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.
spk02: 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 third quarter financial results for the period ended September 30, 2023. The release, as well as the accompanying presentation for its 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 that differ materially from those expressed. 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 of the Securities and Exchange Commission. With that, I would now like to turn the call over to Ingo, Chief Executive Officer of WalkTheJet.
spk04: Thank you, Johannes. Good morning, everyone. Thank you for joining us on our earnings call today. Our business continues to perform well, and we are targeting the higher end of our full-year sales guidance for 2023. Achieving this goal is primarily dependent on all 3 printer installations progressing as planned. Everyone here at Wasserjet is fully committed and fully focused on making the fourth quarter of this year our best quarterly refill to date. We are currently finalizing the business planning for the coming fiscal year with our main goal being to optimize costs in all operational areas without compromising our growth targets. Our goal is to break even on a full year EBITDA basis by 2025. A key priority in this market environment is to preserve cash. Therefore, we are lowering our non-essential spend across the company. Let's turn to slide four and a brief overview of our company. 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 5, 1999, as a spinner from the university with a clear vision in mind to establish a new manufacturing standard. 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 its specialized field of application. We use a technology called binder jetting. Binder jetting is especially well suited for high volume manufacturing because of its potential to scale. We were one of the first companies to recognize the potential of this technology in industrial applications and have continued to develop this advantage. Today, Voxeljet not only supplies the world's largest binder jetting printers, but also the fastest. With our VJX technology, we are pushing new boundaries. In one of the later slides, we provide a link to a video of these new printers in action at the BMW plant in Germany. Slide six 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 in Asia. Turning to slide 7, where we explain our two business segments. As shown on slide 8, 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 the 3D data in and we will print parts for them. That is an efficient 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. For example, in the US, one of our largest on-demand printing clients is a supplier to a leading space exploration company. In our systems segment on Flight 9, we manufacture and sell industrial-grade high-speed large-format 3D printing systems geared towards mass production of complex models, molds, and direct parts. We differentiate ourselves from our competitors by superior build size, material diversity, and speed. Each model can be used with multiple material sets. The Wiecks 1000, for instance, can be ordered as a PMMA printer, as a printer for various types of sand molding sands, and also to print ceramics. This versatility enables us to address different market needs efficiently. 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. On slide 10, we summarize the key advantages of combining 3D printing and conventional manufacturing what we call indirect metal printing. First, you freely print a mold or pattern and then cast it in metal. Key advantages include high economic use of scale, no need for certification, and no limitations regarding the size of the part and the alloy used. While direct metal printing has its applications, it is not usable for high volume production. Because of very limited economies of scale, the cost per part in direct metal printing are simply too high compared to the combination of 3D printing and metal casting. Slide 11 presents a comprehensive illustration of the wide range of applications of our technology. Slide 12 highlights recent improvements in the performance of our binder-jetting technology. It all started with a tiny printer that I and some colleagues built almost 30 years ago. It was our goal from the beginning to bring 3D printing into high-volume production. Today, with massive partners like BMW GE Renewable Energy and others, we are achieving this mission. On slide 13, we summarize illustrated case studies showcasing how we add value for clients across several different industries. Let's start with the formal part of the presentation. 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 2023 and our outlook for the rest of the year. Following his comments, we will be happy to take your questions. Turning to slide 15. Total revenue for the third quarter this year came in at higher end of our guidance corridor and increased 7.5% to 6.2 million euros from 5.7 million euros in the third quarter last year. In combination with an order backlog for 15 3D printers worth around 11.8 million euros, this makes us very optimistic. In services, our on-demand 3D printing segment, we saw another very robust quarter with continued high demand for our products. In Germany, we received a large order last week from a leading German car maker for printing parts that will keep us busy throughout December of this year. In the U.S., our PMMA section is basically fully booked with printing parts for a supplier to a U.S.-based exploration company. Overall, revenue from our German and Chinese service centers was slightly below the very successful third quarter last year. In systems, revenue increased more than 25% as we sold three new printers in the third quarter of 2023, compared to selling one new and one refurbished printer in the third quarter of 2022. The recurring portion of revenue is also growing as the installed base of our 3D printers expands. This includes the sale of consumables, maintenance contracts, upgrades, and other after sales activities. For the first nine months of this year, systems revenue increased by an impressive 37%. Cross-profit margin from the sale of 3D printers was lower as a result of a less favorable product mix. This was more than offset by the increase in gross margin contribution from after-sales related business. Cross-profit margin in the services segment decreased 30% from 33% in the third quarter 2022. This was mainly related to a lower utilization of our German and Chinese service centers. Slide 16 breaks down order backlog by quarter, revenue by geography, and operating expenses by category. Then looking at revenue by geographic region, we target an even distribution across the three regions to hedge against risk from local events. Order backlog for 3D printers continues to grow throughout the year, and in combination with the 37% increase in systems revenue for the first nine months, that is an excellent result. Let's turn to slide 17 and a brief update on our project with GE. We were selected for a $14.9 million contract alongside GE Research to develop advanced manufacturing technologies to enable the US energy transition. The funding comes from the US Department of Energy and is directed towards the development of noble manufacturing processes. The DOE grant will fund the development and commercialization of our new big and fast printer or BFP. This new printer is currently under development and will be by far the largest and most productive system worldwide. The new printer will be used to manufacture massive sand casting molds, for example, for next generation wind turbines. The project was established to strengthen the US manufacturing industry and expertise. It will boost cost-effective domestic production of large metal components in alignment with the Biden administration's clean power generation strategy. We plan to produce most forecasting parts ranging from 10 to 60 tons, for example, the wind turbine outer casing or nacelle. According to data bridge market research, the global wind turbine nacelle market was estimated to be valued at $6.6 billion in 2021 and projected to be over $15 billion by 2029. We are confident that additive manufacturing and especially our large-scale binder chaining technology is the optimal and perhaps also the only choice for the manufacturing of such parts efficiently. Let's turn to slide 18 and a new video that we published at the end of October. In this video, you can see how the five VJDX units were installed at the BMW plant in Landshut, Germany. The video also demonstrates the fully automated process which we developed together with our partners. This is a unique solution and something that no other player in the 3D printing industry can currently offer. You will see from the video that this is real industrial production. We have obtained one patent and filed 28 pending patent applications across 10 product families in order to protect this proprietary approach across the United States, Europe, and other geographies. Let's turn to slide 19 and a brief update on high-speed sintering. OSE, a large multinational Q1 supplier, received the first week's 1,000 high-speed sintering system as part of our beta program. We achieved a significant milestone. Last month, the printer was formally handed over so that both can operate it with their own stuff. The procurement of parts and assembly of the next two HSS printers has started. We are making good progress with printing flexible materials like TPU on larger printers as well. And you can see some pictures on the left side of the slide. Let's turn to slide 20. We are excited to announce that FKM Sintertechnik, one of Germany's largest 3D printing providers, invest in our new weeks 1000 high speed sintering printer fkm is a pioneer and leading 3d printing service provider for powder bed laser sintering and laser powder bed fusion in europe the company's clients include well-known industrial companies from a wide range of industries with our weeks 1000 hss they are expanding their production capacity with a powerful 3d printer that offers both low cost per part and unprecedented build volume. Turning to slide 21, we hosted a two-day customer seminar with customers from all around the world. This productive seminar featured fascinating figures and presentations about metal casting and 3D printing, topology optimization, large-format arc casting, and material development for polymer additive manufacturing and network sessions. Slide 22 summarizes our value proposition with the continued high demand for our products and the cost savings we believe we are well on track on our path towards profitable growth. With that, I would now like to turn over the call to Woody.
spk03: Thank you, Ingo, and good morning, everyone. We're happy with the revenue for the third quarter coming in at the high end of our guidance corridor. Overall, our operational business is developing well. Compared to full revenue guidance given at the beginning of this year, we are currently on track to arrive at the higher end of the full year revenue range as well. Achieving this important goal is primarily dependent on all 3D printer installations progressing as planned. For the first nine months of this year, revenue from our system segment increased by an impressive 36.7% as compared to the same period last year. That is a great achievement. Everyone here at VoxenShed is fully focused on making the fourth quarter of this year our best quality results to date. Our main goal for the next year is to optimize cost in all operational areas without compromising our growth targets and to break even on a full-year EBTR basis by 2025. I will now take you through the financial for the third quarter. After that, we are happy to take your questions. Turning to slide 24, third quarter 2023, revenues increased 7.5% to 6 to 2 million euros as compared to 5 to 7 million euros in the same year. period last year. Gross profit margin in the quarter slightly decreased to 26.8% and 28.7% in the third year last quarter. Let's break this down. In systems, gross profit margin from the sale of 3D printers decreased as a result of less favorable product mix. This was offset by a substantial increase in gross margin contribution from aftersales, which is part of the system segment. In services, Germany and China contributed lower gross margins as compared to the third quarter of the previous year as a result of slightly lower utilization rates. Nevertheless, we are happy with our service segment. In Germany and the U.S., we are basically fully booked until the end of 2023. The next slide shows our segment reporting for the quarter. On slide 25, revenue from our system segment, which includes revenue from selling 3D printers, consumables, and spare parts, as well as maintenance, increased 25.2% to 3.4 million euros for the third quarter this year from 2.7 million euros for the third quarter last year. We saw three new printers this quarter compared to one new and one refurbished printer in the third quarter 2022. On slide 26, services revenue decreased 8.2% to 2.8 million euros in the third quarter 2023 compared to 3.0 million euros in the same quarter last year. Services cross-profit margin decreased to 29.6% in the third quarter of 2023 from 32.8% in the same quarter 2022. The lower margin was the result of lower utilization of our German and Chinese 3D printing centers. Looking now to the rest of the financial highlight of slide 27, selling expenses decreased to 1.8 million euros in the third quarter of 2023 Most of our 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 third quarter of 2022. Administrative expenses increased to 1.8 million euros as compared to 1.6 million euros in the third quarter of 2022. Keep in mind, we typically spend more than a million euros in auditing fees per year and over 5 million euros in legal fees. Research and development expenses decreased to 1.5 million euros in the third quarter of 2023 compared to 1.7 million euros in the same quarter of 2022. The decrease was mainly due to lower usage of external services and lower material consumption and personal expenses. R&D expenses can vary from quarter to quarter and are usually driven by variation in project types and phases. Over 4 million euros of R&D costs were reimbursed to our project partners, primarily GE renewable energy and government grants. This is shown in other operating income. Operating loss was 2.8 million euros in the third quarter of 2023, compared to an operating loss of 2.5 million euros in the comparative period in 2022. As a result, net loss for the quarter was 3.2 million euros, or 34% to ADS, compared to a net loss of 8.7 million euros over 1.23 euros in the previous prior year same quarter. Shares outstanding as of September 30th, 2023 are 9.134724 million. We have provided a similar presentation for the nine-month period ended September 30th, 2023 on slide 28 through 31. Slide 31 shows selected balance sheet items. As of September 30th, 2023, the company has cash, cash equivalents, and short-term investments funds of roughly 10 million euros. This includes restrictive cash of approximately 3 million euros. I would like to point out that the only financial debt on our balance sheet is a $3.2 million promissory note that matures in early 2028. This compares favorable to uncumbered current assets of around $30 million. Slide 32 summarizes our financial guidance for the full year 2023. We increased the mid-term and full-year revenue guidance from 30 to 33. We lowered fully a research and development extensive guidance corridor from previously 7.5 to 8.5 million euros to between 6.75 to 7 million euros. We lowered fully a capital expenditure guidance corridor from previously 3.75 to 4.25 million euros to between 1.5 and 1.75 million euros. Please note that here is the timing of when the asset is capitalized on the balance sheet as relevant. Overall cash capital expenditures for full year 2023 is around a million euros, and we expect less than over two million euros for the fourth quarter of this year. Revenue for the fourth quarter 2023 is expected to be in the range of 10 million and 13.5 billion euros. This concludes my remarks, and Rebecca will now open the call up for your questions. Operator.
spk01: Thank you. At this time, we'll be conducting a question and answer session. If you'd 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'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. Our first question comes from the line of Brian Kinslinger with Alliance Global Partners. Please proceed with your question.
spk00: Great. Thanks for taking my questions and nice additions to the backlog. So if you look at the backlog and just divide by the 15 printers there, the average selling price is about 800 euros, whereas the backlog at the year end of December was about 900 euros, plus or minus. So I guess I'm wondering how you think about the average selling price going forward based on the pipeline you have. Will it be increasing, or is that kind of where you think, based on what you're selling, new printers versus old printers, you know, kind of a good sense down the road.
spk03: So I think, thank you for the question, Brian. It always depends on the product mix. The average selling price of a printer, I think that's what we always have shared with the market is around 500,000 euro. And it depends, as said, it can depend on the product mix that on a quarterly basis, it is still on 700K or 800K. I hope that answers your question.
spk00: Yeah, okay. And then maybe I wonder how you quantify the pipeline of opportunities today versus maybe a year ago. Is the market stronger? Is it weaker? Maybe because the economy, just trying to understand, again, the pipeline.
spk03: So our impression is that the interest in our products increased. We see a good increase in all material sets, and we are quite confident for 2024 and 2025 based on what we have in the pipeline.
spk00: I guess I'm thinking more on the lines of new customer wins for system sales. Are you engaging with more prospective customers, less prospective customers about the same year over year? I'm trying to understand. That builds for years down the road.
spk03: I would say it is consistent. My answer to your question is it is consistently growing. Our products are, I would say, well accepted in the market. And as you know, we have a very active service center activity. Every system cell comes through our service segment. And here we have more than 300 very active clients partly owning a printer already and ordering more parts, and clients who decided or will decide over time to increase their in-house production and accordingly going to buy a printer.
spk00: Okay. And then I'm curious, with your successes at BMW, we've talked about this, I'm curious if you could share any discussions or plans with BMW going forward in regards to printers for other parts.
spk04: Sure. So to answer this question, currently the plant is trying these printers out and getting the confidence in the solution. But the discussions of how castings will be made in future and how to utilize such a method also for other purposes is going on, not just with BMW, but also with other clients. And we are confident that we can benefit from the development very soon.
spk00: Okay. Lastly, you mentioned getting to break even by 2025. Can you help frame 2024? Is 15% reasonable growth on the top line? Do you think EBITDA losses will narrow with cost cutting? Just maybe high level without necessarily specific targets.
spk03: The high level is that we plan growth of, I would say, as we have said in the past, approximately 15% to 20% headline growth. We plan further cost reduction in SG&A without affecting our growth targets. we definitely see a better EVTR number. In 2024, we're definitely targeting, in the second half of this year, being either EVTR-neutral or slightly negative. And as said, on a full-year basis, we want to be EVTR-positive in 2025, and that implies or the assumption there is that we again grow by 50 to 20 percent and as well see a better cost structure.
spk00: Great. Thanks so much. You're welcome.
spk01: Thank you. That concludes our question and answer session. I'll turn the floor back to Dr. Fitts, Dr. Ederer for any final comments.
spk04: Thank you. Current capacity utilization and order inflow is robust and we believe that this forward momentum may well make the first quarter of this year our best quarter to date. Thank you for joining today's call and it was good speaking many of you at the last Formnix show. Seeing you, we look forward to speaking with you again in our next earnings call which we expect to take place in March 2024. which results for the fourth quarter and full year 2023. Thank you from my side and see you soon.
spk03: Thank you from my side. Have a good weekend. Bye-bye.
spk01: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Disclaimer