voxeljet AG

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.

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.

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.