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spk00: Greetings and welcome to the VoxelJet AG first quarter 2021 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Johannes Pesch, Director of Investor Relations and Business Development for Voxeljet. Thank you.
spk02: Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, Voxeljet Chief Executive Officer, and Rudy Franz, Voxeljet National Officer. Yesterday, after the market closed, Voxeljet issued a press release announcing its first quarter resides for the period ended March 31, 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 www.walkthejet.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 filing with the Securities and Exchange Commission. With that, I would now like to turn the call over to Ingo, Chief Executive of Central Project.
spk01: Thank you, Johannes. Good morning, everyone. Thank you for joining us on our earnings call today. Let's turn to slide four. Our rules reach back to the year 1995 with the first successful dosing of unique durable resins. In the context of a hidden project, initial 3D printing tests were performed at the Technical University of Munich. I co-founded the company on May 5, 1999, as a spin-off from the university with a clear vision in mind to establish new manufacturing standards. Today, we provide our customers a strategic competitive advantage by upgrading their existing conventional production methods to additive manufacturing solutions. We push technological boundaries and develop new generated processes for the series production of complex components. On slide 5, you can find some more information about Rudy and myself. We and our supervisory board together hold roughly 20% of the company. We are happy to announce that we both extended our contract just recently We have a clear plan in mind and are fully committed to make this a success for all stakeholders. Let's turn to slide six and some thoughts on the additive manufacturing. As you can see, Wohler's associates project grows to accelerate over the next years. This growth will be driven by a larger share of sales to manufacturing. How big could this opportunity become? If we assume that the global economy is about $80 trillion, If we assume that manufacturing accounts for 60% of it, this would put the manufacturing economy at around $12.8 trillion. If additive manufacturing captures only 5% of it, this could potentially be a $640 billion industry. I believe we are in an excellent position to capture our fair share of this growing market over the next year. 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. I would estimate that with our current portfolio of 3D printers, our share in sales for manufacturing is already higher than any of our competitors. I expect this to grow further significantly with VGDX and the new high-density printers. I believe so because 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. I firmly believe there is currently no other company in our industry who can offer a fully automated 3D printing line for large-scale manufacturing like we do with the VJX. Before we start with the formal part of the presentation, let's quickly remind those who are new to 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 binary shading. Binary shading is especially used for high volume manufacturing because of its potential to fail. On slide 8, you can see some of our products. It starts with the week 200 on the left and goes all the way down to the week 4,000, which is the largest binder checking system available in the market. The idea is that we have one platform with many applications. Each model can be used with multiple materials. For example, we offer the 1,000 3D printer for the printing of highly accurate sand casting molds and as a plastic polymerization printer. We expect also to 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 contract. In the services segment on the left side of this 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. 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 balance the typical long sales cycles in our systems. In our system 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. 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, 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 future customers from various industries. Products made with our technology are flying in space, make mobility more efficient, and view engineering solutions possible. Let's start with the formal part of the presentation. I will begin with an overview of the results of the first 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 be happy to take your questions. It has been six weeks since our fourth quarter and full year 2020 earnings call. Among other things, we have continued to assemble VJX units number four and five. In one of the later slides, we have included a picture of the current status. I'm happy to say that we are on track and slightly ahead of our schedule for delivery to the carmaker in the next weeks. Remember, the first two units are at the carmaker's facility since a couple of years. Together with this OEM and our partners, we use the time to further optimize the printers and the whole supply chain. Keep in mind, this is a fully automated production line, including robotic systems, which take the 3D printed parts and remove unbound material. When it comes to 3D printing and high-volume manufacturing, I firmly believe that this project is at the forefront of technology. We expect to book revenue for the first units in the next upcoming months. We have also included a picture of our new HSS printer in one of the later slides. We are very happy with the progress we are making. For example, just recently we put the printer under a sort of stress test and were successfully printing a job utilizing the full height. This is an important milestone. 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. Expanding our IP, because when you have IP, you will have a cross margin. IP is the reason why our R&D investments are very important. Turning to slide 13. Total revenue for the quarter increased 4.5% to 4.1 billion euros as compared to 3.9 billion euros in the first quarter last year. In our system segment, we sold two new printers this quarter as compared to one new and refurbished printer in the first quarter 2020. Historically, the majority of 3D printer sales is recognized in the second half and the fourth quarter of the year, and it was no exception this time. Today, the revenue increased as compared to the first quarter 2020, which is good news. We achieved excellent gross margin contribution from the sales of consumers. Services revenue means the revenue from selling on the printed parts continued to be strong in Europe with sales on a similar level as in the fourth quarter of 2020, but below the first quarter of 2020. In the US, market demand for services was weak over the first month of this year. We hear from our customers that the demand for their product is picking up again, and we certainly see that in the order and flow over recent weeks, which was much better than in previous months. Looking at the right side of this slide and growth margins, as a result of lower utilization, growth margin contribution from our U.S. and China 3D parts production center was lower. in our european service center utilization growth margin contribution remained at a good level comparable to the fourth quarter of 2020. slide 14 breaks down order backlog by quarters revenue by geography dating expenses the category and we looking at revenue by geographic region we target an even distribution across the three regions to hedge against risk from local events Let's move to slide 15 and an update on our growth drivers, VJDX and high-speed sintering. In the following slides, we have included pictures of the new 3D printers. The pictures were taken at the end of April this year. We believe these new products will help us capture a significant portion of manufacturing-related revenue. Keep in mind, these printers are made for automated industrial productions. Let's start with VJX on slide 16. In the presentation with fourth quarter and full year 2020 results, we included a detailed timeline. Today, we want to show you a picture of VJX units four and five. On top of the printers, you can see the large control cabinet. The printers are designed for industrial production, which requires high performance and availability, as well as straightforward servicing and flexible expansion options. Meanwhile, the assembly is completed, and the printers were handed over to our in-house commission. We expect to bring them to the carmaker's facility in the next weeks. In this facility, we have trained technicians of the OEM, and they are now operating the printers independently for months and supply pre-series production. Our teams are on standby if something unexpected happens. This is a very important milestone, and we are optimistic that we can book revenue for the first unit in the next month. On slide 17, you can see a VJX-coated unit with bidirectional recoding technology for layer times of around four seconds. We have also included a link to a video of this purpose unit in action. Let's move to slide 18 and an update on high-speed sintering. On the left side of this slide, you can see a picture of the new high-speed sintering printer. As mentioned in the fourth quarter and full year 2020 conference call, it successfully printed on the full build area. To my knowledge, this is the largest polymer sintering 3D printer in this industry. We have filed IP for this, which we believe is critical to achieve consistent results in centering across such a large field area. Just recently, we put the printer to a stress test and achieved another significant milestone. We fired it up early in the morning, and it was successfully printing a full job until late in the evening. This was critical because we did not yet know how the printer would behave when exposed to these temperatures for an extended period. We are happy to say that the test was successful. There is still some optimization to do, and we are making excellent progress. Based on some initial calculations, we can reach costs per part, which are significantly better than that of competing technologies and close to those of conventional manufacturing. Our batch size is of several hundred thousand parts. On slide 19, we have included a link to a video featuring our week's 1,000 agencies. 3D printer in action and an insight into our high speed filtering technology. On slide 20, we have compared parts printed with HP MultiJet Fusion and our high speed filtering technology. On the bottom of this slide, you can find a link to a detailed comparison between HP MultiJet Fusion and VJ-8 high speed filtering. With that, I would now like to turn the call over to William. William?
spk03: Thank you, Ingo. Good morning, everyone. We are off to a decent start to the progress we have been making in our printer project, SweetShedX, and the large HSS printer. We successfully collected additional funds because we believe we are approaching an inflection point and have to accelerate to size the upcoming opportunities in front of us. As we mentioned in the last conference call, we believe that the share of our revenues from manufacturing will expand in the coming years. SAP offering and starting recognizing revenue from our new manufacturing-focused products. In addition to working on the new printers, we continue to upgrade our existing portfolio of 3D printers. For example, we have added an updated print engine to our high-end VEEDS 2000 system, basically doubling the speed of the printer. We sold such system to our client in the first quarter of this year. We have a new fully environmental-friendly printing material in the pipeline, which could potentially be used on our largest printers, including the WEEX 4000. We are working on new materials for high-speed sintering technology and are expanding our partnership with large chemical companies. Regarding quarantine, 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 been 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 increased 4.5% to 4.1 million euros in the first quarter as compared to 3.9 million euros in last year's first quarter. Revenue from our 3D parts production center in Germany continues to be strong and was on a similar level as in the fourth quarter 2020. Contribution from the U.S. and China on demand printing were weak, but we encouraged by recent order inflow for on-demand print parts, especially in the U.S. Gross profit and gross margin per quarter were €1 million and 25.6% compared to €1.2 million and 29.7% in the first quarter of 2020. If you break this down, systems provided stable gross profit margins, while gross margin contribution from services was lower as a result of lower utilization in the U.S. and China. The next slide shows our segment reporting for the quarter. On slide 23, revenues from our system segment, which includes revenues from setting 3D printers, consumables, and spare parts, as well as maintenance. increased 59.9% to 2.1 million euros for the quarter from 1.3 million euros in the first quarter of 2020. We saw two new printers this quarter versus one used in refurbishment in last year's first quarter. It was good to see that revenues from our after-sales segment means consumables and maintenance continue to contribute strongly. On slide 24, services revenue decreased 23.5% to €2 million in the first quarter of 2021, compared to €2.6 million in the same quarter last year. Services cross-profit decreased to 23.2% from 38% in the first quarter of 2020. Looking now to the rest of the income statement on slide 25, selling expenses were €1.4 million as compared to €1.5 million in last year's first quarter, The majority of selling expenses are personal expenses and distribution expenses, such as trade and commissions for sales agents. Administrators' expenses are 1.5 million euros as compared to 1.4 million euros in the first quarter of 2020. Keep in mind, we typically spend more than a million euros in auditing fees per year and over 5 million euros in legal consulting fees. Research and development expenses were basically stable at €106 million. Operating loss was €2.7 million in the first quarter this year compared to an operating loss of €3.5 million in the comparative period last year. The improvement is primarily driven by higher other operating income as a result of foreign exchange gains. on the valuation of intercompany loans. Net loss per quarter was €8.3 million, or €1.51 per ADS, compared to a net loss of €2.6 million, or €0.65 million in the prior year's same quarter. The improved operating result was offset by a non-cash expense of €5.2 million from the revaluation of the Deere FITF financial instrument with the European Investment Bank. This revaluation is part of the financial result in the non-cash item. Slide 26 shows selected balance sheet items. At March 31st, 2021, the company had cash, cash equivalents, and short-term investments in bond funds of roughly 22.9 million euros. We increased our cash position with two offerings in January and February 2021 that added aggregate gross proceeds of $22 million. Total debt at March 31st, 2021, was approximately 30.6 million euros. Of this, 29 million euros are long-term. Long-term debt primarily consists of 50 million euros from EIB's 2020 venture debt program. Weighted average number of shares outstanding for the first quarter of 2021 were 5.5 million ADS. Current shares outstanding are 5.9 million 584 ADS. On slide 27, we have summarized our financial guidance for fully 2021, which remains unchanged. Revenue for second quarter 2021 is expected to be between 4 and 6 million euros. This concludes my remarks, and with that, we'll open now the call for your questions, operator.
spk00: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press start queue if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Brian Kinslinger with Alliance Global Partners. Please proceed with your question.
spk05: Hi, guys. Thanks for taking my questions. Thanks for giving us the update on the five printers for the German automotive manufacturer. It's helpful. Can you talk about discussions you're having with other German auto manufacturers? Is there enough success yet given your printing, sorry, given your one customer is printing without your help? Is there enough success yet to have meaningful conversations? And can you talk about how those conversations are going and more so how Should we expect to see orders from other customers by the end of the year, or is that more a 2022 event?
spk01: Hi. Thank you for your question. This is Ingo. So as already mentioned, we are in talks with many other providers, not just carmakers, but also suppliers and also suppliers for other industries. for similar products and similar solutions as we see with the widget X. I think the market waits for positive results so far from the German car maker. As soon as we have, let's say, the potential to release a press release together with them about the successful implementation, I think it will definitely provide us a good start for further marketing this product.
spk05: And I guess do you think that timing is in the second half of this year? Does that happen in the calendar year, that kind of?
spk01: Yeah, absolutely. So we speak about probably such a success message by later this year. Great.
spk05: And then regarding the new centering print, can you take us through the timeline of of where, you know, the milestones we should be evaluating this technology against, you know, again, similar when to expect the orders or pipeline, you know, metrics that we should be tracking, you know, maybe help us evaluate through the remainder of the year for that product. Absolutely.
spk01: So currently we are in the stages of finalizing the alpha stage, which means a first printer is running here constantly on our factory floor. And we are also currently designing the upcoming beta units. I'm saying beta units because it will be more than one printer. We will assemble these printers towards the end of the year, and we'll be able to start our beta programs with the selected customers probably by the end of this year or next year. The plan is to have at least one beta customer currently. We think that we will have two. The pipeline is already full, so we can select customers from various groups. And we will believe that this pipeline will be also good for us to be valid for the upcoming series machine, which is probably taking place by the end of next year.
spk05: Great. One more question for me. Regarding the supply chain, can you talk about any issues given the global supply chain challenges you may or may not be having with lead times, parts or supplies that you need, and how is it impacting your business, if at all?
spk01: Yeah. So we also face these problems with the parts that we need for our printers. Luckily, we are still having a warehouse which is well equipped with parts. And we see for the next product, we intend to book revenue, no delay. But we are looking forward to get new parts, probably with a delay, sometimes between four and six weeks. And this may have impact on the next year's revenue. It's not clear yet for this moment. We do everything in our hands to accelerate the sourcing and to get things done as soon as possible.
spk05: Great. Thanks so much for answering my question. You're welcome.
spk00: Thank you. Our next question comes online of Troy Jensen with Lake Street Capital. Please proceed with your question.
spk04: Hello, gentlemen. Thanks for taking my questions. First of all, is today Ray's birthday?
spk02: Yeah.
spk04: Happy birthday, sir. And I didn't forget about you. I think yours was earlier this week, correct?
spk03: Thank you. Very kind.
spk04: And Ingles is earlier this week, right?
spk01: Yeah. Yeah, yeah. I'm a couple of days older. All right.
spk04: You guys don't look a day over 45, so keep up the good work for that. All right. How about question time here? So can you just talk about the number of high-speed centering customers you currently have? I know you shipped a lot of kind of the demo platforms or test beds. Just curious what that number is.
spk01: Troy, I need to question you back. What do you mean specifically? For the 200 or for the 1,000 or a mix?
spk04: High-speed centering customers.
spk01: The 200 high-speed centering is already in the market for two years, and we have a bunch of installations out. So these are already customers who are working actively with the technology. Then when you speak specifically about the 1000, we have a list of potential beta clients for this one. Among them are very famous brands and also service suppliers, which are also well known to the industry. And it's filling up. It's good news. So most of these guys, they already have experience with some sort of similar technology, like coming from SLS or HP, and they are seeking something different for the future.
spk04: Right, OK. And then I'm assuming at launch, it's just going to be nylon 11, nylon 12. Is there anything else?
spk01: Yes. So the machine basically is an open materials platform. So you can run all materials which are applicable for HSS on the machine, basically. But for sure, the initial machines will be equipped with the PA-12 and also with the process for PA-12.
spk04: Okay. All right, then switching gears, you know, last quarter you talked about the electrical vehicle market, specifically the helical cores. Just wondering if you're getting any traction with that, or is that also kind of a, you know, story maybe more for next year?
spk01: So the inorganic core making, this is something really special for the automotive industry. And these guys, not just the one where we have supplied the machines to, these guys are seeking for solutions not just for the combustion engines, but also for electric engines and other components in the car to be cast with any cost. And while the addressable market is still there, customers are talking to us, requesting benchmark pieces, We are in a good shape to supply further technology upgrades. We believe it's quite promising for us. Currently, as you heard me saying, the machines at the customer side are working in pre-series mode. The next two printers are in progress to be delivered. Once they are installed and the full set up is complete, and we still probably see some weeks of testing with the customer, and then hopefully we can have this common press release about success, and then we start from that.
spk04: Gotcha. I got two more questions. So can you just talk a little bit about the automotive industry, specifically for your services bureau? Because I was a little surprised to see the U.S. market week. It seems like we're kind of recovering over here. Not as close to the European, but just your thoughts on the second half services and the recovery in auto.
spk01: So in general, I would say that the auto market is here in our services center and the on-demand parts center in Germany brings only a smaller portion of the business. We currently get more from other industries, energy, engineering components, even art and architecture and so on. In the automotive sector, there's still movement in the electric engine side. We get more and more of these components also in our service center. But there's still, of course, also development going on on combustion engines and components. I would say with the new and now accelerating phase in electric vehicles, we will see more and more of these components for such cars coming also to the service centers, since most of these car manufacturers are still in that exploration mode, how to manufacture components in future for these products. And the US? The U.S., you know, we have a little bit of different customer base there. A lot of our existing clients are working in the aerospace industry, also in the civil aircraft industry, and this industry is still relatively weak for obvious reasons. I think it will pick up and we get some more orders. What helps us definitely is the run in space. So we're doing a lot of business, various companies working in the space exploration field. And as well, the auto is also picking up a little bit.
spk04: Okay, now my last question for you, Ingo. There's a lot of interest in metal powder bed binding right now, and given you guys have this established product that can do large format, really fast powder bed jetting, could you guys change the material out and use metal powders and binders appropriate for metals? I know you've got a lot on your plate right now and kind of focus on what you're doing, but... Have you thought about going into metal power bed jetting?
spk01: This is an interesting question. So as you know, we are working on binder jetting. And binder jetting is, let's say, a quite open materials platform. And we are clearly watching what kind of materials needed and maybe successfully printed on similar machines. And I think we are watching the market carefully and also the restrictions in post-processing of printed metal parts. I think there is a clear move towards better products in post-processing, and with that, it is obvious that we also try whatever is possible to achieve new goals. I would not directly say that we are doing MAPLS for this moment, but I would not say we don't do it.
spk04: Okay. Understood. Good luck, gentlemen.
spk03: Thank you, Floyd.
spk00: Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Dr. Ederer for any final comments.
spk01: Thank you. To sum up, we believe that the value proposition of 3D printing is more compelling than ever to the manufacturing industry, especially in light of the uncertain global environment we are in today. We believe we have the ecosystem resources and technology to become a key supplier of solutions for high volume industrial 3D printing. Keep in mind, that is the reason why we started the company 20 years ago. Thank you for joining today's call and we're looking forward to speaking with you again in our next call, which we expect to take place in August with financial results for the second quarter 2021. Thank you.
spk02: Thank you, everybody.
spk01: Have a good weekend.
spk00: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your
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