Voxeljet AG (VJET) 2021 Q2 法說會逐字稿

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

I would now like to turn the conference over to your host, Mr. Johannes. Thank you, sir. You may be begin.

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

Yesterday, after the markets closed, voxeljet issued a press release announcing its second quarter result for the period ended June 30, 2021. The release as well as the accompanying presentation for this conference is available in the Investor Relations section of the company website at voxeljet.com.

During our call, we may make certain forward-looking statements about the company's performance, including expectations on 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 earnings call today.

Let's turn to Slide 4. Our roots reach back to the year 1995 with the first successful dosing of UV resin. In the context of a hidden project, initially 3D printing tests were performed at the Technical University, Munich. I co-founded the company on May 5, 1999, as a spin-off from the University with the clear addition in mind to establish new manufacturing standards.

Today, we provide our customers strategic competitive advantage by upgrading the existing conventional production methods to additive manufacturing solutions. We pushed technology boundaries and developed new generated processes for the series 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 we are fully committed to make this a success for all stakeholders.

Let's turn to Slide 6 and some thoughts on the additive manufacturing market. As you can see, all of associates project growth to accelerate over the next years. This growth will be driven by larger share of sales to manufacturing. I believe we are in excellent position to capture our fair share of this growing market over the next years, because what really differentiates us from 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 the fact what we do. Let's turn to Slide 7 where we describe our technology. In the additive manufacturing market, we have probably more than 10 different technologies each with its specialized field of application. We use a technology called binder jetting. Binder jetting is definitely suited for high-volume manufacturing because of its potential to scale.

On Slide 8, you can see some of our products. It starts with VX200 on the left and goes all the way to the VX4000, which is the largest binder jetting system available in the market. The idea is that we have one platform with many applications. Means each model can be used with multiple material sets. For example, we offer the VX1000 3D printer for the printing of highly accurate sand casting molds and as a plastic polymerization printer. We expect to also offer it as a high-speed polymer sintering 3D printer.

Looking at Slide 9 and our integrated business model. With this integrated model, we can capture business either as a 3D printer sale or on-demand printing contracts. 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 great and easy way for our customers to understand new business opportunities in 3D printing. The short sales cycles and services helps us balance the typical long sale 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 include recurring revenue from the sale of consumables, maintenance contracts, upgrades and other after-sales activities.

Slide 10 shows our global sales network and production footprint. As you can see, we have reached an established position in all major markets, in Europe, USA as well as Asia. We focus on educating our channel partners to ensure true global coverage.

Turning to Slide 11. We differentiate ourselves from our competitors by build, size, mature diversity and speed. Our printing systems are modular, versatile and highly scalable and therefore uniquely positioned to support critical demanding applications and address the challenges and needs that are most important to our customers. We have established excellent relationships with blue chip customers from various industries. Products made with our technology are flying in space, make mobility more efficient and new engineering solutions possible.

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

I'm very happy with the results for the quarter as we have made significant progress in our key projects. Just recently, we signed a deal with a large multinational company for our new high-speed sintering 3D printer as part of the beta program we have launched earlier this year. In addition to that, we are in advanced negotiations with another large multinational company, but cannot assure you that we will come to terms on a final contract.

Over the last months, we have significantly improved the stability and reliability of the new HSS 3D printer and are currently in the process of ordering parts for the assembly of the first unit.

We have shipped the next VJET X units to the carmaker's facility. The 3D printers were bought in and installed in part of with the ongoing operation of the VJET X units already in production. As you know, we are supplying a full production solution here.

Our partners are currently making some upgrades to the post-processing workflows. For example, they are bringing in larger and more powerful microwave ovens, which [cures] the 3D printed parts prior to casting.

In addition to that, we are working on an interesting project in the field of renewable energies, and we expect to announce more details on that soon.

In our Services segment, the demand for 3D printed parts continues to be high in Europe and has significantly picked up in the U.S. and also in China. Now our German 3D parts production center, we were able to achieve gross margins around 40%, which is in an excellent result.

Turning to Slide 13. Total revenue for the quarter increased 26% to EUR 4.9 million as compared to EUR 3.9 million in the second quarter last year. In our Systems segment, we sold 2 printers this quarter as compared to 2 printers in the second quarter 2020. Historically, the majority of 3D printer sales is recognized in the second half, in the first quarter, and we expect it to be no exception this time.

After sales revenue increased significantly as compared to the second quarter 2020, which is great news. 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 continue to be strong in Europe, with sales up sequentially and significantly higher than in the second quarter of 2020.

Revenues in the U.S. and China increased substantially from the first quarter this year. Particularly in the U.S., we have seen a strong order inflow, probably the strongest in the last 15 months. For example, we have just recently received a large repeat order from a leading U.S.-based exploration company for printed PMMA patterns for the casting of extra-large [checking] in parts.

Looking at the right side of this slide in gross margins, as a result of higher utilization, gross margin contribution from our 3D parts production centers in U.S. and China improved. In our European service center, utilization and gross margin contribution remained on a very good level, comparable to the first quarter of 2021.

The Slide 14 breaks down order backlog by quarters, 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.

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 16, where you can see a close up of the new large High Speed Sintering 3D printer in action. We are very happy with the progress we are making in the conference call with the first quarter results, we showed you a picture of the new printer, since then we have developed and implemented significantly stability and performance improvements.

We are currently ordering parts for the assembly of the first filter system and are very happy that we already won a large multinational company as the first customer for this new printer.

On Slide 17, you can see how large part -- how a large part is taken out of the job box. The part was printed in PA12 on the new HSS printer.

On Slide 18, we have summarized recent progress in other projects. As mentioned in the beginning, we successfully shipped and installed, VJET X units 4 and 5 at the carmaker facility and received a technical pre-acceptance for them.

Regarding materials, over -- the last years, we have developed ceramic materials that can be printed, for example, on a tailored VX1000 system, together with the Japanese company AGC, which is a market leader in glass and glass related products and employs more than 50,000 people.

We developed a material called Brightorb. The ceramic parts 3D printed with this material can be used among other applications as cores for the metal casting process in order to reproduce complex and filigree cavities within the castings.

In the future, this process could make it possible, for example, to integrate internal cooling channels in turbine plates. With that turbine efficiency could be increased and downtimes reduced to a minimum.

Brightorb is a high-performance ceramic that is extremely well suited for metal casting due to its high-chemical stability, heat resistance, thermal connectivity and low thermal expansion.

We have just recently sent samples to selected customers, and the feedback so far has been very positive. In one of the later slides, you can see a printed part on our VX1000 with a Brightorb material.

Now let's move to another interesting 3D printing material. As you know, VJET X is working with a fully environmentally friendly materials that's called inorganics. 3D printed inorganic caused a 0 emissions during the handling and casting.

Taking the knowledge we have gained over the last years and especially so with VJET X, we developed a second generation inorganic material, which can be processed with our standard 3D printers as well. The second generation material is cold hardening and can be used for larger part geometries and thick-walled structures.

In HSS, we have successfully completed recycling test with a 80:20 configuration for thermoplastic polyurethane or TPU materials and increased the speed for running both axis in parallel on our VX200. This feature is already implemented on the large VX1000 HSS printer.

A very large international sportswear manufacturer has recently done preliminary stress test in a 20,000 cycles set up with new TPU parts printed on VJET 3D printers and the results were much better than expected. There was significantly less loss in bounce and elasticity in the parts 3D printed with VJET X -- VJET HSS printers as compared to the other 3D printing technologies. This is excellent news.

In our assembly department, we have implemented modular design principles to streamline the process of 3D printer production. As we say, we have one platform, many applications. What does that mean exactly? For example, we offer our VX1000 3D printer in various materials and process configurations by PMMA for investment casting, PDD for inorganic materials and so on.

What we do now is, to example, a basic machine, which is the same for all processes and add-on a process kit, which defines the type of material the printer will be using in the end. We expect this to reduce lead times and lower the costs related to the manufacturing of the 3D printers.

On Slide 19, you can see as a part printed with Brightorb material on VX1000 printer. As mentioned in the beginning, we are a technology company with a clear mission to establish new manufacturing standards. Consequently, we continue to invest a significant amount of our resources into research and development. With this, we are continuously expanding our IP base. Going forward, we believe this will help us on our path to become a profitable company.

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

Thank you, Ingo. Good morning, everyone. It is good to see the progress we are making with our principal project, VJET X and the large HSS printer. Just recently we successfully collected additional funds from institutional investors to further strengthen our balance sheet.

With a growing number of companies is realizing the opportunities in industrial 3D printing, we believe we are approaching an inflection point and have to accelerate the size the opportunities in front of us.

Just a couple of weeks back, for example, we signed a deal with a large multinational company for our new high-speed sintering 3D printer as part of the beta program we have launched earlier this year. Our aim is to deliver long term value for shareholders through attractive growth from our margins and optimal development of capital.

Our attention remains firmly on driving operational execution to deliver these outcomes while managing our gradual transformation from a technology to a product company.

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 month, 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 21. Total revenues increased 26.2% to EUR 4.9 million in the second quarter as compared to EUR 3.9 million in last year's second quarter. Revenue from our 3D parts production center in Germany continues to be strong. It is good to see the U.S. and China catching up. Especially in the U.S., we have seen strong order inflow over the last weeks for on-demand printed product.

Gross profit and gross margin in the quarter were EUR 1.4 million and 28% compared to EUR 1.0 million and 25.9% in the second quarter of 2020. If you break this down, Systems provided slightly lower gross profit margins, while gross margin contribution from Services increased significantly. The positive margin development in this segment is driven by continued strong performance in our German 3D parts production center. In the German 3D printing center, we reached a gross profit margin of around 40%, contribution from our facilities in the U.S. and China has improved as utilization is picking up.

The next slide show our segment reporting for the quarter. On Slide 22, revenues from our Systems segment, which includes revenues from selling 3D printers, consumables and spare parts as well its maintenance, increased 43% to EUR 2.7 million for the quarter from EUR 2.1 million in the second quarter 2020. We sold one new and one refurbished printer this quarter as compared to 2 new printers in last year's second quarter. It is good to see that revenues from our after sales segment means consumables and maintenance continues to contribute strongly.

On slide 23, revenues increased 11% to EUR 2.3 million in the second quarter of 2021 compared to EUR 2.1 million in the same quarter last year. The increase is driven by continued strong performance in our German 3D parts production center. Contribution from our 3D printing centers in the U.S. and China improved substantially from the first quarter this year as utilization is picking up. As a result of higher utilization, Services gross margin improved to 28.9% from 19.4% in the second quarter 2020.

Looking now to the rest of the income statement on Slide 24. Selling expenses were EUR 1.5 million as compared to EUR 1.3 million in last year's same quarter. The majority of our selling expenses are personnel expense and distribution expenses, such as freight and commissions for sales agents.

Administrative expenses were EUR 2 million as compared to EUR 1.8 million in the second quarter of 2020. Keep in mind, we typically spend more than EUR 1 million in auditing fees per year and over EUR 5 million in legal consulting fees.

Research and development expenses slightly increased to EUR 1.7 million from EUR 1.6 million in the second quarter of 2020. Operating loss was EUR 3.9 million in the second quarter this year compared to an operating loss of EUR 4 million in the comparative period last year.

Net loss for the quarter was EUR 2.5 million or EUR 0.41 per ADS compared to a net loss of EUR 5.1 million or EUR 1.06 versus prior year same quarter. The improvement is related to the revaluation of the derivative financial instruments with the European Investment Bank as part of the financial result. This revaluation is a non-cash item. We have provided the same presentation for the first half period ended June 30, 2021, on Slide 25 to 28.

Slide 29 shows selected balance sheet items. At June 30, 2021, the company had cash, cash equivalents and short-term investments in bond funds of roughly EUR 8.5 million. We increased our cash position with a registered direct offering in July 2021 that added gross proceeds of $10 million.

Total debt at June 30, 2021, was approximately EUR 29.3 million. Of this EUR 28.1 million are long term. Long-term debt primarily consists of EUR 15 million from the EIB Horizon 2020 venture debt program. Weighted average number of shares outstanding for the second quarter 2021 were part of 5,900,584 ADS, current shares outstanding of 7,026,711 ADS.

On Slide 30, we have summarized our financial guidance for the full year 2021, which remains unchanged. Revenue for the third quarter 2021 is expected to be between EUR 4.5 million and EUR 5.5 million. This concludes my remarks.

And with that, we will now open the call up for your questions. Operator?

(Operator Instructions) Our first question comes from the line of Brian Kinstlinger with Alliance Global Partners.

The fourth quarter guidance is obviously solid. It's always in a back-end loaded business. But can you remind us the range of the number of printers you expect to deliver at the high-end or low-end range, and their rough average price points?

And then how many printers are sitting at the item OEM site that you have not yet been able to recognize? And what goals need to occur for you to recognize revenue?

Rudi?

So I start with the last part of your question. Currently, they are sitting 5 printers with this client, meaning sitting on our balance sheet, but installed at the clients' premises. We expect to get the final acceptance for this printer during the next quarter.

The other questions were how many printers do we plan to ship in the upcoming quarters? We have not given specific guidance on when and how many printers we ship. What I can say is the average price of a printer is between USD 500,000 and USD 700,000. And this is -- I think you could easily calculate how many it can be. Overall, currently, we ship on a yearly basis between 20 and 25 printers. That's the number which we're currently working on, and this is what we want to grow over the next couple of years.

And have I answered all topics of your question?

And then has anything changed with the time line for the better or worse? I mean obviously, the automotive industry is having problems with chips and inventory. I'm not sure that impacts you in the short-term, but it's worth asking how that impacts their process, their priorities as it relates to your business?

So currently, we -- as every -- probably in the industry season see that there are restrictions and some end. But overall, we're dealing with the situation pretty good and don't see any significant delays when ordering parts.

That's ordering parts, but what about your customers? You're -- I take it all the automotive companies are having trouble creating inventory with a lack of chips. So did that impact you in any way?

No, it did. It did not impact us. As such nothing significantly. You always have many inventory, you deal with it, but I could not say that we significantly impacted at this stage. That might change, but currently, we're not significantly impacted and we're monitoring this very carefully. And our purchasing department is very close to both matters.

And then with the sportswear company, it sounds like the performance of the HSS was very solid. So what's the next step there? Have they ordered a couple? Do you expect they're going to order a couple of base in the performance? Is there more testing to do? Just take us through the process now that you've proven out a solid performance of your printers?

So as you heard me saying, we are in the process of starting the on-site data project with the HSS printers. One of these printers is dedicated to a special material set, which is explicitly needed for these kind of sportswear applications. Once we have the results from the beta project, we can roll it out. So I think the customers are very happy so far about the results and waiting for the machine and then in a series possession.

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Ingo for closing remarks.

Thank you. To sum up, we are very much encouraged by the recent progress we have made in our principal projects. We believe we have the ecosystem, resources and technology to become a key supplier of solutions for high-volume industrial 3D printing. The opportunities all around the world are vast, and we are ready to take them.

Thank you for joining today's call, and we look forward to speaking with you again in our next call, which we expect to take place in November with the financial results for the third quarter 2021. Thank you.

Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time.