voxeljet AG

Q4 2022 Earnings Conference Call

3/31/2023

spk06: Greetings. Welcome to the Voxel Jet AG fourth quarter 2022 financial results conference call. At this time, all participants are on a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Johannes Pest. You may begin.
spk02: 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 fourth quarter and four-year financial resize for the period ended December 31, 2022. The release, as well as the accompanying presentation 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 extra results to differ materially from those expressed, including the risks and uncertainties caused by the current COVID-19 pandemic and reciting 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 Oxen Chef.
spk00: Thank you. Thank you, Johannes. Good morning, everyone. Thank you for joining us on our earnings call today. We are very happy with the results for the quarter. In our system segment, we had a strong order inflow and started the new business year 2023 with a record high order backlog. Regarding our new VJX 3D printers, we have now five units of this large next-generation 3D printer in operation at the Bavarian carmaker. and have good revenue for all of them. In our on-demand printing segment, services demand continues to be extremely robust, both in Europe and the US. This high demand is driven by large production orders, which is very exciting. Let's turn to slide four and a brief history of our company. On the left side, you can see the first prototype that we built around 1996 and the related patents. On the right side, you see our largest 3D printer, the VX4000. Our booths 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 5, 1999 as a spin-off 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 production methods to additive manufacturing solutions. 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 a specialized field of application. We use a technology called binder jetting. Binder chatting 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 and recent key developments. In October 2022, we completed the sale-leaseback transaction of our headquarters here in Germany with a gross proceeds of approximately 26.5 million euros We cleaned up the balance sheet and repaid our financial liabilities. In December 2022, we completed the revenue recognition of all five EgyptX units. The printers, which are integrated into a fully automated casting line, are in operation at the Bavarian carmaker's facility. The production line produces several hundred complex engine components per day. The components are used to make the cars more efficient by improving the temperature management. Because the components are 3D printed, you have conformal shapes, can get closer to the heat, and dissipate it more quickly. VJX uses a new inorganic binding system for maximum environmental compatibility when casting the 3D printed cores. Turning to slide 7, where we explain our two business segments. In the services segment, 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 only need to send in this 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. 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 systems segment, we manufacture and sell industrial-grade, high-speed, large-format 3D printing systems geared towards mass production of complex models, modes, and direct parts. Systems revenue also includes recurring revenue from the sale of consumables, maintenance contracts, upgrades, and other after-sales activities. This recurring portion of revenue is growing as the install base of our 3D printers expands. Let's turn to slide 8 and an illustration of the wide range of applications of our technology. To give you some examples, there is an innovative yacht company producing several thousand advanced propellers with our technology. There are leading US space exploration companies using our technology to make their rockets more aerodynamic. There are car makers using our technology to make their vehicles more lightweight and energy efficient. There's a leading Swiss university in Zurich the ETH using our technology to make the most amazing concrete structures, and there are many more. 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. In almost every discussion that we have with our customers, we hear that they need to create versatility localization, and flexibility. We can help them of these areas with our 3D printing technology, which is well-suited for industrial production. At the same time, we are seeing that the effective adoption of 3D printing requires a fully integrated ecosystem. This includes pre- and post-processing of the 3D printed parts. We believe we are ahead of our competitors in this regard because of the experience we have gained through VJX and similar projects. Slide 9 shows an art piece we recently printed for the BMW Art Club in Warsaw, Poland. It was amazing to see the ideas clients come up with and to be able to make such ideas into reality with our binder chaining technology. 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 USA, as well as Asia. We stopped 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 address the challenges and needs that are most important to our customers. Each model can be used with multiple material samples. On the right side of this slide, you can see our portfolio of 3D printers and their corresponding build volume. Layer times vary with platform and process and can go as fast as four seconds with VJDX. Let's start with the formal part of the presentation. I will begin with an overview of the results for the fourth quarter. Woody will then provide a more in-depth view of our financials for the fourth quarter and full year 2022 and our outlook for 2023. Following his comments, we will be happy to take your questions. Turning to slide 13. Total revenue for the fourth quarter this year was 10.8 million euros as compared to 10.9 million euros in the fourth quarter last year. We are happy to note that the fourth quarter, 2021, was a new record for our company in revenue. EBITDA was positive for the fourth quarter, 2022. This was primarily the result of the gains from the sale and leaseback transaction completed in October, 2022. In services, our on-demand 3D printing segment, we saw another strong quarter with continued high demand for our products, and quarterly revenues grew 11% from an already strong fourth quarter in the previous year. In systems, we sold nine printers in the fourth quarter of 2022. This is unchanged from the fourth quarter of the prior year. As a result of a less favorable product mix in our system segment, gross margins were lower, mainly because we sold smaller systems that carry smaller margins. We continue to see challenges when it comes to lead times for certain electrical components for our printers, and we are working hard with our suppliers on this topic. In services, gross profits from the German and the Chinese service centers were lower. In general, quarterly gross margin fluctuations in services can be the result of the timing of installation, for example, of a new printed. In China, utilization was weak for the quarter. In the US, gross margins further improved. Slide 14 breaks down all the backlogs by quarters revenue by geography, and operating expenses by category. In looking at revenue by geographic region, we target an even distribution across the three regions to hedge against risk from local events. Looking at order backlog for 3D printers, I would like to highlight we ended the business year 2022 not only with a new record high for full year revenue, but also with a new record high for fourth quarter order backlog of 3D printers. Slide 15 summarizes recent improvements in the performance of our binder checking technology for indirect metals. Indirect metals means printing a mold, pattern, or core, which is then used in a casting process to produce the actual metal parts. The casting process has been refined over thousands of years and is geared towards high throughput and low cost and consistent quality. We combine the full design benefits of 3D printing with the cost advantages of conventional casting. With this combination, we offer our clients highest quality metal parts at a fraction of the cost of direct metal 3D printing. Our hybrid approach also means that clients will benefit from huge economies of scale, which is not the case for other 3D printing technologies. What do we mean by scalability? On the left side of this slide, you can see a standard reach 1000 printhead with an output of 12 liters per hour. The same printhead with parallel axis movement is approximately 15% faster. If the parallel recoding upgrade is installed, then the layering unit and the printhead move simultaneously. The high performance printhead, the third column from the left is simply larger and as a result more than four times faster. The latest iteration is a next-generation line head printhead with optional bidirectional recoating and single-path technology. Performance is north of 160 liters per hour or more than 13 times faster than the standard version. This innovation makes it possible by our 20 years of research and expertise in precision mechanics, microfluidics, and material science. On the next two slides, you can see two examples of how our clients, TEI and Sheryl Marine, are using our technology for series production. Turning to slide 16. TEI is using the world's largest 3D sand printer, which is the VX4000, to produce cores for the series production of large-format, weight-saving structural components for the Cadillac Stylistic Using 3D printing, the novel underbody structure consists of only six large position sandcast aluminum parts. Each of the six castings reduces the number of parts roughly by 30 to 40 components compared to a typical stamped construction. On slide 17, you can see the Sherald propeller. You have heard me talk about this very exciting project in one of our earlier presentations. Basically, the Sherald propeller is the first major advancement in propeller technology since the 1830s. Because of the new design, it has significantly better performance characteristics. All of these new propellers are 3D printed on our VIX 1000 PMA printers and then casted. This way, Sherald can produce a highly complex geometry at a fraction of the cost of direct metal printing. Yamaha will offer the Shero propeller as a new option to more than hundreds of the world's leading boatbuilders and its network of more than 2,000 dealers. This is a fantastic project. Slide 18 summarizes our value proposition. Our commitment to technology leadership is stronger than ever, as can be seen by how we have advanced our research and development strategy during the last few years. We have now started to capitalize on these investments We believe we are on our way to reach profitable growth. With that, I would now like to turn to Woody. Woody, please.
spk01: Thank you, Ingo. Good morning, everyone. We're very pleased with our 2022 results where we reached the midpoint of our revenue guidance to the new record high for full year revenue. We also delivered positive EBITDA in the fourth quarter of 2022. The successful completion of the sale and leaseback transaction, the repayment of all debt, and the two successful rounds of financing in the solid backlog of printer orders, we believe we are well prepared for the fiscal year 2023. I will now take you through the financials for the fourth quarter and full year 2022. After that, we are happy to take your questions. Turning to slide 20, fourth quarter 2022 revenues decreased 1.1% to 10.8 million euros in the fourth quarter of 2022 as compared to 10.9 million euros in the previous year's fourth quarter. The sold nine printers in the quarter as compared to nine printers in the fourth quarter 2021. Gross profit and gross margins in the quarter decreased to 2.9 million euros and 26.5% compared to 3.6 million euros and 32.7% in the fourth quarter. of 2021. Let's break this down. In systems, gross profit margins from the sale of 3D printers decreased as a result of a different product mix. We sold smaller systems, which generate lower gross margins. In services, Germany and China contributed lower gross margins as compared to the fourth quarter of the previous year. In China, utilization was lower, and in Germany, we installed a new big printhead. We've also moved expensive materials, including this kind of ceramic, to print benchmarks for our clients. The next slides show our segment reporting for the quarter. On slide 21, revenues from our system segment, which includes revenues from selling 3D printers, consumables, and spare parts, as well as maintenance, decreased 4.4% to 8.1 million euros for the fourth quarter of 2022, from 8.5 million euros for the fourth quarter of 2021. We sold eight new and one refurbished printer this quarter, compared to seven new and two refurbished prints in the fourth quarter of 2021. Product mix was different as we sold smaller scale printers which generate lower revenue and gross margin. On slide 22, services revenue increased 10.6% to 2.7 million euros in the fourth quarter of 2022 compared to 2.4 million euros in the same quarter 2021. Services gross profits margin decreased to 25% in the fourth quarter of 2022 from 30.9% in the same quarter 2021. In the US, gross margins improved in line with the excellent utilization. Looking now to the rest of the financial highlights on slide 23, selling expenses were 2.4 million euros in the fourth quarter of 2022. The majority of selling expenses are personal expenses and distribution expenses such as freight and commissions for sales agents. This compares to 2.0 million euros in the fourth quarter of 2021. Administrative expenses were 1.8 million euros as compared to 1.6 million euros in the fourth quarter of 2021. Keep in mind, we typically spent more than a million euros in auditing fees per year and audited 5 million euros in DECs. Research and development expenses were 2.1 million euros in the fourth quarter compared to 1.4 million euros in the same quarter 2021. These expenses are usually driven by individual projects, especially through the consumption of materials. as well as the demand of external services is made very significantly from quarter to quarter. Operating profit was 0.2 million euros in the fourth quarter of 2022 compared to an operating loss of 0.8 million euros in the comparative period in 2021. And profit was mainly due to gain from the saliency spec transaction amounting to 4.3 million euros. Net loss for the quarter was over 2 million euros or 1 euro cent per ADS compared to a net profit of 1 million euros or 15 euro cent in the previous quarter. In the fourth quarter of 2021, the net financial income of 2 million euros drove up to profitability. The financial income resulted from the revaluation of the derivative financial instruments with the European Investment Bank as part of the financial result in both the non-cash items. The AIB loan has been fully repaid, which means we expect less volatile financial results going forward. We have provided the same presentation for the full year ended December 31st, 2022, on slides 24 to 27. Slide 28 shows selected balance sheet items. At December 31st, 2022, the company had cash, cash equivalent to short-term investment in bond funds of roughly 15 million euros. This includes restricted cash of approximately €3.0 million. Total financial debt at December 31st, 2022 was approximately €0.2 million. Rated average number of shares outstanding in December 31st, 2022 were 8.3 million shares. Current shares outstanding are 9.134724 ADS. Moving now onto slide 29 in our financial guidance for full year 2022 revenue, Range is expected to be between 27.5 and 32.5 million euros. SG&A spending is expected to be in the range of 14 to 16 million euros. And R&D spending is expected to be in the range between 7.5 and 8.5 million euros. Depreciation and amortization expenses are expected to be between 3 and 3.25 million euros. CAPEX spending for 2023 is projected to be in the range of 3.75 to 4.25 which primarily consists of ongoing investments in our global subsidiaries. Adjusted EBTR, which excludes the impact of foreign exchange valuation, is expected slightly negative to neutral for the fourth quarter of 2022. Revenue for the first quarter of 2023 is expected to be in the range of 5.75 and 6 million euros. This concludes my remarks and with that, we'll now open the call up for your questions. Operator.
spk06: And at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone would indicate a line is in the question queue. You may press star two 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. Our first question comes from Brian Kenslinger with Alliance Resource Partners. So we'll see what your question is.
spk05: Hey, good morning. This is Shervin on for Brian. Thanks for taking my questions. Good morning. To start, in regards to your backlog, could you quantify what percentage of it includes demand for your VJX and VX4000, which are your higher-priced products, and is demand growing for those?
spk01: We don't disclose the individual breakdown for our printers, but what I can say is that the current backlog is larger format printers and the demand for applications. So, we have multiple systems in operation that's growing. So, as we have discussed in the calls, Serum Marine, TEI, and the German Car Manufacturer, we now have three
spk05: um clients who operate more than three or five printers okay thank you the demand is growing demand is growing great good to hear um could you provide an update and i may miss this because my call dropped for a second but did you provide an update on your ge renewables project is it still on track and will you finish prototyping and testing by the end of this year
spk00: So the GE project is going on. As lined out, we are in the final stages of completing the design of the printer. The colleagues from the Research Institute are in the final stages of completing the mold design for the castings. Since we are, let's say, facing delays in sourcing some of the components It will probably take a little bit longer for us to complete the prototype printer. So we expect to be probably already, of course, assembling the prototype this year, but not being able to operate it initially. This will probably be beginning of next year. But anyway, we are on track. We believe that we can still match up with some of the goals, and we're quite happy with the development so far.
spk05: Alright, that ties into my next question. How is the current supply chain environment? Are you outside of the G renewables? Are you seeing any improvement or are you expecting just general delivery delays due to the headwinds?
spk00: So we we see improvement definitely. Improvement means that we get now lead times beforehand. We didn't get firm deliveries, so we now can calculate, but the lead times are still pretty long, eight and nine, sometimes even 12 months. So we need to count and calculate with that. I think it's under control, so the colleagues are doing a great job to source critical components early enough to have them available when we need them.
spk04: Great. And one last question.
spk05: Now that the quarter is essentially over, can you reveal how many new printers you sold in the first quarter? And of the printers you sold in the fourth quarter, how many were new customers versus existing?
spk01: Again, in our given guidance, we don't disclose the number of printers which we sold. And we as well do not disclose whether it's new or existing clients. have in mind that every printer cell is generated out of our service center activities initially or through clients who have existing equipment. And what we see is that the demand is growing on a steady basis.
spk04: Okay, that's all I have. Thank you. Thank you. Thank you.
spk06: And we have reached the end of the question and answer session. I'll now turn the call back over to Dr. Hingo for close remarks.
spk00: Thank you. To summarize, a key focus that will create separation for us over the long term is our expertise and IP in binary chatting and high-speed centering. Ultimately, it's about becoming more productive at scale, and I'm highly confident in our ability to execute on this Thank you for joining today's call, and we look forward to speaking with you again in our next earnings call, which we expect to take place in May with results for the first quarter 2023. Thank you. Have a good day. Bye-bye. Thank you.
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-