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spk03: Greetings. Welcome to VoxelJet AG's third quarter 2022 financial results conference call. At this time, all participants will be in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Johannes Pesch, Director of Investor Relations, Business Development. Mr. Pesch, you may now begin.
spk02: Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, Voxelchat's chief executive officer, and Rudi Franz, Voxelchat's chief financial officer. Yesterday, after the market closed, Voxelchat issued a press release announcing its third quarter financial results for the period ended September 30th, 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 voxelchat.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 extra results to differ materially from those expressed, including the risks and uncertainties caused by the current COVID-19 pandemic and to reciting uncertainty in the global economy. For additional information concerning factors that could cause extra recites 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 Oxford.
spk00: Thank you, Johannes. 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 resins 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 5th, 1999 as a spinoff from the university with a clear vision in mind to establish new manufacturing standards. Today, we provide our customers a strategic competitive advantage by upgrading 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. 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 binary jetting. Binary jetting is especially suited for high-volume manufacturing because of its potential to scale. With our VJSX technology, we are pushing new boundaries. In slide 6, 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 seen some of the best order inflow for 3D printers we have ever had. Now the focus is on delivering these printers on time. Order backlog for our 3D printers is at a record high. Recently, we cleaned up the balance sheet by completing the sale and leaseback transaction of our headquarters here in Germany. With a gross proceeds of approximately 26.5 million euros, we have repaid our financial liabilities. On slide seven, you can see pictures of our production facilities in Germany, US, and China. 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 overcapacity for the whole time. The barriers to entry are very low and customers just need to send in the 3D data and we will print parts for them. That is a great and easy way for our customers to understand new business opportunities in 3D printing. The short sales cycles and services help us balance the typical long sales cycles in our 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 clients 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. Let's turn to slide nine and some thoughts on the additive manufacturing market. As you can see, Wohler's associates project grows to accelerate over the next few 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 few years. Because what really differentiates us from other players in the 3D printing industry is our focus on solutions for manufacturing or industrial production at scale. 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 few 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 build 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 materials. For example, we offer the VEEX 1000 3D printer for the printing of high-accurate sand casting molds for ceramics or as a plastic polymerization printer. On the right side of this slide, you can see our portfolio of 3D printers and the corresponding build volume. Layer times vary with platform and process and can go as fast as four seconds with the VJD. The new BSP printer, which we are currently developing together with GE, is expected to have a build volume of more than 50 cubic meters. The normal size offers completely new opportunities. We are very excited for it. Let's start with the formal part of the presentation on slide 13. I will begin with an overview of the results for the third quarter. Woody will then provide a more in-depth view of our financials for the third 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 our performance over the last month as we continue to collect large orders for our 3D printers, made progress in key R&D projects, and were extremely busy in our on-demand 3D printing segment. The demand for our products is as high as ever. We are very excited about how we are positioned for the coming years. 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 their numbers in some more detail. Total revenue for the quarter increased 16%. Revenue in the on-demand 3D printing segment increased 24% year over year. It is great to see that this growth comes from a wide variety of applications, projects for space exploration and yachts in the U.S., large orders from the art and architecture sector in Germany, components for cooling of parts in electric vehicles in the UK, and so on. Very recently, we received another large order for printed parts here in Germany from a supplier to a large US electric car maker. Looking at the right side of the slide and gross margins, we are pleased with the gross profit and gross profit margins in our services segment, especially in Germany, It was a bit weaker in the US and China. This is partially the result of timing, for example, when we installed a new printhead. In our system segment, gross profit margin from the sale of 3D printers decreased as a result of product mix. These fluctuations from quarter to quarter are nothing that makes us nervous. It is great to see that the systems related revenue significantly increased in the third quarter year over year. reflecting the higher install base of our 3D printers in the market. Slide 14 breaks down order backlog by quarters, revenue by geography, and operating expenses by category. Regarding order backlog, I would like to highlight 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 Order inflow for 3D printers was one of the best we ever had so far, and order backlog for 3D printers was at 13.7 million views at the end of September 2022. That is a new record. In looking at revenue by geographic region, we target an even distribution across the three regions to hedge against risk from local events. Let's turn to slide 15 and a quick status update on some of the projects we are working on and why we believe there is no other company in this space with a comparable portfolio of solutions for additive mass production. Most additive manufacturing machines are designed for prototyping and single-part production. They cannot be easily integrated into the shop floor. Integration requires machine controls that can be included seamlessly in the factory's manufacturing execution systems and enterprise resource planning software. It also requires high levels of automation to reduce manual work and comprehensive maintenance services, similar to those for other production machinery to reduce the number of costly production stops. This means the integration of 3D printers into automated processes and workflows is critical. We have gained significant knowledge in this area over the last few years, especially with the VJX in our project with the German car maker. You can see some pictures at the bottom of this slide. While the project was extremely challenging, we now have five printers in operation. All of them have been handed over operationally to the customer. We have gained invaluable insights that can be applied to other projects and developments. We have summarized some of them on the upper half of this slide. For example, with our WIGS 1000 PMMA printers, We help U.S. clients mass produce critical components in marine and aerospace applications. Cheryl Marine, for example, who has developed a next generation propeller system that can only be made with 3D printing, earlier this year announced a global distribution and manufacturing supply agreement with Yamaha marine precision propellers. They looked at all the available 3D printing technologies and also conventional technologies and decided to go with water jet technology, as it is the only one that allows them to manufacture at sufficient scale and at acceptable costs. With GE Renewable Energy, we are developing an ultra-large 3D printer for the production of next-generation wind turbines. We are currently sourcing components for the prototype printer. TEI, a long-standing customer in the U.S., is using several of our VX4000 printers to make large, complex castings. Recently, they won a multi-year contract from a large U.S. carmaker to make certain components of a new electric vehicle. In this case, it's the underbody of the car that is made by printing the molds, followed by casting. Just six large, hollow, structural castings make up the complete vehicle underbody for this future EV. The rear rail combines the torque box, longitudinal and shock tower into one complex hollow casting. All hollow sections will be made using 3D printed cores in production. In doing so, they can combine the advantages of 3D printing, namely product and process innovation, with those of conventional manufacturing of metal parts via casting, cost advantages and high degree of automation. Another important advantage of our technology is avoiding high recertification costs, as the casting process is a standard process for the production of metal cast parts. In Germany, we recently received an order for structural components from a supplier to another U.S. electric carmaker. Structural geometries of printed components are becoming ever more complex, and demand for lightweight hollow structures is growing fast. means we are 3D printing a lot of parts for the casting of structural components, which is a really exciting application of our technology. On the right side of this slide, you can see an update on the new high-speed sintering or HSS printer. Assembly of the first beta systems is complete, and we are currently doing the in-house commissioning. Next, we prepare shipment to our clients, which we expect to take place early next year. We believe we are now reaching an inflection point and the number of parts that are currently going into production is increasing fast. On to some material development use on slide 16. As mentioned in the last conference call, we have put commercially available concrete powder from a local store on our week 200 and were able to print parts of excellent quality. The large part on the left side of this slide was printed in sand and then casted in concrete. On top of the large part, you can see a smaller part that was directly 3D printed and is as it is out of the printer, meaning no post-treatment was necessary. The surface is exceptionally smooth and the degree of detail is far better than we had expected. In the middle of the right side of the slide, you can see close-ups of parts directly printed in concrete. We have seen interest from companies that, among many other things, operate very large theme parks. Turning to slide 17, we hosted a two-day customer seminar. Finally, again, live and in person, the seminar featured fascinating speakers and presentations about metal castings and 3D printing, topology, optimization, large-format art castings, and material development for polymer additive manufacturing, networking sessions, and get-togethers. 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, good progress in the key R&D projects, and full focus on execution. We have a lot to look forward to in the coming months and years, and with that, I would now like to turn the call over to Woody.
spk01: Thank you, Ingo, and good morning to everyone. We are pleased with our performance over the last few months as we completed the sale and inspect transaction of our headquarters here in Germany. We used the proceeds from this transaction to repay our financial liabilities and now are debt-free. This is an important milestone for our company. Also, we added additional liquidity through a logistic direct offering, which was completed mid-October. As you noted in the past, our rational and grating capital will be multifaceted. This transaction accomplished that. Given the record level of order backlog for our 3D printers, we plan to use the proceeds primarily for working capsules. To guard against supply chain delays, we order products that we need for our printers with exceptionally long lead times. For example, electrical components well ahead of the planned delivery. Everything we do is focused on capturing the growth opportunities in our business and on long-term value creation for everyone in our business ecosystem that includes our clients, investors, and employees. We are very happy with how the business has been in recent months, both in our systems and service segments. We will now take you through the financials for the third quarter of 2022. After that, we are happy to take your questions. Turning to slide 19. Total revenues increased 16.1% to 5.7 million euros for the third quarter of 2022 as compared to 4.9 million euros for last year's third quarter. Cross-profit and cross-profit margins decreased to €1.6 million and 28.7% for €1.9 million and 39.3% for the third quarter of the last year. The decrease was mainly due to a less favorable product mix regarding our printer sales. In addition, we recorded a higher valuation allowance for inventories following our inventory reserve policy amounting to €2.63 negative for the third quarter of 2022 compared to €1.09 negative in the last year's same period. The next slides show our segment reporting for the quarter. In our system segment on slide 20, revenue for the third quarter of this year increased 8.3% compared to the same period last year. After sales business increased significantly compared to the previous year, reflecting the growing installed base of our three printers in the market. Cross-profit and gross margin for the quarter for the system segment were 0.7 million euros and 24.1% compared to 1.1 million euros and 44% in the third quarter of 2021. This decrease was mainly due to the less favorable product mix regarding our printer sale and the regulation allowance mentioned earlier. Turning to slide 21, revenue from our 3D parts production center summarized in the service segment in Germany and the U.S. continues to be exceptionally strong, and it's great to see that this momentum is continuing. Services revenues increased 24.2% to €3 million for the third quarter 2022 compared to €2.4 million for the same quarter of 2021. Service cross-profit margins slightly decreased to 32.8% for the third quarter of 2022 from 34.4% for the same quarter of 2021 Looking now to the rest of the income statement on slide 22, selling expense increased to 2.0 million euros for the third 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 revenue. Distribution expenses like shipping and packaging are main drivers for selling expenses, and it not only depends on the amount of revenue but also on the quantities and types of products sold. as well as the destination to which those goods are being delivered. Therefore, distribution expenses can vary from quarter to quarter. Over the last few months, shipping costs have doubled, in some cases even tripled. Administrative expenses were 1.6 million euros as compared to 1.5 million euros for the third quarter of 2021. The increase was related to higher legal expenses relating to the saving defect transaction which closed on October 31st, 2022. This was offset by lower legal advisory fees related to our stock market listing and our communication with financial institutions in connection with funding activities. Research and development expenses increased to 1.7 million euros from 1.5 million euros in the same quarter last year. The increase was mainly due to higher usage of external services. Expenses are usually driven by individual projects, especially through the consumption of material as well as demand of external services that may vary significantly from quarter to quarter. Operating loss was 2.5 million euros for the third quarter of 2022 compared to an operating loss of 1.5 million euros in the comparative period of the last year. This was mainly due to higher expenses with the sales and marketing function as well as research and development in combination with a decrease in cost of profit. Net loss for the quarter was 8.7 million euros or 1.23 euros to ADS compared to a net loss of 0.8 million euros or 12 euros same for ADS for the prior year's same quarter. This was mainly related to a higher finance expense due to the write-down of embedded derivative financial instruments relating to the European Investment Bank's performance participation interest. This is a non-recruiting and non-cash expense. The write-down resulted from the early repayment of the finance contract with EIB in October 2022, expected already as of September 30th, 2022. The early repayment included full settlement of all tranches and interest, including the performance participation interest on amount of 22 million euros. We have provided the same presentation for the nine-month period ended September 30, 2022, on slides 23 through 26. Slide 27 shows selected balance sheet items. At September 30, 2022, the company had free cash of roughly 10.2 million euros, performer when taking the proceeds from the latest registered direct offering completed in October 2022 into account, free cash would have been approximately 14 million euros. Total debt at September 30th, 2022 was approximately 28 million euros. We repaid our financial liabilities on 31st October because the repayment was after the third quarter closed. The financial liabilities will show up in the report as of 30th September 2022. The current number of shares outstanding is 803.05781 million. And now moving on to slide 28 in our financial guidance for 2022. Revenue for the fourth quarter of 2022 is expected to be in the range of 9 to 12 million euros. And this concludes my remarks. And with that, we will now open the call out for your questions. Operator.
spk03: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 on your telephone keypad, and the confirmation tone will indicate your line 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. Let's get that star 1. Thank you. Thank you. And our first question is from the line of Brian Kintzlinger with Alliance Global Partners. Please receive your questions.
spk04: Great. Thanks so much for taking my questions. Solid order flow. First, as it relates to the backlog of systems, how many customers do the 16 systems represent? And then how many are first-time orders from customers compared to follow-on orders from customers that already have taken control of at least one printer?
spk01: So the majority of the order is first-time orders. And I think anything else, since we don't disclose this in our numbers in that detail, we do not share.
spk00: But among the crowd, there are also second-time orders.
spk04: There are customers that have second-time orders? Is that what you're saying, or there are not?
spk01: As I said, primarily it's first-client orders, but there are as well orders with customers who already operate systems. So they increase their installed basis. But as I said, we don't go into this in such a detailed information. But we spoke in the call about DEI, for example. They operate multiple systems. You spoke about Sharon Marine as well, multiple systems, and those printers you find is on our backlog.
spk04: And then is there any concentration in those 16 printers in the backlog in terms of what type of system there are orders in there? And then I guess I'm just trying to figure out what the average price looks like and how inflation of components is impacting that.
spk01: Our best-selling system still is the Wix 1000 and the related service, independently from the product mix. The average sales price is, as always said, it's $500,000 to $600,000, and on those systems, it's slightly higher.
spk04: Great. And then, yeah, I think you guys...
spk01: There are, if weeks for thousands are in the backlog, you know, that a week for thousands, for example, costs up to, it depends on the configuration, between 1.5 and 1.8 million.
spk04: And then you mentioned, I think in the last six months, shipping costs doubled. We've been hearing from a lot of U.S. companies that the price of shipping containers has dropped substantially to around pre-COVID levels. Can you reconcile differences that you're seeing?
spk01: What we see is currently that the shipping costs are still on a very high level. We did not reach the pre-pandemic level on this. We usually invoice the client with the increased shipping costs. But in addition, what we see is that partly still shipping costs are about three times higher than pre the pandemic and as well before the Russia-Ukraine crisis. So from January to now, we have seen partly, as said, three times higher shipping costs to Asia, the US partially as well, at least double.
spk04: Lastly, can you update us on any changes or remind us of the expected timeline of the joint development with GE and what's the next data point investors should be focused on?
spk00: So currently we are engineering the machine. It will be a prototype printer. We are planning to start ordering parts beginning of next year and The assembly of this prototype printer is also planned for next year. There will be then an initial test operation also scheduled for next year. And then hopefully we see a second phase of the project where we then do the customer project. It means that we are printing then the real molds and do the real castings.
spk04: Great. Thank you so much.
spk03: You're welcome. Thank you very much. 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.
spk00: Thank you. The strategic priorities have been very clear for a long period of time now, and we keep working on them and delivering. You know that our first priority is to drive more product growth. But it has taken longer than we anticipated. New products are starting to meaningfully contribute to top line growth. Existing products are performing better than we expected. See, for example, the recent deals we made with our VX1000 PMMA and VX4000 printers. We have a lot to be looking forward to in the upcoming years. It was great to see many of you at this week's Formnext show in Frankfurt. safe travels back and we are looking forward to speaking with you again with our full year 2022 results then in next year.
spk01: Thank you very much, everyone.
spk00: Thank you. Have a good weekend. Bye-bye.
spk01: This concludes today's conference.
spk03: We disconnect your lines at this time. Thank you for your participation.
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