to the year 1995 with the first successful dosing of UV resins. In the context of a hidden project, industrial 3D printing tests were performed at the Technical University of Munich. I cofounded the company on May 5, 1999, as a spinoff from the university with a clear vision in mind to establish a new manufacturing standard.

Today, we provide our customers a strategic competitive advantage by upgrading the existing conventional production methods to additive manufacturing solutions. We push technology vehicle, boundaries and develop new generative processes for the serious production of complex components.

On Slide 5, you can find some more information about Rudi and myself. We are significant shareholders. And as we previously announced, we both extended our contracts effective as of July 1, 2021. We have a clear plan in mind and are fully committed to make this a success for all stakeholders.

It is an exciting time to be a technology leader in the 3D printing industry. By winning the contract with GE, we are now working on 3 principal R&D projects, which we firmly believe will help us enter a phase of really full growth in the years ahead.

First, we are making steady progress with VJET X, arguably the most productive 3D printing solution currently available. The first customer is a premium German carmaker. We are working towards getting the final acceptance for the first unit, which is the trigger for revenue recognition and are already negotiating a maintenance package. This gives us the confidence that we should be in a position to book revenue at least for the first units in the near future.

Second, with High Speed Sintering, we are developing the industry's largest polymer sintering 3D printer. Recently, we announced that we signed with Brose, a large multinational company active in the automotive industry, as our beta customer for the HSS program.

Third, we have won the deal with GE Renewables for the development of the world's largest binder-jetting 3D printer for offshore wind applications. This new 3D printer is expected to streamline the production of key components of GE's Haliade-X offshore wind turbines, which are among the world's largest and most efficient units of this type. We are proud to be part of this groundbreaking project in the field of renewable energies and will provide pictures later in the presentation.

These projects are for different industries but have one thing in common: They are all through real manufacturing applications. The experience we have gained from working with these OEMs on these projects gives us a true advantage over our competitors.

Remember, at voxeljet, we don't go for the small wins. We plan to implement a new manufacturing standard with our solutions for high-volume additive manufacturing in the automotive, sports equipment, renewable energies and other sectors.

Let's turn to Slide 6 and some thoughts on the additive manufacturing market. As you can see, Wohlers Associates projects growth to accelerate over the next years. This growth will be driven by a larger share of sales manufacturing. I believe we are in an excellent position to capture our fair share of this growing market over the next years because what really differentiates us from the other players in the 3D printing industry is our focus on solutions for manufacturing or industrial production at scale.

Keep in mind, we are working with leading industrial OEMs basically since our foundation. We sold our first 3D printers to BMW and Daimler in 2002. In addition, our technology evolved significantly over the last years in terms of speed, accuracy and the degree of automation of the whole process chain.

Before we start with the formal part of the presentation, let's quickly remind those who are new to that -- to what we do. Let's turn to Slide 7, where we describe our technology.

In the additive manufacturing market, you have probably more than 10 different technologies, each with its specialized field of application. We use a technology called binder jetting. Binder jetting is especially suited for high-volume manufacturing because of its potential to scale.

On Slide 8, you can see some of our existing products. It starts with the VX200 on the left and goes all the way to the VX4000, which is the largest binder-jetting system currently available in the market.

The idea is that we have one platform with many applications. It means each model can be used with multiple material sets. For example, we offer the VX1000 3D printer for the printing of highly accessed tank testing mode and as a plastic polymerization printer as well.

On Slide 9, you can see some of our new products. On the left side of this slide is a picture of the new VJET X printer, which is a high-end solution for mass manufacturing. The printer is 10x faster than previous versions and fully integrated into automatic pre- and post-processing.

In the middle of the slide, you see our new High Speed Sintering printer. It's a high-performance polymer sintering printer with an extra-large build area. Recently, we announced Brose as our first beta customer for this new printer.

On the right side, you see a drawing of something very exciting. In September 2021, we announced a partnership with GE Renewables for the development of an extra-large 3D printer for the production of components for next-generation wind turbines. The new printer will be probably 4x larger than our currently largest printer. At the moment, we are designing the layout. And it could look like a supersize version of our VX4000.

With these new printers, we believe we can increase our total addressable market considerably. We can take -- we target new applications within existing customer groups like, for example, with the VJET X. With High Speed Sintering, we can address both new and existing markets like, for example, audio equipment, automotive interiors, exteriors, sealings, gaskets, walls, strippers and other consumer products.

Looking at Slide 10 and our integrated business model. With this integrated model, we can capture business either as a 3D printer sale or on-demand printing contract. In the Services segment, on the left side of the slide, we operate our own 3D printers in 3 facilities around the world to offer affordable on-demand access to our technology.

The barriers to entry are very low as customers just need to send in the 3D data and we will print parts for them. That is a great and easy way for our customers to understand new business opportunities in 3D printing. The short sales cycles and services help us to balance the typical long sales cycles in our Systems segment.

In our Systems segment, we manufacture and sell industrial-grade, high-speed, large-format 3D printing systems geared towards mass production of complex models, molds and direct parts. Systems revenue also includes maturing revenue from the sale of consumables, maintenance contracts, upgrades and other after sales activities.

Slide 11 shows our global sales network and production footprint. As you can see, we have reached an established position in all major markets in Europe and the U.S. as well as Asia. We focus on educating our channel partners to ensure true global coverage.

Turning to Slide 12, where we differentiate ourselves from our competitors by both size, material, diversity and speed. And we have established excellent relationships with blue-chip customers from various industries.

Let's start with the formal part of the presentation. I will begin with an overview of the results for the third quarter. Rudi will then provide a more in-depth view of our financials for the third quarter and our outlook for 2021. Following his comments, we will take your questions.

Turning to Slide 14. Total revenue for the quarter was EUR 4.9 million, slightly increased from the third quarter last year. In our Systems segment, we booked revenue for 1 used and refurbished printer as compared to 2 used and refurbished printers in the third quarter of 2020.

We anticipate a strong fourth quarter with large contributions from all our principal markets. After sales revenue continued to increase every quarter this year and is also up from the third quarter last year. We continue to achieve very strong gross margin contribution from the sale of consumables.

Services revenue means the revenue from selling on-demand 3D printed parts increased 10%. Order inflow and revenue in our German 3D parts production center remains high. The trend of strong order inflow during the previous quarter is continuing in our U.S. 3D parts production center and revenue continues to grow. It is almost 50% up from the second quarter 2021, which is a great achievement of our team in the U.S.

Especially in the PMMA section, we are basically at capacity and have built up a significant order backlog. This includes repeat orders from a large client in the space exploration sector, with whom we are working since several years. At the moment, our team in the U.S. is discussing a possible large production opportunity for propellers for yachts.

Looking at the right side of the slide and gross margins. Both gross profit and gross profit margin improved significantly as a result of higher utilization, which is great to see.

Slide 15 breaks down order backlog by quarter's revenue, by geography and operating expenses by category. The majority of administrative expenses are related to the cost of being a public company like, for example, audit and legal consulting fees.

Order backlog increased to EUR 7.6 million, which represents 10 printers. Please note that this is order backlog for 3D printers only and does not include order backlog from our Services segment or order backlog for projects like the one with GE. For example, we expect the project with GE to have a total value of more than $5 million over 2 years. It will either show up as revenue or as other operating income.

When looking at revenue by geographic region, we target an even distribution across the 3 regions to hedge against risk from local events.

Let's move to Slide 17, where you can see a snapshot of the press release announcing our deal with GE and the picture of the new Haliade-X extra-large wind turbine in the background. It is truly an amazing piece of technology. According to GE, Haliade-X can capture more annual energy production than any other offshore wind turbine even at low wind conditions.

Why did GE choose voxeljet? For 20 years, we have been developing the largest and fastest binder-jetting printers in the industry and have built up a comprehensive IP portfolio. With the extra-large build area of the new 3D printer, the number of individual parts can be significantly reduced.

In addition to that, the mold for casting can be optimized in terms of functionality and material consumption. This optimization makes completely new casting designs possible that can then enhance the efficiency of the turbines.

Also, it streamlines the logistics. The 3D printer can be operated close to the location where the mold will be casted, optimizing what could otherwise be very complex logistics like a long and complicated road transportation.

What exactly is our part in this project? We will handle the design, mechanical development and creation of the prototypes as well as commercialization of the new printers. GE will supply turbine know-how and the digital blueprints for the parts, the machine we'll print. Moreover, we'll do the research and development on incorporating new printing concepts and experimentation.

Let's turn to Slide 18 and some thoughts on the market opportunity of this new project. The International Energy Agency has projected that global offshore wind capacity will increase 15-fold by 2040, becoming a $1 trillion industry. Thanks to falling costs, supportive government policies and technological progress like that behind the Haliade-X offshore turbine.

Last month, there was an article in the New York Times describing how the Biden Administration plans to build offshore wind farms along the entire U.S. coastline. So we are very excited about this project.

Let's turn to Slide 19 and an update on HSS. What can we see there? The printed part in the front are order distribution notice against large continuous build area of the new polymer printer in the background.

We are excited to announce Brose, our global leading supplier to the automotive industry, as the first client for our new VX1000 High Speed Sintering printer as part of the beta program launched earlier this year. Brose is the fourth-largest family-owned automotive supplier. And according to them, every second, a new car worldwide is fit with at least one Brose product.

What does this partnership mean? First, we take the input from Brose on the new printer. Then we will design and implement improvements to the VX1000 HSS printer. After a joint 3-month development phase at our headquarters in the Munich area, we plan to move the system to the Brose additive manufacturing center in Coburg and integrate it into the production environment and optimize it for customer-specific applications. The focus is here on using the printer and high-volume applications. One part Brose is thinking about to print are door modules.

Brose told us that they decided to partner with us because the new printer has a higher output than any other comparable system and a larger continuous build area, which makes it possible to print large parts like door modules in one piece.

Another decisive factor was that both the process and the materials are open. This means that in addition to the initial PA12 configuration, we can also test and qualify materials that cannot currently be processed using SLS and other technologies.

On Slide 20, you can see 2 large parts, which are printed on the new HSS printer in one piece. The part on the left was just printed recently. We believe that the extra-large build area of the new printer is a key competitive advantage for us as none of our direct competitors is able to print such large parts in one piece.

With that, I would now like -- the call over to Rudi. Rudi?

Thank you, Ingo. Good morning, everyone.

It is good to see the progress we are making with our technology platform and our 3 principal R&D projects, VJET X, VX1000 HSS and now the new printer for GE. I'm confident that the deal with GE breaks our previous large deal record with a 2-year term and an estimated volume of more than $5 million.

Overall, I'm very pleased with our performance in the various regions. Services in Europe continues to be very strong, basically at capacity. And the U.S. also keeps accelerating. For example, we are pretty much fully booked in the PMMA section there, also thanks to continued large orders from a space exploration company.

In Asia, we continue to work on promising opportunities for printer sales, especially when it comes to our larger platform. For example, we have installed our largest printer, the VX1000 at a client in India a couple of months back and started the installation of another VX1000 at a client there.

Regarding COVID-19, we continue to work with some special measures in place around isolation and contamination protocols to ensure the safety of our employees and to reduce risk of operational disruption. Over the past months, COVID-19 cases have increased in certain areas of the world. And we are monitoring the evolving situation carefully.

I will now take you through the financials for the quarter. After that, we are happy to take your questions.

Turning to Slide 22. Total revenues for the third quarter 2021 was EUR 4.9 million, slightly increased from the third quarter last year. Revenue from our 3D parts production center in Germany continues to be strong. As Ingo mentioned, we are happy with the strong order inflow for printed parts in the U.S.

Gross profit and gross margin in the quarter increased to EUR 1.9 million and 39.3% compared to EUR 1.6 million and 32.7% in the third quarter of 2020. The significant improvement in gross margins in those segments is excellent news. And Systems gross margins improved to 44.1% in the third quarter of 2021 from 39.5% in last year's third quarter.

In Services, gross margin increased to 34.4% compared to 24.6% in last year's third quarter. The increase is driven by continued strong performance of our German 3D parts production center and a substantially higher utilization of U.S. factory.

The next slide show our segment reporting for the quarter. On Slide 23, revenues from our Systems segment, which includes revenues from selling 3D printers, consumables and spare parts as well as maintenance decreased 7% to EUR 2.5 million for the quarter from EUR 2.7 million in the third quarter of 2020.

We sold 1 refurbished printer this quarter as compared to 2 refurbished printers in last year's third quarter. It is good to see that revenues from our after sales segment means consumables maintenance continues to increase and is contributing strongly both to revenue and margin.

On Slide 24, Service revenue increased 10% to EUR 2.4 million in the third quarter of 2021 from EUR 2.2 million in the same quarter last year. The increase is driven by continued strong performance in our Germany 3D parts production center and strong order inflow in our U.S. facility. As a result of high utilization, services gross margin improved to 34.4% from 24.6% in the third quarter of 2020.

Looking now to the rest of the income statement on Slide 25. Selling expenses were EUR 1.5 million compared to EUR 1.3 million in last year's third quarter. The majority of selling expenses are personnel expenses and distribution expenses such as freight and commissions for sales agents.

Administrative expenses were EUR 1.5 million and slightly increased from the third quarter of 2020. Keep in mind, we typically spend more than EUR 1 million in ordering fees per year and EUR 0.5 million in legal consulting fees.

Research and development expenses were basically unchanged at EUR 1.5 million. Operating results improved significantly. Operating loss were EUR 1.5 million in the third quarter this year compared to an operating loss of EUR 3 million in the comparative period last year.

Net loss for the third quarter 2021 was EUR 0.8 million or EUR 0.12 per ADS compared to a net loss of EUR 4 million or EUR 0.82 in the prior year same quarter. The improvements in the bottom line are a result of improved operational performance, better gross margins and the revaluation of our derivative financial instruments to the European Investment Bank as part of the financial results. The positive impact for the quarter of the derivative instrument was EUR 1.3 million.

We have provided the same presentation for the 9-month period ended September 30, 2021, on Slide 26, 29.

Slide 30 shows selected balance sheet items. At September 30, 2021, the company had cash, cash equivalents and short-term investments and bond funds of roughly EUR 24.5 million. We increased our cash position with a registered direct offering in July 2021 that has a gross proceed of $10 million.

Total debt at September 30, 2021, was approximately EUR 29 million. Of this, EUR 27.7 million are long term. Long-term debt primarily consists of EUR 50 million from the EIB Horizon 2020 debt venture program. Current shares outstanding are at 7,026,711 ADS.

On Slide 31, we have summarized our financial guidance for full year 2021, which remains unchanged. Revenue for the fourth quarter 2021 is expected to be between EUR 9.25 million and EUR 10.75 million.

This concludes my remarks. And with that, we will now open the call for your questions. Operator?

(Operator Instructions) Our first question comes from the line of Troy Jensen with Lake Street Capital.

Congrats on the nice results. So it seems like you guys have got a ton of great stuff going on, right? It's always going to be more a function of kind of get into the end zone, right, and then kind of -- revenue in these things. So I just kind of would like to talk a little bit about timing on some stuff too, Ingo, if you don't mind going through a few of these opportunities?

To start with GE, so I get it's a 2-year development window. And I mean after the 2 years, what do you think happens? Is this like a quick decision? Or just -- would it be something that would also take a while to get into production applications and the bigger revenue opportunity may be further out? Could you just kind of help us with our expectations?

Well, the program is designed in a way that there is already a demand for the machine. So the technology will be directly integrated as a kind of a bidder program at a client's side or the client's foundry to directly manufacture these specific parts for these wind turbines.

So as soon as we see that the project is presenting the desired progress, we believe that GE is pushing their suppliers to integrate this kind of technology into their process chain. So it will be a relatively quick scale-up.

You need to understand that the addressable market is probably in the range of 10 to 20, just for GE, of these machines. So we are pretty sure that we can address this market in a very quick way.

Congrats. It seems like a great win for you guys. Next question, just kind of next topic, it's on the High Speed Sintering. I'm guessing we'll see the system here next week in Germany. And it's -- update us on timing. System should be generally available and shipping when again?

Well, we have -- as you know, we have an offered system here in voxeljet in free bag. We are currently assembling the beta units which are planned to be evaluated in the beta program starting with the first quarter next year.

And -- okay, we face definitely problems with suppliers. But for this moment, it looks very promising that we can start on time with the beta phases. And of course, we plan for further units down the next year.

So currently, I'm very optimistic that we can ship the first beta units to the outside in the second half of next year. And we can also ship following units by the end of next year.

All right. Perfect. And remind me, are you guys starting with Nylon 12 or Nylon 11?

This is a PA12 initially but be sure we are working also on other materials.

And then maybe last one for me. Just the big automotive customer we've all been waiting for. Can you just confirm that we're going to gain some revenues in Q4 from that big deal?

This is -- as I said, this is currently the plan. I think the production test, what currently happens shows in the right direction. And we are optimistic to get sign-off at least on the first printers towards the end of the year.

Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners.

Exciting news about GE. Can you estimate how long it's going to take to build a new printer? And what's the estimate delivery time for the first machine? And then can you share with us in particular parts you're printing? Maybe I mentioned the wind turbines.

Sure. This is Ingo. So the printer is not developed yet. So we need to develop the printer. And this is the program for it. The program is with a 2-year term. And the target is to have, at the end of the program, a demonstrator for the technology, which is basically a prototype printer.

With that prototype printer, we will print molds and mold packages for the specific parts here at our voxeljet factory. And once this is successful, so we see probably the casting results after the term of the 2 years, then we will start the production of a beta unit, which can be tested on site at a client's place. So this means this is a phase outside the 2 year, probably in the third year. Hopefully, this answers your first part of the question.

Second, what you print on -- or what the customer prints on the printer are molds for extremely large castings. These are, for instance, kind of access systems, bearing systems but also the holder for a brake disc and other components which exceed several tons of cast metal volume weight.

Great. That's really helpful. I take it it's too early to share what the ARPU in 2 or 3 years will be for this kind of system.

Well, of course, we have made our math on this. But we will not share to the public for this moment.

Great. And then in terms of the R&D, is GE refunding that fully? And then what's the determining factor of whether this is revenue or other income?

So the project is funded partially by the government. And the remaining costs are majorly covered by GE. So this gives -- or brings us in a position where the R&D is -- our R&D contribution is mostly paid.

And then the other question, part of that one was, what determines if that's revenue or other income? I think in the prepared remarks, you said it's going to be one or the other.

Exactly. So the -- of course, the government grant is coming as other operating income. And it could be the case that the refund from the GE is booked under revenue, but this needs to be checked with the auditor.

Great. And then in terms of your largest customers, just to be clear about that. It sounds like you're going to -- you think you'll expect some in the fourth quarter and then some in the first quarter, if I'm not mistaken. And then do you have any insight into how that customer will have additional orders as we look into next year?

We will not have additional order in the next year. What are you talking about? You mean the next, correct?

Yes. Sorry, the I'm just curious about deliveries and demand for additional orders, if at all?

So the status here is that we have 5 units now at the customer place. This is the full order. So all the remaining printers are now at the customer place. With the remaining machines which are installed recently, the customer is starting the pre-phase production -- preproduction phase. And after that, we expect that the customer is making their mind on future production possibilities.

So for this moment, we don't have another order at hand. And there is currently also no immediate plan for another order pending. And they make their mind on the possibilities. And of course, we expect that this topic goes on. And we will likely see other projects like this from the same but also from other customers probably in the next year.

Well, that was going to be my follow-up question. So that's great. Talk about the pipeline of the VJET X and the High Speed Sintering system, although you just got your first beta customer there. How close are you? Do you think it is securing orders from other customers that will drive some revenue for next year?

So with VJET X currently, we are in discussion with several parties about similar projects as we see with this automotive client. They are in different stages of decision-making.

So I think for this moment, we cannot disclose more. It is a very interesting application. And it could contribute to revenue next year, but it's not done yet.

On HSS, similar image. We are in discussion with several parties about follow-up projects after the bidder. I think it's very likely that we have further units, as already mentioned, installed at customer places next year.

Great. Last question. While it's early, as I look to next year's revenue, there aren't a number of new customer securities. You just said that's something they're working on. Should we think about next year just looking a little bit better than this year in terms of revenue? Or do you think once you secure orders, those are going to quickly materialize in your revenue? It just seems like the conversion cycle takes a little bit of time. So I guess I'm thinking about next year in terms of revenue and how it looks compared to this year.

Brian, we have not given any guidance for 2022. We will give guidance in our earnings call in March. What I can say currently is that we, for sure, plan growth for the upcoming years. And that's how I would see -- we as well say it won't be 50%. We see the growth potential currently in the range of 10% to 20%, which we as well say with our forecast. And on the long term, we see the growth potential as just described on HSS, VJET X and the GE.

But on a general view, you need to see that the 2020 year will be probably, again, a transition year since the new technologies are, let's say, in a phase of testing or in a bidder phase. So to be clear, a major breakthrough in sales is more likely to come in '23.

Great. Last question on that, sorry, just on that. What is the conversion? If you sold a printer or 2 or 3, how quickly do you get those built or if you have them built and then shipped to customers?

Currently from the order intake to the customer shipment or installment, I would say it depends on the system, but it's an average between 2 and 3 quarters. That's how we see it.

So VX1000 is one of our top seller, let's say, it's 2 quarters. If you order the large platform with VX1000 currently, definitely 9 months from the order until the shipment and final acceptance.

There are no further questions at this time. I'd like to turn the floor back over to Ingo for closing comments.

Sure. So by winning the contract with GE, we are now working on 3 potential principal R&D projects, which we believe gives us a chance to enter a phase of meaningful growth in the years ahead. We are very enthusiastic about what our teams have already accomplished this year. We believe these new products will increase our total addressable market substantially, from projects in the energy sector and the critical components for space exploration, electric and conventional vehicles to sport equipment from gripping systems for robotic applications to speaker systems and others. And this set of opportunities in the manufacturing space is what makes 3D printing so exciting to us.

So thank you for joining today's call, and we look forward to speaking with you again in our next earnings call. And some of you, we may see next week on Formnext in Frankfurt. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.