voxeljet AG

Greetings. Welcome to VoxelJet AG's second quarter 2022 financial results conference call. At this time, all participants will be in listen-only mode. In question and answer session, we'll follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Johannes Pesch, Director, Investor Relations and Business Development. Johannes, you may begin.

Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, Voxeljet's Chief Executive Officer, and Rudi Franz, Voxeljet's Chief Financial Officer. Yesterday, after the market closed, Voxeljet issued a press release announcing its second quarter financial results for the period ended June 30, 2022. 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 and 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 discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the company's filings with the Securities and Exchange Commission. With that, I would now like to turn the call over to Ingo, Chief Executive Officer of Opti-Jet.

Thank you. Charles, good morning, everyone. Thank you for joining us on our earnings 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 of Munich. I co-founded the company on May 5th, 1999 as a spinoff from the university with the clear vision in mind to establish new manufacturing standards. Today, we provide our customers a strategic competitive advantage by upgrading the existing conventional production methods to additive manufacturing solutions. We push technology boundaries and develop new generative processes for the series production of complex components. Let's turn to slide five, where we describe our technology. In the additive manufacturing market, there are likely 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. With our VJX technology, we are pushing new boundaries. On slide six, you can find a high-level overview of our company, including recently achieved milestones. We believe these will help us on our mission to establish new manufacturing standards. In recent months, we have probably seen some of the best order inflow for 3D printers we have ever had. Now the focus is on delivering these printers on time. On slide seven, you can see pictures of our production facilities in Germany, the US and China. As you might have seen from the press release last week, We have entered into as a leaseback transaction for our headquarters here in Germany. We expect gross proceeds of 26.5 million euros and plan to use the funds to repay our debt. We expect the transaction to close towards the end of the third quarter of 2022. Now let me briefly explain our two business segments. In the services segment, top 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. Demand in this segment has been outstanding in recent months in Europe and in the US and we were basically at or over capacity for the whole time. 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 and services helps us balancing the typical long sales cycles in our system segment. Customers come from various industries, including automotive, aerospace, general engineering, as well as art and architecture. In the US, one of our largest on-demand printing client is a supplier to a leading space exploration company. 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. Let's turn to slide eight and an illustration of the wide range of applications of our technology. We are encouraged by the many discussions that we are having with different players in a broad variety of industries. They are all seriously looking at adopting our technology for well-chosen applications. And this interest is translating into orders. In recent months, we have seen some of the best order inflow for our 3D printers ever. To give you some examples, There is, for instance, an innovative US yacht company producing several thousands of advanced propellers with our technology. These new propellers have a shape that cannot be made conventionally. We have added more details on this exciting project in one of the other slides. There are leading US space exploration companies using our technology to make parts for their rockets more aerodynamic. There are car makers who use our technology to make their vehicles more lightweight and energy efficient. There's a leading university in Zurich, Switzerland, the ETH, using our technology to make the most amazing concrete structures. And there are many more. Let's turn to slide nine and some thoughts on the additive manufacturing market. As you can see, all of the associates projects growth to 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 that really differentiates us from the other players in the 3D printing industry is our focus on solutions for manufacturing or industrial production at scale. We have been working with leading industrial OEMs since our foundation. We sold our first 3D printers to BMW and Daimler more than 20 years ago. Our technology has evolved significantly over the last years in terms of speed, accuracy, and the degree of automation of the whole process chain. 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 have halted our activities in Russia and Belarus until further notice. Turning to slide 11, on the left side, we have summarized our USPs. We differentiate ourselves from our competitors by both size, material diversity, and speed. This leads to a complete set of industrial 3D printers to support critical demanding applications and address the challenges and needs that are most important to our customers. Each model can be used with multiple material sets. For example, we offer the VX1000 3D printer for the printing of highly accurate sand casting molds for ceramics or as a plastic polymerization printer. On the bottom right side of this slide, you can see some of our new products. With these new printers, we believe we can increase our total addressable market considerably. We can target new applications within existing customer groups, for example, with WeChat X. With high-speed centering, we can address both new and existing markets, like, for example, audio equipment, automotive interiors and exteriors, ceilings, gaskets, walls, grippers, and other consumer products. Let's start with the formal part of the presentation on slide 13. I will begin with an overview of the results for the second quarter. Woody will then provide a more in-depth view of our financials for the second quarter and our outlook for the rest of 2022. Following his comments, we will be happy to take your questions. We are very happy with the results for the quarter and how the momentum has continued to build in recent months. We are extremely busy in our on-demand printing segment and want major orders for 3D printing systems. Very recently, we signed an order for two printers worth over €2 million. With the currently signed number of orders for 3D printers, we have already achieved our target for 2022. Now we are working hard to make the deliveries and installations on time to be able to book revenue for these orders in 2022. Similar to many other companies, we continue to see some delays with our suppliers, especially for electrical components. We are working closely with our suppliers, and the support we receive is excellent. Let's look at the numbers in some more detail. Total revenue for the quarter increased 35%, with both segments contributing equally to this growth. Revenue in the on-demand 3D printing segment increased 36% year-over-year and and absolute gross profit almost doubled. As mentioned earlier, it is great to see that this growth comes from a wide variety of applications. Projects for space exploration and yachts in the US, large orders from the art and architecture sector here in Germany, components for cooling of parts in electric vehicles in the UK, and so on. The high utilization leads to excellent gross margins in this segment of roughly 40%. The high utilization also means that each printing shop is fully packed and there's less waste. We mentioned in our earlier conference calls that on-demand printing revenue is a good leading indicator for future sales of 3D printers. This is exactly what we have seen in recent months and especially in July and August. Order inflow for 3D printers was one of the best we ever had so far. This makes us very optimistic for our system segment. Looking at the right side of the slide and gross margins, they are very pleased with the high gross profit and gross profit margins in our services segment of roughly 40%. Utilization is key, and as it was the case in the first quarter, we had more orders than printing capacity. In our system segment, gross profit margin from the sale of 3D printers slightly increased. The overall segment saw a decline in gross profit margin as a result of change in valuation allowance for inventories following our inventory reserve policy. This valuation allowance is a non-cash item. Let's turn to slide 14 and a quick update on a really exciting project. US-based Chevron Marine developed a new type of propeller that cannot be manufactured conventionally. On the left side of this slide, you can see a standard propeller and the corresponding turbulences it creates underwater. In the center of the slide, you can see the new propeller. It creates significantly less turbulences and tip cavitation and vortices. This new design has several advantages. It is up to 30% more energy efficient and creates more speed and also less vibrations for much better ride comfort. Chevro-Marine purchased two printers so far and also ordered a large amount of parts in our US 3D parts production center. On the right side of this slide, you can see the 3D printed pattern and the cast propeller in a close-up. We believe that this part cannot be made with any other technology in higher quantities at comparable costs to our approach of printing the pattern and then casting it. On the bottom left side of the slide, we have included a link to a video of these propellers in action. It is really remarkable. On slide 15, we have provided a quick update on our high-speed sintering technology called grayscale printing. We have mentioned this in one of the earlier calls and can now show more details. With this technology, we can adjust the amount of ink on the voxel level. Remember, a voxel is a 3D pixel. Let's start at the left side of this slide. Here we can see printing data that has been prepared with different levels of gray. This information is then sent to and processed by the printhead by adjusting the ink amount on the voxel level. We can also filter the energy input and can avoid a detailing agent, which makes our technology cost efficient in production. On the right side of this slide, you can see the results from this gray scaling effect. It enables functionally graded monomaterial components. This means that you can tailor, for example, the flexibility of a shoe sole to the specific needs of a person, and you can do it with only one material by adjusting the amount of ink. We are currently trying to bring this technology from the VX200 high-speed centering to the larger production HSS printer. On slide 16, you can see some parts printed on the big high-speed sintering printer and an overview of the topics we have been working on. I would like to highlight that we have improved overall part quality and are already printing many benchmark parts for our customers. We identified a third potential beta client and are in advanced discussions with them. Also, unattended operation of this large printer is now possible. This means we can, for example, run overnight jobs. In the lower half of the slide, you can see some of the parts we have been printing. We have printed an air duct for a student-built racing car. After printing, it was colored and then mounted onto the car. It looks very impressive. Above that, you can see a car grill and a housing for a vacuum cleaner robot. We continue to make progress with VJDX and are improving the stability and performance of the printers. We now have a large high-tech industrial microwave in operation in our facility in Friedberg, similar to the ones at the carmaker. This allows us to develop the inorganics process further to an application in our standard VX1000 IOB printers. In the coming years, we believe there will be a lot of demand for this inorganic process because it creates no harmful emissions during casting, and is fully environmentally friendly. Regarding materials and high-state sintering, we are currently exploring the use of PBT. This is a thermoplastic engineering polymer that can be used as an insulator in the electrical and electronics industries for housings in electrical engineering and automotive construction as plug connectors and in household applications like shower heads or irons. Just recently, we have put commercially available concrete powder from a local store in our weeks 200, and we were able to print parts of good quality. We are now scaling this up to our larger platforms. Slide 17 breaks down order backlog by quarters, revenue by geography, and operating expenses by category. When looking at revenue by geographic region, we target an even distribution across the three regions to hedge against risk from local events. As mentioned earlier, we were able to win major orders for 3D printers in recent months, and our backlog is growing. We target to have at least a one-year backlog because that makes it easier to plan and optimize our production. We are getting there. To sum up the recent months, excellent growth rates and exciting projects in our on-demand printing segment, one of the best order inflows for our 3D printers and good progress in key R&D projects. We are very excited about how the company is positioned and our opportunities ahead. With that, I would like to turn the call over to Woody.