voxeljet AG
Q3 2021 Earnings Call Transcript

Published: 12 Nov 2021

[Operator:]

Greetings, and welcome to the Voxeljet Third Quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Johannes Pesch, Director Investor Relations and Business Development. Thank you, Mr. Pesch, you may begin.

[Johannes Pesch:]

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 first quarter results for the period ended September 30th 2021. 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, excluding expectations on from our current order backlog. Such forward-looking statements are not guaranteeing 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 materially from those expressed, including the risks and uncertainties costs 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 in our forward-looking statement, you should refer to the cautionary statements contained in our press release, as well as the risk factors contained in the Company's with the Securities and Exchange Commission. With that I would now like to turn the call over to Ingo, Chief Executive Officer of Voxeljet.

[Ingo Ederer:]

Thank you. Johannes. Good morning, everyone. Thank you for joining us on our call today. Let's turn to Slide 4. Our roots reached back to the year 1995 with the first successful dosing of UV resin. In the context of a hidden project, industrial 3D printing tests were performed at the Technical University of Munich. I co-founded the Company on May 5th, 1999 as a spin-off 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 convention production methods to additive manufacturing solutions. We pushed technology boundaries and develop new generative processes for this year's production of complex components. On Slide 5, you can find some more information about Rudi and myself. We are significant shareholders, and as we previously announced, we both extended our contracts effective as of July 1st 2021. We have a clear plan in mind and are fully committed to make this a success for all stakeholders. It is an exciting time to be a technology leader in the 3D printing industry by winning the contract with GE. We are now working on 3 principal R&D projects, which we firmly believe will help us enter a phase of meaningful growth in the years ahead. First, we are making steady progress with VJET X, arguably the most productive 3D printing solution currently available. The 1st customer is a premium German car maker, we are working towards getting the final acceptance for the 1st unit, which is the trigger for revenue recognition, and are already negotiating a maintenance package. This gives us the confidence that we should be in a position to book revenue, at least for the for-1st units in the near future. Second, with High-Speed Sintering, we are developing the industry's largest polymers sintering 3D printer. Recently we announced that we signed with Brose, a large multinational Company active in the automotive industry also beta customer for the HSS program. With that, we have won the deal with GE Renewables for the development of the world's largest binder-jetting 3D printer for offshore wind applications. This new 3D printer is expected to streamline the production of key components of GE's Haliade -X offshore wind turbines, which are among the world's largest and most efficient units of this type. We are proud to be part of this ground-breaking project in the field of renewable energies. And we'll provide pictures later in the presentation. These projects are for different industries, but have 1 thing in common

[Rudi Franz:]

Thank you, Ingo. Good morning, everyone. It is good to see the progress we are making with our technology platform and our 3 principal R&D projects

[Operator:]

Thank you. We will now be conducting the question-and-answer session. One moment please while we pull for questions. Our first question comes from the line of Troy Jensen with Lake Street Capital. Please proceed with your question.

[Troy Jensen:]

Hey, gentlemen. Congrats on the nice results.

[Rudi Franz:]

Hi, Troy.

[Ingo Ederer:]

Hi, Troy.

[Troy Jensen:]

Hi Rudi. Hi Ingo. So, it seems like you guys just got a ton of great stuff going on, right? It's -- so it's kind of been more a function of kind of getting to the end-zone, right? And kind of revenue in these things. Let's talk a little bit about timing on some stuff to Ingo if you don't mind going through a few of these opportunities. To start with GE, I get into two-year development window and after the two years, what do you think happened? Is this a quick decision or is this would be something that would also take a while to get into production applications and bigger revenue opportunity maybe further out? Could you just help us with our expectations?

[Ingo Ederer:]

Well, the program is designed in a way that there's already a demand for the machine. The technology will be directly integrated as a beta program at our client side or the clients foundry that directly manufacturer these specific parts for these wind turbines. As soon as we see that the project is presenting the desired progress, we believe that GE is pushing their supplier to integrate this kind of technology into their process chain. So, it will be a relatively quick scale-up. You need to understand that the addressable market is probably in the range of 10 to 20 of these machines. So, we are pretty sure that we can address these markets in a very quick way.

[Troy Jensen:]

Congrats. Seems like a great one for you guys. Next question. Just kind of next topic. It's on the High-Speed Sintering. I'm guessing we will see the system here next week in Germany and update us on timing. System should be generally available and shipping when again?

[Ingo Ederer:]

Well, we have -- I think that we have a system here in Voxeljet . We are currently assembling the beta units, which are planned to be evaluated in program starting with the first quarter next year. We faced definitely problems with supplies, but for this moment it looks very promising that we can start on time with the beta phases. And of course, we plan for further unit then down the next year. Currently, I'm very optimistic than we can ship the first beta units to the outside in the second half of next year. And we can also ship following units by the end of next year.

[Troy Jensen:]

All right. Perfect. And remind me, are you guys starting with Nylon 12 or Nylon 11?

[Ingo Ederer:]

This is a PA 12, initially, but be sure we are working, also, on other materials.

[Troy Jensen:]

And then maybe last one for me, just the big automotive customer we've all been waiting for. has confirmed that we're getting some revenues in Q4 from that big deal.

[Ingo Ederer:]

This is Ed. As said, this is currently the plan. I think the production tests, what currently happens shows in the right direction. And we are optimistic to get signed off, at least on the first printers towards the end of the year.

[Troy Jensen:]

Awesome. Alright guys, well, congrats, keep up the good work and I'll see you in Germany.

[Ingo Ederer:]

[Rudi Franz:]

Thank you, Treble (ph).

[Operator:]

Thank you. Our next question comes from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed with your question.

[Brian Kinstlinger:]

Great. Thanks. Exciting news about GE. Can you estimate how long it's going to take to build a new printer? And what's the estimate delivery time for the first machine? And then can you share with us particular parts you're printing maybe I missed in the wind turbines?

[Ingo Ederer:]

Sure. This is Ingo. The printer is not developed yet. So, we need to develop the printer. And this is the program for -- the program is a -- with a 2-year term and the target is to have at the end of the program a demonstrator for the technology, which is basically a prototype printer. With that prototype printer, we will print molds and mold packages for the specific parts here at our voxeljet factory. And once this is successful, so we see problems is the casting results after the term after two years, then we will start the production of a beta unit, which can be tested on-site at our clients place. So, this means this is a phase outside the 2 year, probably in the third year. Hopefully, this answers your first part of the question. Second, what you print -- on other words, what the customer prints on the printer are modes for extremely large castings. These are, for instance, kind of an excess systems, varying systems, But also the holder for a brake disc and other components, which exceed several tons of cast macro volume weight.

[Brian Kinstlinger:]

Great. That's really helpful. I take it, it's too early to share what the ARPU in 2 or 3 years will be for this kind of system.

[Ingo Ederer:]

Well of course, we have made our math on this, but we will not share to the public for this moment.

[Brian Kinstlinger:]

Great. And then in terms of the R&D, is GE funding that fully? And then what's the determining factor of whether this is revenue or other income?

[Ingo Ederer:]

The project is funded partially by the government. And the remaining costs are majorly covered by GE. So, this gives -- brings us in a position where the R&D is -- our R&D contribution is mostly paid.

[Brian Kinstlinger:]

And then the other question, a part of that 1 was, what determines if that's revenue or other income? I think in the prepared remarks, you said it's going to be one or the other.

[Ingo Ederer:]

Exactly. Of course, the government grant is coming as other operating income. And it could be the case that the refund from the GE is booked under revenue, but this needs to be checked with the auditor.

[Brian Kinstlinger:]

Great. And then in terms of your largest customer, just to be clear about that, and it sounds like you're going to -- you think they'll ship some in the fourth quarter, and then some in the first quarter if I'm not mistaken? And then, do you have any insight into how that customer will have additional orders as we look into next year?

[Ingo Ederer:]

I'm not have additional order for next year.

[Rudi Franz:]

Brian, what are you talking about, the VJET X, correct?

[Brian Kinstlinger:]

Yeah. It's all right. The VJET X, I'm just curious about deliveries and demand for additional printers if at all.

[Ingo Ederer:]

The status here is that we have 5 units now at the customer place. This is the full order. All the remaining printers are now at the customer place with the remaining machines which are installed recently, the customer is studying the pre -phase production -- pre -production phase and after that, we expect that the customer is making their mind on future production possibilities. So, for this moment, we don't have another order at hand. And there is currently also no immediate plan for another order pending.

[Brian Kinstlinger:]

Okay.

[Ingo Ederer:]

And that they make their mind on the possibilities. And of course, we expect that this topic goes on, We will be likely to see other projects like this from the same, but also from other customers probably in the next year.

[Brian Kinstlinger:]

That was going to be my follow-up question. That's great. Talk about the pipeline of the VJET X and the high-speed sintering system. Although, you just got your first beta customer there. How close are you do you think into securing orders from other customers that will drive some revenue for next year?

[Ingo Ederer:]

So, with, with VJET X, currently we are in discussion with several parties about similar projects as we see with this automotive client. They are in different stages of decision-making. I'd say -- I think for this moment, we cannot disclose more. It is a very interesting application, and it could contribute to revenue next year. But it's not guaranteed. On HSS, similar image we are in discussion with several parties about follow-up project after the beta. I think it's very likely that they have further units, as already mentioned, installed at customer places next year.

[Brian Kinstlinger:]

Great. Last question, while it's early. As I look to next year's revenue, there aren't a number of new customer securities. You just said, that's something they are working on. Should we think about next year, just looking a little bit better than this year in terms of revenue? Or do you think once you secure orders, those are going to quickly materialize into revenue? It just seems like the conversion cycle takes a little bit of time, so I guess I'm thinking about next year in terms of revenue and how it looks compared to this year.

[Rudi Franz:]

Brian, we have not given any guidance for 2022. We will give guidance in our Earnings Call in March, but I can say currently is that we for sure plan growth for the upcoming years. And that's how we would see it. We both say it, it won't be 50%. If we see the growth potential currently in the range of 10% to 20%, which we as well say with our work costs. And on the long term, we see the growth potential as just described on HSS, VJET X, and the GE.

[Ingo Ederer:]

But on a general view, you need to see that the 2020 year will be probably again a transition year since the new technologies are, let's say, in the phase of testing, or in the beta phase. So, to be clear, a major breakthrough in sales is more likely to come in '23.

[Brian Kinstlinger:]

Great. Last question I got. Sorry, just on that. What is the conversion if you sold a printer or 2 or 3, how quickly you get those built or if you have them built and then shipped to customers?

[Rudi Franz:]

Currently, from the order intake to the customer shipment or installment, I would say it depends on the system, but it's an average between 2 and 3/4. That's how we see it. VX1000 is one of our top . Let's say it's two quarters, if you order the last platform of VX4000 currently 9 months from the order until the shipment and final acceptance.

[Brian Kinstlinger:]

Great. Thanks for all -- thanks for taking all my questions.

[Rudi Franz:]

Sure.

[Ingo Ederer:]

You're welcome.

[Rudi Franz:]

Bye-bye, Brian. Have a good day.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the floor back over to Ingo for closing comments.

[Ingo Ederer:]

Sure. By winning the contract with GE, we are now working on free potential principal R&D projects, which we believe gives us a chance to enter a phase of meaningful growth in the years ahead. We are very into the about what our teams have already accomplished this year. We believe these new products will increase our total addressable market substantially from project in the energy sector. And then printing of critical components for space exploration, electric, and conventional vehicles to spot equipment from gripping systems for robotic applications to speaker systems and others. And these set of opportunities in the manufacturing space is what makes 3D printing so exciting to us. Thank you for joining today's call. And we look forward to speaking with you again in our next earnings call. And some of you, we may see next week on for in Frankfurt. Thank you.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.