voxeljet AG

Greetings and welcome to the VoxelJet third quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. A brief 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. 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 Ruby Franz, Voxeljet's Chief Financial Officer. Yesterday, after the market closed, Voxeljet issued a press release announcing its first 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 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 residing uncertainty in the global economy. For additional information concerning factors that could cause actual results to differ from those cast 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 Roxachet.

Thank you, Johannes. Good morning, everyone. Thank you for joining us on our call today. Let's turn to slide four. Our roots reach back to the year 1995 with the first successful dosing of UV resin. In the context of a hidden project, initial 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 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 technological boundaries and develop new generative processes for the serious production of complex components. On slide five, you can find some more information about Rudi and myself. We are significant shareholders, and as you previously announced, we both extended our contracts effective as of July 1st, 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 three principal R&D projects, which we firmly believe will help us enter a phase of meaningful growth in the years ahead. First, we are making steady progress with VJX, arguably the most productive 3D printing solution currently available. The first customer is a premium German car maker. We are working towards getting the final acceptance for the first units, 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, our first 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 Halyard 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 for 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 Voxachat, 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 six and some thoughts on the additive manufacturing market. As you can see, Wohler's Associates project growth will accelerate over the next years. This growth will be driven by a larger share of sales to 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 markets, 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 accurate sand casting modes and is 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 VJDX printer, which is a high-end solution for mass manufacturing. The printer is 10 times 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 the partnership with GE Renewables for the development of an extra large 3D printer for the production of components for next generation winter ones. The new printer will be probably four times larger than our currently largest printer. At the moment, we are designing the layout, and it could look like a supersized version of our Wix 4000. With these new printers, we believe we can increase our total addressable market considerably. We target new applications within existing customer groups, like, for example, with the widget X. With high-speed sintering, we can address both new and existing markets, like, for example, audio equipment, automotive interiors, exteriors, ceilings, gaskets, walls, grippers, 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 three 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 in services helps us to balance the typical long sales cycles in our system segment. 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 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, in the US, 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 build size, maturity, diversity, and speed. And we have established excellent relationship 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. Guddi 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 4.9 million euros, slightly increased from the third quarter last year. In our system segment, we booked revenue for one used and refurbished printer as compared to two 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% for the quarter. Order inflow and revenue in our German 3D parts production center remained high. The trend of strong order inflow during the previous quarter is continuing in our US 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 US. 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 US is discussing a possible large production opportunity for propellers for yachts. Looking at the right side of this 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 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. Order backlog increased to 7.6 million euros, 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 two 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 three 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 a picture of the new Halyard X extra-large wind turbine in the background. It is truly an amazing piece of technology, according to GE. Halyard X can capture more 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 enhance the efficiency of the turbines. Although it streamlines 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 will print. Fraunhofer will 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 Halyard 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 US 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 parts in the front are spray water distribution nozzles against the 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 week's 1,000 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 new car worldwide is equipped 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 Reef 1000 HSS printer. After a joint three-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 in high-volume applications. one part Brose is thinking about to print our door modules. Both 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 two 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 to call over to Rudi. Rudi.