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spk00: Greetings. Welcome to the VoxelJet third quarter financial results conference call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Mr. Johannes Pesch, Director of Investor Relations and Business Development. Mr. Pesch, you may now begin.
spk01: Thank you, Operator, and good morning, everyone. With me today are Dr. Ingo Iderman, Wapuchet's Chief Executive Officer and Human Trust Wapuchet's Chief Financial Officer. Yesterday, after the market closed, Wapuchet issued a press release announcing its first quarter financial results for the period ended September 30, 2020. The release, as well as the accompanying presentation for the conference call, is available in the Investor Relations section of the company's website at wapuchet.com. During our call-in, we may make certain forward-looking statements about the company's performance, including expectations on the results from our current order backlog. Such forward-looking statements are not guarantees of the future performance, and therefore one should not claim until reliant 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 earlier statement, you should refer to the question in the statement contained in our question, as well as the risk factors contained in the company's finances, institutes, and exchange commissions. With that, I would now like to turn the call over to Ingo, the Chief Executive of Postbox. Thank you, Johannes. Good morning, everyone. Thank you for joining us on our earnings call today. Let's turn to slide three. Our rules reach back to the year 1995 with the first successful dosing of UV resin in the context of a hidden project initial 3D printing test performed at the Technical University of Munich. Our company was founded on May 5th, 1999 as a spin-off from the University with a key vision in mind to establish new manufacturing standards. We want to do this by developing new, generative, or 3D processes for the production of complex components. In early 2018, we were approached by a leading German carmaker who asked us if we were able to develop and design a high-speed, fully automated 3D production line. This carmaker wants to use additive manufacturing to make its releases more efficient, Towards the end of 2018, we signed a deal with them for the development of our new 3D printing solution, VJX. Let's turn to slide four. Now we are extremely excited to report that while it might have taken us a bit longer than initially anticipated, we have reached three significant milestones with VJX and the new large high-speed sintering 3D printer over the last month. First, we received the follow-up orders for three additional VJX units. One VJX unit was ordered in August 2020, and two VJX units were ordered in September 2020. The follow-up orders came as part of a frame contract concluded in 2018 between us and our partners and the German Communist Party. The first two VJX units were ordered 2018, and we installed them in 2019 at the carmaker's facility. Since then, we have significantly improved the printers and infrastructure. This follow-up order brings the current total to five VJX units for this carmaker. Second, I would like to highlight that we have received a sort of technical pre-acceptance from the carmaker and our partners in September this year for the first three units. We now expect to book revenue for all five units mid-2021. We will summarize the key events in a timeline in one of the later slides. And third, as explained in our conference call earlier this year, the most critical step in the development of the large high-density sintering printer is to make sure to have a stable temperature across the built area. This becomes exponentially more challenging the larger the built area is. We believe we have found a clever solution for this problem and have filed IT accordingly. Now we have put it all together this month, and the results were good. The printing tests on the large IT sintering printer were successful, and we are extremely excited about the new opportunities and markets we plan to address with it. Before we start with the formal part of the presentation, let's quickly remind those who are new to that what we do. Slide 6 summarizes some key data about our company. On the right side of this slide, you can see a V4000 3D printer as it is operated in our on-demand parts production center in Germany. On slide 7, you can find some more information about Rudi and Michael. Together, we hold roughly 20% of the company. We are happy to announce that we have Both extended our contracts just recently. We have a clear vision in mind and are fully committed to make this a success for all stakeholders. Let's turn to slide eight, 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 binary jetting. Binary jetting is especially suited for high volume manufacturing. because of its potential to fail. Looking at slide 9 and our integrated business model, with this integrated model, we can capture business either as 3D printer sales or on-demand printing contracts. In the services segment on the left side of the slide, we operate our own 3D printers in three facilities around the world to offer affordable on-demand access to our technology. The barriers to entry are very low, and customers just need to send in the 3D data, and we will print parts for them. This 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 balance the typically long sales cycles in our systems. 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 recurring revenue from the sale of consumables, maintenance contracts, upgrades, and other after-sales activities. Going forward, we expect to benefit from the increased demand for solutions for the additive series production. We anticipate to commercialize 3D production cells with multiple 3D printers each, like in the project with the carmaker, and sell large volume contracts for 3D printed parts. 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, the US, 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, material 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 start with the formal part of the presentation. I will begin with an overview of the results for the third quarter. Judy will then provide a more in-depth view of our financials and our outlook for the rest of the year. Following his comments, we will be happy to take your questions. Turning to slide 13. Total revenue for the third quarter this year increased 11% to 4.9 million euros as compared to the third quarter last year. This is primarily related to a strong increase in systems revenue, which was partially offset by a decrease in our on-demand printing signal. The revenues decreased by roughly 20% as compared to the third quarter 2019. We had five additional large 3D printers at our customer facilities, but could not yet book revenue for them. Among those are the three VJ8 units for which we now expect to book revenue this 2021, together with the other two VJ8 units. For the other two large-scale printers, which are already at our customer facilities, we could not complete the installation due to travel restrictions related to COVID-19. In the EU, revenues in the services segment are already on the same level as in the third quarter 2019. And this trend seems to continue as we saw a strong order inflow in our EU service center over the last week. We are busy until the end of the year. In the US, we are roughly 30% below the third quarter of 2019. Looking ahead, Things are starting to improve in certain parts of the U.S. as well. For example, we are printing patterns for the casting of components for space sources for suppliers to leading U.S. space exploration companies. Revenue in the services segment in the U.S. were up 6% from the second quarter of 2020. Looking at the systems segment, total revenue for the third quarter was 2.7 billion euros. We put revenue on two larger 3D printers, As said earlier, we are expected to book revenue for four additional 3D printers, which are already at our customer facilities. We continue to experience delays with the printer installations due to the COVID-19 pandemic, for example, through international travel restrictions. We are also carefully watching the resurgence of COVID-19 cases and reading predictions of travel restrictions and lockdowns in certain parts of the world, as they may continue to have adverse effects on our business. we saw a strong increase in after-sales revenue, especially when compared to the second quarter of this year. But also when comparing it to the third quarter of 2019, we saw a double-digit growth in the after-sales segment in this year's third quarter. Looking at the right side of this slide and profit margins from services improved, increases driven by gross margins of close to 40% in our German service center and offset by lower contribution from the US and China. In systems, gross margin improved to 39.5%. If you break this down, the gross margin contribution from 3D printer sales was around 40% and the contribution from our consumer group segment around 60%. This was offset by lower gross margin contribution from the maintenance team as several were restricted by the effects of COVID-19. Slide 14 breaks down order backlogs by quarters, revenue by geography, and operating incentives by category. I would like to highlight that order backlog for 50 printers was growing during the first nine months of 2020, which is great news. One reason, obviously, is that we could not recognize revenue on printers as we anticipated. But if you compare the nine-month revenue from our system segment this year against the same period in 2019, we were only 5% below. In August, we received a follow-up order for another BJX system. And in September, a follow-up order for additional two BJX units, bringing the total to five BJX units in order backlog now. In looking at revenue by a geographic region, please keep in mind that this can fluctuate short-term, especially when larger units are sold. Long-term, we target an easy distribution across the three regions to hedge against risk from local events. At the right side of the slide, we have summarized operating expenses as a percentage of quarterly revenues. We are happy to report that we have reviewed operating expenses significantly as a result of implementing a structural efficiency program at the beginning of 2020. We expect to see full P&L impact from the fourth quarter of 2020 onwards. Annual savings from this program are estimated to be in the range of 2.5 to 3 million euros. Let's move to slide 15 and an update on our growth drivers, which are east and high-speed We call them road drivers because we believe we can store multiple units of production cells of these new printers to individual clients. Keep in mind, these printers are made for automated industrial production. Let's turn to slide 16 and then update on VJX. On this slide, we compare the cost per kg of aluminum of several production technologies, for instance, direct metal printing, casting, 3D printing and casting, profile and sheet metal, and so on. From this we can immediately see why we believe our big technology is so important. In a production scenario, fully automated 3D printing, integrated into conventional casting lines, is around 1,000 times cheaper than direct metal 3D printing. 1,000 euro per kg versus 1 euro per kg. Again, this is not To say that direct metal printing itself is not interesting, the application area is just different. Both technologies can complement each other very nicely. Let's turn to slide 17 and why we believe this technology is important for us. Here we have summarized the potential revenue and cross-profit expectations over a 10-year period. These numbers are illustrative because they are not there yet. For one production line, consisting of 25 VJD units, and over a period of 10 years, we would arrive at roughly 128 million U.S. dollars in revenue and 73 million U.S. dollars in gross profits. More than 80% of this 10-year total would be recurring revenue. The printers are basically running 24-7 at high speed, which means we expect the printer engine to be repaid and refurbished two times a year. That is our current expectation and subject to change as we learn more from the DJX units already in store. Also, please check the note on the bottom of the slide where we have summarized some of the assumptions and risks associated with this model. As mentioned earlier, the expected book revenue for the first five DJX units is 2021. On slide 18, we have summarized key events in development and commercialization of DJX. On slide 19, we have included a link to the printer in action. Let's turn to slide 20 and an update on high speed sintering. With HSS, we combine the advantages of two existing editing processes, final part properties from selected laser sintering and high throughput from binder drilling. As you can see from this slide, there are not too many companies in the area of thermal powder bed fusion. HSS is similar to HVMGF. with a few critical distinctions. First, we use different printers. We have developed a self-adjusting filtering technology. Especially the filtering solution is pretty clever, and we have filed IT for this. Second, we check only one ink. This makes our system more efficient in a production scenario. Taken together, this allows us to build Q3E printers with larger build areas and lower running costs. Similar to VJX, we want to offer our customers a polymer sintering production solution. We are collecting interesting leads and are currently in the process of setting up the ETA program. We are working with a large chemical company on the qualification of new materials for HSS. One R&D police of this company is at our company every other week, and the results have been very impressive. On slide 21, we present some of the products that can be printed with HSS. These are only some of the portable applications of HSS. We are also talking to customers from other industries, like audio equipment, automotive interiors and exteriors, ceilings, baskets, bars, grippers, and other consumer products. I would like to highlight that we can achieve high-counter recycling rates with HSS, especially with the reflective TPU material. In Germany, we are currently working with 80% recycled material which is very impressive. A high recycling rate is a key enabler for industrial production as the materials are significantly cost-saving. With that, I would now like to turn the call over to Rudi. Thank you, Ingo. Good morning, everyone. Overall, we are happy with the quarter. It has made significant progress toward our strategic goal. The highlight certainly was the follow-up order from the carmaker for additional research experience. We had expected to book revenues for four additional printers in the third quarter of this year, but we were also impacted by restrictions due to COVID-19. For example, our installation team could not travel to customer sites. Service revenues in Europe is developing very nicely, and we are at the same level as in the third quarter of 2019. For the first nine months of 2020, revenue contributions from our German service center was 5% below compared to the first nine months of 2019. They're doomed to improve in the U.S. and in China, and our colleagues are working hard to collect orders. We continue to monitor our costs very carefully. With the additional funds from the European Investment Bank, the first in June 2020, we can continue our ambitious R&D targets. If you look at our P&L, you will not see revenue contributions from new products. All the expense, all the cost is in here. Our expectation is that we can do revenue for the first time to reach its units in 2021. This car maker, for example, had not been in plan when it came to the rollout of this technology. 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 last week, cases have gone up. We are monitoring the evolving situation carefully. I will now take you through the financials for the first quarter. After that, we are happy to take your questions. Slide 23, total revenue increased 11% to 4.9 million euros in the third quarter of 2020 as compared to 4.4 million euros in last year's third quarter. The increase was driven by higher sales in our system segment as we took larger 3D printers. Revenue from our 3D parts production center in January was on the same level as in the third quarter 2019. The revenue contribution from the F was roughly 30% lower for the same period. China was only flat. Cross-profit and cross-profit margins in quarter were 1.6 million euros and 33% compared to 0.9 million euros and 20% in last year's third quarter. If you break this down, systems provided improved cross-profit margins close to the target quantity. in the previous year. Gross margins in services also improved, driven by strong insights in our German facilities. Our US and China service centers are working hard to improve their gross margin contribution so that we meet our guidance quota of greater 40% on a good level as well. The next slide shows our segment reporting for the quarter. On slide 24, revenues from our service segment, which includes revenues from selling 3D printers, consumables, and spare parts as well as maintenance, increased 60.2% to 2.7 million euros from the third quarter of 2020, from 1.6 million euros in last year's third quarter. It was especially good to see the revenues from our after-sales segment, which is continuing to maintain and improve substantially over the second quarter of this year. We are pleased with gross margin development in this segment. Gross profit margin increased to 39.5% in the third quarter of this year, up from 32% in the same year After the cross-profit and system segment almost jibbled from €100 million in the third quarter last year to €101 million in the third quarter of 2020. Earlier this year, we implemented the first stage of our structural efficiency program, Accenture 2020+. We expect to see full P&L effect from the fourth quarter 2020 onwards and analyze savings of €205 to €3 million. Let's turn to slide 25 and an overview of the development of last quarter. What we can clearly see is the positive trend of order inflow, which continues throughout the year, for example, with the additional orders for each of X. At the end of the first quarter, order backlog for 3D printers was at 9.1 million euros. On July 26, service revenue decreased 21% to 2.2 million euros in the first quarter 2020, compared to 2.8 million euros in last year's first quarter. Service costs also increased the same quarter. Improvement was driven by strong gross margin contribution to the general service and then . Looking out to the rest of the income statement on slide 27, selling expenses were 1.3 million euros in the third quarter of 2020. The majority of our selling expenses are personal expenses and distribution expenses, such as rate and commission . This compares to 1.7 million euros in the last quarter. Administrative expenses were 1.5 million euros as compared to 1.6 million euros in the same quarter last year. Keep in mind, we typically spent more than 1 million euros in auditing fees per year and 1.5 million euros in legal consultancy fees. Research and development expenses were 1.5 million euros in the third quarter compared to 1.9 million euros in last year's third quarter. Most of our ID expenses is related to ReachesX and the new HSS printer. Operating loss of 3 million euros in the third quarter 2020 compared to an operating loss of 3.5 million euros in the comparative period last year. Improvement is largely driven by reduced operating expenses across all functions, high cross margins, and high revenues . Net loss per quarter was 4 million euros or 82 euros compared to a net loss of 3.7 million euros or 76 euros in the entire year same quarter. The hard loss was driven by a non-cash expense from the revaluation of the derivatives financial instrument to the European Investment Bank. This provides the same presentation for the nine months ended September 30th, 2020, and slides 28 through 31. Slide 32 shows the lack of balance sheet items. At September 30th, 2020, the company's cash, cash equivalents, and short-term investments in joint funds of roughly 8.9 million euros. Total debt at September 30th, 2020 was approximately 26 to 60 million euros, of which 25 to 30 million euros are long-term and long-term. Long-term debt primarily consists of 50 million euros from the EIB's 2020 venture program. Rated average number of shares outstanding for the quarter was 836,088, moving now on to 2023 and our financial guidance for the full year. The full-year 2020 revenue range is now expected to be between 27 and 20.7 million euros, from currently 26 to 30 million euros. The key glider for the adjustment was the date of first revenue recognition of WeChat X and the continued impact of COVID-19. As of today, spending is expected to be in the range of 13 to 13.25 million euros, and R&D spending is expected to be between 1 o'clock and 5 to 7. 5 million to 6.25 million euros. Depreciation and amortization expenses are expected to be between 3.5 million and 3.75 million euros. Cash cap expanding for 2020 is projected to be in the range of 0.5 million euros to 1.0 million euros, which primarily consists of ongoing investments in our global facility. Adjusted EVD average includes the impact of foreign exchange valuations expected to be neutral to positive for the fourth quarter of 2022. Regents for the fourth quarter of 2020 is expected to be in the range of 8 and 10 million euros. This completes my remarks, and with that, we will now open the call for your questions of the regents.
spk00: Thank you. We'll now be conducting the question and answer session. If you'd like to ask a question at this time, please press star 1 from your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And once again, that's star 1. As a reminder, you may press star 1 to ask a question at this time. Thank you. At this time, I'll turn the floor back to Mads Riff for closing remarks.
spk01: Thank you. With the follow-up order from the GLE, we reached a significant milestone in our mission to bring 3D printing into high-volume industrial production. This is excellent news, as it not only highlights the significance of our technology, but also the confidence this leading German carmaker has in the new solution and the chaos behind it. Together with our partners, we can today offer a solution for the mass production of complex light metal parts at what we believe to be a fraction of the cost as compared to other players in the additive manufacturing industry. We plan to follow a similar path with our new large high speed sintering printer. We are extremely excited about the new opportunities and markets we plan to address with it. Thank you for joining us on today's call, and we're looking forward to speaking with you again next week. Thank you. Thank you very much.
spk00: Thank you, everyone. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
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