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spk00: 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.
spk05: 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.
spk03: 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.
spk06: Thank you, Ingo, and good morning to everyone. As mentioned in previous calls, it's our target to deliver long-term value for our shareholders through attractive growth, stronger margins, and optimal deployment of capital. Last week, we entered into a sell and defect transaction of our headquarters in Friedberg. We are fully committed to our operation here in Germany and signed a 15-year lease term with two consecutive five-year extension options. The buyer is an institutional unaffiliated real estate investor. We expect gross proceeds of approximately 26.5 million euros in the closing to take place towards the end of the third quarter. With the proceeds, we plan to repay our financial liabilities. As we continue on our path towards profitability, this saliency spec transaction aligns with our objective to source non-diluted financing wherever possible and focus on our main business, which is developing, manufacturing, and selling high-tech industrial 3D printers. We are very happy with how the business has been in recent months, both in our systems and service segment. 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. We are monitoring the evolving situation carefully. I will now take you through the financials for the second quarter of 2022. After that, we are happy to take your questions. Turning to slide 19, total revenues increased 35.4% to 6.7 million euros for the second quarter of 2022 as compared to 4.9 million euros for the last year's second quarter. Cross-profit and gross profit margin increased to 2.1 million euros and 31.3% from 1.4 million euros and 28.6% for the second quarter of last year. The next slide shows our segment reporting for the quarter in our segment. System segment of slide 20, we were able to collect major orders for 3D printers, especially in recent months. Revenue for the second quarter of this year increased 35% compared to the same period last year. Cross-profit and gross margin for the quarter for the system segment were 0.9 million euros, or 24%, compared to 0.8 million euros and 28% for the second quarter of 2021. For the gross profit margin for 3D printers slightly increased, the overall margin for this segment decreased as a result of a change in the valuation allowance for inventory following our inventory reserve policy. This is a non-cash item. Turning to slide 21, revenue from our 3D part production center summarized in the service segment. In Germany and the US, it continues to be exceptionally strong, and it's great to see that the momentum is carrying on. In China, we saw strong sequential increase from the previous quarter to this year. The second quarter was one of the best quarters we ever had in the April to June period in our demand part production. Service revenues increased 35.8% to 3.1 million euros before the second quarter 2022 compared to 2.3 million euros for the same quarter of 2021. Services cross profit margins significantly increased to 39.7% for the second quarter of 2022 from 28.9% for the same quarter of 2021. Improvement was driven by strong gross margin contributions from our German and US 3D parts production centers. Absolute cross-profits almost doubled to 1.2 million euros for this year, second quarter from over 7 million euros for the same quarter of last year. Looking now to the rest of the income statement of July 2020, selling expenses increased to 1.9 million euros for the second quarter of 2022 from 1.5 million euros for the same quarter of last year. This increase was mainly related to higher distribution expenses in line with the increase in revenues. Distribution expenses like shipping and packaging are main driver of selling expenses and not only depend on the amount of revenue, but also on the quantities and types of products sold, as well as destination to which those goods are being delivered. Therefore, distribution expenses can vary from quarter to quarter. Administrative expenses were 1.5 million euros as compared to 2.0 million euros for the second quarter of 2021. This decrease was mainly related to significant lower legal advisory fees related to our stock market listing and lower fees expended on financial institutions in connection with fundraising activities. Research and development expenses were stable at 1.7 million euros. These expenses are usually driven by individual projects, especially through the consumption of material as well as the demand of external services. It may vary significantly from quarter to quarter. Operating loss was 2 million euros for the second quarter of 2022 compared to an operating loss of 3.9 million euros for the competitive period last year. Improvement was mainly due to a positive net impact from other operating income, higher cross-margin and lower administrative expenses. Net loss for the quarter improved to 1.8 million euros or 26 euro cent per ADS compared to a net loss of 2.5 million euros or 41 euro cent per ADS for the prior year same quarter. We've provided the same presentation for the first half period ended June 30th, 2022 on slide 23 to 26. Slide 27 shows selected balance sheet items. At June 30th, 2022, the company had free cash of roughly 13 million euros. Total debt at June 30th, 2020 was approximately 27.5 million euros. As mentioned at the beginning, we plan to repay the debt with a receipt from the salient leaseback transaction and expect a closing of this transaction towards the end of the third quarter of 2022. Weighted average number of Shares outstanding at 30 June 2020 was 7,026,711 ADS. This is all of the current number of shares outstanding. Moving now on to slide 28 in our financial guidance for the full year 2022, which remains unchanged. Revenue for the third quarter of 2022 is expected to be in the range of 5.5 to 6 million euros. This concludes my remarks, and with that, we will now open the call for your questions, operator.
spk00: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. For one moment, please while we poll for questions. Thank you. Thank you. Our first question comes from the line of Brian Kinzinger with Alliance Global. Please proceed with your questions.
spk02: Great. Thanks for taking my questions and great to see the order flow during the second quarter. My first question is about those bookings. I'm hoping we can get a little bit more information. You certainly talked about a lot of different projects. Can you share information such as How many customers ordered what I calculate was five printers? How many were repeat customers, industries, and even which printers potentially you sold? Anything you can share would be helpful.
spk04: Thank you for the question.
spk06: Usually we don't share this in that detail, you asking, Brian. What I can say is there is the five printers. were sold to all new customers. Sharon Marine was named in this presentation where we gave as well some more insights. And the booking of those printers is planned towards the second half of 2022 as well as the first half of 2023. The industries are, as said, Sharon Marine, this is engine technology, automotive, renewable energy. I think these are currently the main projects where we see a high demand of equipment. Material sets, sand, PMMA, again, for the demand of complex metal pieces.
spk02: Great. And you had mentioned on several occasions that one of the leading indicators is the services business. How many of these five customers were previously services customers, whether you were printing parts for them?
spk06: I would say almost every system customer was or is still a service customer so the service segment is for us a real cash flow positive marketing tool because initially we we don't have to oversell clients can send us data sets and we print the goods for them which is a real good showcase so i said every every system customer was or is a service client and the service segment that's what we currently see as well is the high demand very likely comes from the geopolitical challenges all of us are facing and supply chain issues we assume that those we see those as well in 2023 and another driver is for sure that the industry really is seeing as a manufacturing or what we do as a standard process meanwhile, and really start ordering high volume.
spk02: Great. And then I think in the press release you mentioned the challenges of the supply chain, which I assume is sourcing components for you, and your focus is on getting these built and delivered. Can you touch on whether there's one or several components that you're having trouble with, what the lead times look like? and anything that is in your control that can speed up the process?
spk06: High level. We manage it very good. Our team is focused and very close with our suppliers. Critical components, and I'm sure you hear this everywhere, are electrical components, microchips. I think we're getting closer and we get the parts. But it's still a it's still a challenge and we we have to order a lot earlier and accordingly we have to accept higher inventory. So lead times are a lot longer and accordingly to we currently build our book for 2023 on the system side and we already negotiate volumes with our suppliers to be on the safe side. Maybe Johannes, you want to add something? It's your department.
spk05: Not really. So the critical parts are the electrical components in the electrical cabinets. But the supplier is really helping us nicely. We are chasing them, and then we get the parts. So there's a delay, but we will get them, absolutely.
spk02: Thank you, Johannes. And my last question is it relates to your large German have they installed all the printers from the original order? Because you can just remind me. And have they ordered additional printers since?
spk06: I hand over to Ingo. He's working on this client. So we understand whether we have... All five printers are installed.
spk03: Yeah, yeah, yeah. That's true. Yeah, yeah, yeah. We are in ongoing discussion with the client about further sales also with his suppliers. such a carmaker has a network of suppliers applying similar or the same products at scale. And these discussions are ongoing and we believe that we can gather further sales probably next year for the same technology.
spk04: Great. Thanks, guys. Thank you so much. You're welcome. Thank you, Brian.
spk00: Our next question is from the line of Jacob Stephen with Lake Street Capital. Please proceed with your questions.
spk01: Hey guys, congrats on the good results and thanks for taking my questions. Maybe just touching on gross margin in the system segment. It looks like they were down just slightly year over year. Is that mainly due to the product mix or the kind of supply chain component constraints like we were just talking about?
spk06: As mentioned in the presentation, The decrease or the lower cross-profit is primarily related to a one-time effect where we adjusted or where we had to adjust our inventory, which went through this. If you would, that was a non-cash item. If you would exclude this, cross-martial would look very different. So, overall, we are pre this booking.
spk04: We were very happy with the cross-profit. But you're right, the profit margin is fluctuating, but in this specific quarter, there is a good reason for it.
spk06: That was this booking of inventory.
spk01: Okay. Yeah, no, that's helpful. Thank you. And then maybe just revenue in Asia looked like it was up nicely sequentially and year over year. Could you just talk about, you know, the primary driver of that growth?
spk06: As mentioned, I think our clients are really seeing this technology as a standard technology, and they build their own production plans against it. Ingo gave a good example of sharing marine, for example. That product is designed for using a production process, which is called additive manufacturing. I think the global supply chain issues are not only on microchips. We see this on other components as well. I think that pushes that to manufacturing as well. And we believe, as said in the call, that going forward we will see a lot more growth because that technology is meanwhile really an accepted and very robust technology where you really can start
spk04: building production capacity again. Okay.
spk01: And is it maybe fair to say that the $1.5 million from Asia this quarter was mostly services revenue, but could potentially lead to some additional systems revenue?
spk06: No. I think... I think we signed off on one system and the rest is for sure service activities and aftermarket business component. But we signed off on one big printer in Q2.
spk03: Interesting news with this printer is that the facility is already prepared at this site for accepting multiple printers of the same type.
spk04: So it is a, yeah, we think, We can't say more about this.
spk01: Okay. Well, thanks again for taking my questions. Congrats on the solid quarter.
spk00: Thank you. Thank you. We've reached the end of the question and answer session. I'll turn the call over to Ingo Eder for closing remarks.
spk03: Thank you. We are pushing ahead with full speed and are very excited about the opportunities in front of us. Order inflow is one of the best we ever had and we are working hard to deliver those printers on time. Hopefully we can see many of you next month at the IMTS in Chicago. Have a great summer and we look forward to speaking with you in our next earnings call, which we expect to take place in November with results for the third quarter of 2022. Thank you and goodbye. Have a good weekend. Thank you. Have a good weekend.
spk00: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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