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spk00: 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.
spk01: 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.
spk03: 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.
spk02: Thank you, Ingo. Good morning, everyone. It is good to see the progress we are making with our technology platform and our three principal R&D projects, WeChat X, VX1000HSS, and now the new printer for GE. I'm confident that the deal with GE breaks our previous large deal record with a two-year term and an estimated volume of more than $5 million. Overall, I'm very pleased with our performance in the various regions. Services in Europe continues to be very strong, basically at capacity, and the U.S. also keeps accelerating. For example, we are pretty much fully booked in the PMMA section there, also thanks to continued large orders from a space exploration company. In Asia, we continue to work on optimizing opportunities for printer sales, especially when it comes to our larger platforms. For example, we have installed our largest printer, the Weeks 4000, at a client in India a couple months back and have started the installation of another Weeks 4000 at a client there. Regarding COVID-19, we continue to work with some special measures in place around isolation and contamination protocols to ensure the safety of our employees and to reduce risk of operational disruption. Over the past months, COVID-19 cases have increased in certain areas of the world, and we are monitoring the evolving situation carefully. I will not take you through the financials for the quarter. After that, we are happy to take your questions. Turning to slide 22, total revenues for the third quarter 2021 was €4.9 million, slightly increased from the third quarter last year. Revenue from our 3D part production center in Germany continues to be strong. As Ingo mentioned, we are happy. with a strong order inflow for printed parts in the U.S. Gross profit and gross margin in the quarter increased to €1.9 million and 39.3% compared to €1.6 million and 32.7% in the third quarter of 2020. The significant improvement in gross margins in those segments is excellent news. In systems, gross margins improved to 44.1% in the third quarter of 2021, From 39.5% in last year's third quarter in services, gross margin increased to 34.4% compared to 24.6% in last year's third quarter. The increase is driven by continuous strong performance of our German 3D parts production center and substantially higher utilization of our U.S. factories. The next slides show our segment reporting for the quarter. On slide 23, revenues from our system segment, which includes revenues from selling 3D printers, consumables, and spare parts as well as maintenance, decreased 7% to 2.5 million euros for the quarter from 2.7 million euros in the third quarter of 2020. We sold one refurbished printer this quarter as compared to two refurbished printers in last year's third quarter. It is good to see that revenues from our after-sales segment means consumables, maintenance, continues to increase and is contributing strongly both to revenue and margin. On slide 24, service revenues increased 10% to 2.4 million euros in the third quarter of 2021 from 2.2 million euros in the same quarter last year. The increase is driven by continuous strong performance in our German 3D parts production center and strong order inflow in our US facility. As a result of five utilization services, gross margin improved to 34.4% from 24.6% in the third quarter of 2020. Looking now to the rest of the income statement on slide 25, selling expenses were 1.5 million euros compared to 1.3 million euros in last year's third quarter. The majority of selling expenses are personal expenses and distribution expenses such as trade and commissions for sales agents. Administrative expenses were €1.5 million and slightly increased from the third quarter of 2020. Keep in mind, we typically spend more than €1 million in auditing fees per year and over €5 million in legal consulting fees. Research and development expenses were basically unchanged at €1.5 million. Operating result improved significantly. Operating loss was €1.5 million in the third quarter this year compared to an operating loss of €3 million in the comparative period last year. Net loss for the third quarter 2021 was €0.8 million or €0.12 per ADS, compared to a net loss of €4 million or €0.82 in the prior year same quarter. The improvements in the button line are the result of improved operational performance, better gross margins, and the reevaluation of our derivative financial instruments with the European Investment Bank as part of the financial results. The positive impact for the quarter of the derivative instrument was 1.3 million euros. We have provided the same presentation for the nine-month period ended September 30th, 2021, on slide 26-29. Slide 30 shows selected balance sheet items at September 30th, 2021. The company had cash, cash equivalent in short-term investments and bond funds of roughly 24.5 million euros. We increased our cash position with a registered direct offering in July 2021 at a cross-proceeds of $10 million. Total debt at September 30, 2021 was approximately 29 million euros. Of this, 27.7 million euros are long-term. Long-term debt primarily consists of 15 million euros from the EIB Horizon 2020 Debt Venture Program. Current shares outstanding are 7,026,711 ADFs. On slide 31, we have summarized our financial guidance for full year 2021, which remains unchanged. Revenue for the fourth quarter 2021 is expected to be between 9.25 and 10.75 million euros. This concludes my remarks, and with that, we will now open the call for your questions. Operator.
spk00: Thank you. We will now be conducting a question and answer session. If you would 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 star 2 if you would 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. One moment, please, while we poll for questions. Our first question comes from the line of Troy Jensen with Lake Street Capital. Please proceed with your question.
spk05: Hey, gentlemen. Congrats on the nice results.
spk02: Hi, Troy. Hi, Troy.
spk05: Hey, Rudy Hango. Hey, so... You know, it seems like you guys just got a ton of great stuff going on, right? It's always kind of been more a function of kind of getting to the end zone, right, and kind of revenue in these things. So I would like to talk a little bit about timing on some stuff, too, Ingo, if you don't mind going through a few of these opportunities. You know, to start with GE, so I get it's a two-year development window, and after the two years, what do you think happens? Is this like a quick decision, or is this something that would also take a while to get into production applications and and the bigger revenue opportunity may be further out. Could you just kind of help us set our expectations?
spk03: Well, the program is designed in a way that there is already a demand for the machine. So the technology will be directly integrated as a kind of a beta program at a client site or at a client's foundry to directly manufacture these specific parts for these wind turbines. Although as soon as we see that the project is presenting the desired progress, we believe that GE is pushing their suppliers to integrate this kind of technology into their process chain. So it will be a relatively quick scale up. You need to understand that the addressable market is probably in the range of 10 to 20 just for GE of this machine. So we are pretty sure that we can address this market in a very quick way.
spk05: Well, congrats. It seems like a great win for you guys. Next question, just kind of next topic, it's on the high-speed centering. I'm guessing we'll see the system here next week in Germany and update us on timing. The system should be generally available and shipping when again?
spk03: Well, we have, as you know, we have an alpha system here in Voxichild in Friedberg. We're currently assembling the beta units. which are planned to be evaluated in the beta program starting with the first quarter next year. And OK, we face definitely problems with supplies. But for this moment, it looks very promising that we can start on time with the beta phases. And of course, we plan for further units then down the next year. So currently, I'm very optimistic that we can ship the first beta units to the outside in the second half of next year. And we can also ship following units by the end of next year.
spk05: All right, perfect. And remind me, are you guys starting with nylon-12 or nylon-11?
spk03: This is a PA-12 initially. But be sure we are working also on other materials. Yep, if I can imagine.
spk05: All right. And then maybe the last one for me, just the big automotive customer we've all been waiting for, can you just confirm that we're going to get some revenues in Q4 from that? Big deal.
spk03: As I said, this is currently the plan. I think the production test, what currently happens, shows in the right direction, and we are optimistic to get signed off at least on the first printers towards the end of the year.
spk05: Awesome. All right, guys. Well, congrats. Keep up the good work, and I'll see you in Germany.
spk02: Super. Thank you, Troy. Thanks, Trevor.
spk00: Thank you. Our next question comes from the line of Brian Kinslinger with Alliance Global Partners. Please proceed with your question.
spk04: Great, thanks. Exciting news about GE. Can you estimate how long it's going to take to build a new printer? And, you know, what's the estimate delivery time for the first machine? And then can you share with us the particular parts you're printing? Maybe I missed in the wind turbines.
spk03: Sure. This is Ingo. So the printer is not developed yet. So we need to develop the printer, and this is the program for. The program is with a two-year term, and the target is to have at the end of the program a demonstrator for the technology, which is basically a prototype printer. With that prototype printer, we will print molds and mold packages for the specific parts here at our voxeljet factory. And once this is successful, so we see probably the casting results after the term of the two years, then we will start the production of a beta unit, which can be tested on-site at a client's place. So this means this is a phase outside the two year, probably in the third year. Hopefully this answers your first part of the question. Second, what you print on or what the customer prints on the printer are molds for extremely large castings. These are, for instance, kind of access systems, bearing systems, but also the holder for a brake disc and other components which exceed several tons of cast metal weight.
spk04: Great. That's really helpful. I take it it's too early to share what the ARPU in two or three years will be for this kind of system.
spk03: Well, of course, we have made our math on this, but we will not share to the public for this moment.
spk04: Great. And then in terms of the R&D, is GE funding that fully? And then what's the determining factor of whether this is revenue or other income?
spk03: So the project is funded partially by the government. And the remaining costs are majorly covered by GE. So this brings us in a position where our R&D contribution is mostly paid.
spk04: And then the other question, part of that one was, what determines if that's revenue or other income? I think in the prepared remarks, you said it's going to be one or the other.
spk03: Exactly. So, of course, the government grant is coming as other operating income, and it could be the case that the refund from the GE is booked under revenue, but this needs to be checked with the auditor. Great.
spk04: And then in terms of your largest customers, just to be clear about that, It sounds like you think you'll accept some in the fourth quarter and then some in the first quarter, if I'm not mistaken. And then do you have any insight into how that customer will have additional orders as we look into next year?
spk01: We will not have additional orders. Brian, what are you talking about?
spk04: The BJX, correct? Yeah, sorry, the BJX. You know, I'm just curious about deliveries and, you know, demand for additional printers, if at all.
spk03: So the status here is that we have five units now at the customer place. This is the full order. So all the remaining printers are now at the customer place. With the remaining machines, which are installed recently, the customer is starting the pre-phase production, pre-production phase. And after that, we expect that the customer is making their mind on future production possibilities. So for this moment, we don't have another order at hand. And there is currently also no immediate plan for another order pending. OK. But at that, they make their mind on the possibilities. And of course, we expect that this topic goes on. And we would like to see other projects like this from the same, but also from other customers probably in the next year.
spk04: Well, that was going to be my follow-up question, so that's great. Talk about the pipeline of the VJX and the high-speed centering system, although you're just at your first beta customer there. How close are you, do you think, to securing orders from other customers that will drive some revenue for next year?
spk03: So with VJX currently, we are in discussion with several parties about similar projects. as we see with this automotive client. They are in different stages of decision-making, so I think for this moment we cannot disclose more. It is a very interesting application, and it could contribute to revenue next year, but it's not set yet. On HSS, Similar image, we are in discussion with several parties about follow-up projects after the beta. I think it's very likely that we have further units, as already mentioned, installed at customer places next year. Great.
spk04: Last question, while it's early. As I look to next year's revenue, there aren't a number of new customer securities. You just said that's something they're working on. Should we think about next year just looking a little bit better than this year in terms of revenue? Or do you think once you secure orders, those are going to quickly materialize into revenue? It just seems like the conversion cycle takes a little bit of time. So I guess I'm thinking about next year in terms of revenue and, you know, how it looks compared to this year.
spk02: Brian, we have not given any guidance for 2022. We will give guidance in our earnings call in March. What I can say currently is that we for sure plan growth for the upcoming years, and that's how I would see it. We as well say it won't be 50%. We see the growth potential currently in the range of 10% to 20%, which we as well say with our forecast. And on the long term, we see the growth potential as just described on HSS VJDX.
spk03: But on a general view, you need to see that the 2020 year will be probably, again, a transition year since the new technologies are, let's say, in a phase of testing or in a beta phase. So to be clear, a major breakthrough in sales is more likely to come in 2023. Great.
spk04: Last question on that, sorry, just on that. What is the conversion? If you sold, you know, a printer or two or three, how quickly do you get those, you know, built or if you have them built and then shipped to customers?
spk02: Currently, from the order intake to the customer shipment or installment, I would say it depends on the system, but it's an average between two and three quarters. That's how we see it. So weeks 1,000 is one of our top sellers, let's say. It's two quarters. If you order the last platform or weeks 1,000 currently, it's definitely nine months from the order until the shipment and final acceptance. Great.
spk04: Thanks for taking all my questions.
spk02: Sure. You're welcome. Bye-bye, Brian. Have a good day.
spk00: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Ingo for closing comments.
spk03: Sure. So by winning the contract with GE, we are now working on three potential principal R&D projects, which we believe give us a chance to enter a phase of meaningful growth in the years ahead. We are very enthusiastic about what our teams have already accomplished this year. We believe these new products will increase our total addressable market sustain substantially from projects in the energy sector and the printing of critical components for space exploration, electric and conventional vehicles to sport equipment from gripping systems for robotic applications to speaker systems and others. And this set of opportunities in the manufacturing space is what makes 3D printing so exciting to us. So thank you for joining today's call, and we look forward to speaking with you again in our next earnings call. And some of you we may see next week on Form Next in Frankfurt. Thank you.
spk00: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
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