voxeljet AG

Q1 2023 Earnings Conference Call


spk03: Greetings. Welcome to the Voxeljet AG First Quarter 2023 Financial Results Conference Call. At this time, all participants are on a listen-only mode. A -and-answer session will follow the formal presentation. If anyone should require operator assistance during a 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 Pesch. You may begin.
spk00: Thank you, operator, and good morning, everyone. With me today are Dr. Ingo Ederer, Voxeljet's Chief Executive Officer and Rudy Franz, Voxeljet's Chief Financial Officer. On Wednesday, after the market closed, Voxeljet issued a press release announcing its first quarter financial results for the period ended March 31, 2023. 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 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 actual results to differ from the current risk and uncertainties caused by the current COVID-19 pandemic and the resulting 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, the securities, and the exchange permission. With that, I would now like to turn the call over to Ingo, Chief Executive Officer of voxeljet.
spk01: Thank you, Johannes. Good morning, everyone. Thank you for joining us on our earnings call today. We are happy with the start of the new business year in our on-demand printing segment services. Demand continues to be extremely robust, both in Europe and in the U.S. This high demand is driven by large production orders, which is very exciting. For example, a supplier to a leading U.S. space exploration company recently placed another large order with voxeljet for printed PMMA patterns. These patterns are used to cast large titanium components that are mounted on space rockets. Historically, high on-demand printing revenue has led to higher systems revenue as customers upgrade from buying parts to operating their own 3D printers. So, we are very happy with this. This makes us very optimistic for the rest of the year and beyond. 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 big 4000. Our roots reached 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 in 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 their existing production methods to additive manufacturing solutions. Let's turn to slide five, where we describe our technology and the In the additive manufacturing market, there are likely more than 10 different technologies, each with its specified field of application, to 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 and recent key developments. In October 2022, we completed the same least-sac transaction of our headquarters in Germany. With the 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 VJX units at BMW. The printers, which are integrated into a fully automated casting line, are in full operation at BMW's facility. Our production line produces several hundred complex engine components per day. These components are used to make the cars more efficient by improving the temperature management. Because the components are 3D printed, they can attain conformal shapes and can get closer to the heat and dissipated more quickly. VJX uses a new inorganic binding system for maximum environmental compatibility when casting the 3D printed core. Turning to slide seven, 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. Our business model is very user-friendly as customers only 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. Customers come from various industries, including automotive, aerospace, general engineering, as well as art and architecture. As mentioned earlier, 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, 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 source data for our 3D printers expands. Let's turn to slide eight and an illustration of the wide range of applications of our technology. Slide nine shows an art piece we recently printed for the BMW Art Club in Warsaw, Poland. It always amazes me to see the ideas clients come up with and to be able to make such ideas into reality with our binder-jetting technology. Slide ten shows our global sales network and production footprint. As you can see, we have reached an established position in all major markets in Europe, USA, as well as Asia. Since March 2022, we have stopped our activities in Russia and Belarus until further notice. Turning to slide eleven, 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 sets. On the right side of this slide you can see our portfolio of 3D printers and their corresponding build volume. Layer times may vary with the platform and process and can go as fast as four seconds with the digit eggs. Let's start with the formal part of the presentation. I will begin with an overview of the results for the first quarter. Gudi will then provide a more in-depth view of our financials for the first quarter 2023 and our outlook for the rest of the year. Following his comments, we will be happy to take your questions. Turning to slide thirteen, total revenue for the first quarter this year increased 30% to 6.0 million euros from 4.6 million euros in the first quarter last year. That's a great result. In services, our on-demand 3D printing segment, we saw another robust quarter with continuous high demand for our products. Revenue from our German and Chinese service centers was slightly below the very successful first quarter in the previous year, reflected by a decrease of 11% year over year for this segment. In systems revenue, revenue increased 123% as we saw with one unit of our largest printers in the first quarter of 2023 compared to one smaller system in the first quarter 2022. The recurring portion of revenue is also growing as the install base of our 3D printers expands. This includes the sale of consumables, maintenance, contracts, upgrades and other after-sales activities. Gross profits in the systems segment more than quadruples and gross margin almost doubled from .3% in the first quarter 2022 to .5% in the first quarter this year. Gross profit margin in the services segment decreased to 30% from .7% in the first quarter 2023. This was mainly related to lower gross profits from our German and Chinese service centers. 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. Slide 14 breaks down order backlog by quarter, revenue by geography and operating expenses by category. In looking at revenue by geographic region we target an even distribution across the 3D region to hedge against risk from local events. Order backlog for 3D printers increased 62% from 5.7 million euros at the end of the first quarter last year to 9.2 million euros at the end of this year's first quarter. Turning to slide 15, I'm very excited to share a schematic of our massive new 3D printer Wix 9000 PSP with you together with GE Renewable Energy via developing the world's largest binder-chatch 3D printer for the production of critical components for the next generation of wind turbines called Haliad X. As you can see from the slide, we are aiming for a build area of more than 60 square meters, that's more than seven times the build area of our currently largest system, the Wix 4000. Why did GE choose Boxerjet? For 20 years we have been developing the largest and fastest binder-chatching printers in the industry and we have built a comprehensive IP portfolio. With the extra large build area of the new 3D printer, the number of individual parts can be significantly reduced. In addition, the mold for casting can be optimized in terms of functionality and material consumption. This optimization makes it possible to completely new casting designs that can enhance the efficiency of the turbine. Also it streamlines logistics. The 3D printer can be operated close to the location where the mold will be cast, optimizing what could otherwise be very complex logistics like long and complicated road transportation. What exactly is our part in this project? We will handle the design, mechanical development and creation of the prototypes as well as commercialization of the new printers. GE will supply to wind know-how and digital blueprints of the parts to be printed by the machine. Brownhofer will do the research and development on incorporating new printing concepts and experimentation. How big could this market opportunity become? According to research from McKinsey, the global installed offshore wind capacity is expected to reach 630 GW by 2050, up from 40 GW in 2020, and with upside potential of 1000 GW in a 1.5 degree Celsius pathway scenario. The International Energy Agency has projected that global offshore wind capacity will increase 15-fold by 2040, becoming a $1 trillion industry. Thanks to failing costs, supportive government policies and technological progress like those behind the Hallyad X offshore wind turbine. In the US, the White House has taken decisive action to jumpstart the American offshore wind industry, including a $9.8 billion in new investments in 2022, more than triple the previous year. While advancing the first large-scale projects and new manufacturing and port activity along the East Coast, the Biden administration has also supported development of the entire supply chain that stretches across other regions, from steel production in Alabama, Kentucky, and West Virginia, to shipbuilding in Texas, Louisiana, Mississippi, and beyond. So we are very excited about this project. FLY16 highlights recent improvements in the performance of our wind jetting technology. We have shown a similar slide in the last earnings presentation and now added estimates for the new printer that we are developing in collaboration with GE. For this project, we plan to build what we believe to be the largest wind jet print head ever made. It is planned to be around 7 meters in length and cover the whole printing area in a single path. It is absolutely massive and we calculate that if we can achieve the development goals, it would print more than 2,500 liters per hour. On the next two slides, you can see two examples of how our clients, TI and Cheryl Marine, are using our technology for series production. Turning to slide 17, TI is using the world's largest 3D sand printer, Autoshift Weak 4000, to produce cores for the series production of large format weight-saving structural components for the Cadillac Célestique. They just added another system in the first quarter and now own 3D 4000 printers. Using 3D printing, the novel underbody structure consists of only six large-position sand casting aluminum parts. Each of the six castings reduces the number of parts by 30 to 40 components compared to a typical sand construction. On slide 18, you can see the Cheryl propeller. You have heard me talk about this very exciting project in the earlier presentation. Slide 19 summarizes our value proposition, our commitment to technology leadership is stronger than ever. It can be seen by how we have advanced our research and development strategy over the last few years. We have now started to capitalize on these investments. We believe we are well on our way towards possible growth. With that, I would now like to turn the call over to you.
spk02: Thank you, Ingo. Good morning, everyone. We're happy with the results for the quarter and how about the business developing. I will now take you through the financials for the first quarter. After that, we are happy to take your questions. First quarter 2023 revenues increased almost 30% to 6 million euros in the first quarter this year as compared to quarter 6 million euros in the same period last year. Profit margin in the quarter slightly decreased to 32% from 34% in the first quarter last year. Let's break this down. In systems growth profit margin from the sale of 3D printers increased because of the different product mix. We sold one unit of our large system and larger systems typically generate higher profit margins. In services, Germany and China contributed lower profit margins as compared to the first quarter of the previous year. In the next slide show our segment reporting for the quarter. On slide 22, revenues from our system segment, which includes revenues from selling 3D printers, consumables and spare parts as well, as maintenance increased .8% to 3.2 million euros for the first quarter this year from 1.4 million euros for the first quarter last year. We sold one large new printer this quarter compared to one small new printer in the first quarter 2022. We are also encouraged to see the recurring revenue portion growing as the system continues to generate high gross profit. On slide 23, services revenue decreased .11% to 2.9 million euros in the first quarter 2023 compared to 3.2 million euros in the same quarter last year. Services gross profit margin decreased to 30% in the first quarter of 2023 from 42% in the same quarter 2022. Looking now to the rest of the financial highlights in slide 24. Selling expenses increased to 1.9 million euros in the first quarter of 2023. The majority of our selling expenses are personal expenses and distribution expenses such as freight and commission for sales agents. This compares to 1.6 million euros in the first quarter of 2022. Administrative expenses decreased to 1.5 million euros as compared to 1.7 million euros in the first quarter of 2022. Keep in mind we typically spend more than 1.7 million euros in the first quarter of 2022. Research and development expenses increased to 1.6 million euros in the first quarter compared to 1.4 million euros in the same quarter 2022. These expenses are usually driven by individual projects especially through the consumption of materials as well as demand of external services and may vary significantly from quarter to quarter. Operating loss was 2.8 million euros in the first quarter of 2023 compared to an operating loss of 1.1 million euros in the comparative period in 2022. This increase in loss was mainly due to the one-off impact in the first quarter 2022 from the reclassification of foreign currency translation reserved in connection with the wind down of oxygen pay. We received approximately 0.5 million euros in research and development expenses from the investment and grants this quarter up from 0.1 million euros in the same quarter last year. As a result net loss for the quarter was 3.2 million euros or 34 euro cents compared to a net loss of 0.8 million euros or 10 euro cents in the prior year same quarter. Shares outstanding as of March 31, 2023 are 9.134724 and on the slide 25 we show selected value items. As of March 31, 2023 the company had cash, cash equivalent and short term investment in bond funds of roughly 15 million euros. This includes restricted cash of approximately 3 million euros. Total financial debt as of March 31, 2023 was approximately 2.5 million euros. Moving now onto slide 26, now financial balance for the quarter of the year 2023 which remains unchanged. Revenger for the second quarter of 2023 is expected to be the range of 4.25 and 5.75 million euros. This concludes my remarks and with that we will now open the call up for your question operator.
spk03: At this time we will be conducting a question and answer session. If you would like to ask a question please press star 1 on your telephone keypad. A confirmation tone will indicate your line is 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. Our first question comes from the line of Brian Kinstingler from Alliance Global Partners. Please proceed with your question.
spk04: My first question is systems revenue was up 100% year over year, a little bit more in the first quarter. You talked about selling one printer which was bigger than the one you sold in 2022 in the first quarter. I know prices are different but can you tell us roughly how much of the growth was from the higher price system versus more of the after sales pieces such as consumables?
spk01: The increase
spk02: comes primarily from the sale of the system so probably 80% and the remaining portion comes out of the lower price system. growing revenue consumables. Does
spk04: that suggest to me that the price of the large system was close to $2 million?
spk02: We do not disclose those numbers in detail. The average selling price of the system is given at a range of 500,000 to 600,000 euros and we have in mind that the smaller systems are 200K which starts with 200 up to 1.65 million euros for weeks per thousand. I think within those small numbers you can come to the right numbers.
spk04: Then you said services revenue was down as a result of the lower contribution from China and Germany facilities. I think you made similar comments in the last few quarters about this partially offsetting the growth there. Can you talk about the drivers behind the lower services demand at these facilities? I
spk01: would say that the business was really good and the first quarter last year was extremely good. I would say the German facility is running at capacity which is quite nice. We had some movements of revenue we needed to book in the next quarter. China was relatively under pressure in the first quarter. We believe that it is becoming better during the rest of the year.
spk04: Why is China under pressure? Is it still the effects of the lockdowns and opening up? Is it the customer set? Exactly,
spk01: we are still suffering a little bit of the COVID situation but this is now relieved. We believe that it is now going much better for the remaining year.
spk04: Can you comment on the mix of the 12 printers in your backlog? Are they generally the larger and higher priced systems? Maybe a little more detail would be helpful. Thank you
spk02: for the question Brian. We are focusing more on the larger printers and that is how it is in this current backlog. The
spk01: environment is generally good for the larger printers. This is what we see on a global scale. Especially in the sand printing area, the request for production printers is really increasing.
spk04: The last question I have is for your large Bavarian auto customer who has five printers. They are not printing a large amount of a variety of their different parts. What has to happen for that customer to take more printers? How far are we for other parts? I am assuming they are successful with those five they have got.
spk01: For this moment we can name this company BMW so it is already released. They are currently testing these printers or the technology for this combustion engine as you anticipate. Of course they are thinking about different components for electrical vehicles in the future. You need to know that only a smaller portion of their production is made in-house. They are also seeking with their suppliers for future production capabilities. That is why we are very curious about how these suppliers will approach us in the future. We already had discussions with them. We believe this is becoming closer and better for the near future. Thanks.
spk03: We have reached the end of the question and answer session. I will now turn the call back over to Dr. Engel-Eterer for closing remarks. Thank
spk01: you. It was good seeing many of you at the rapid show a couple of weeks back in Chicago. 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 August with results for the second quarter 2023. Thank you very much and have a good weekend.
spk02: Thank you very much.
spk03: This concludes today's conference and you may disconnect your line at this time. Thank you for your participation.

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