voxeljet AG
Q3 2020 Earnings Call Transcript

Published: 13 Nov 2020

[Operator:]

Greetings. Welcome to the Voxeljet Third Quarter 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. Please note, this conference is being recorded. At this time, I'll turn the conference over to Mr. Johannes Pesch, Director of Investor Relations and Business Development. Mr. Pesch, you may now begin.

[Johannes Pesch:]

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's issued a press release announcing it's third quarter financial results for the period ended September 30, 2020. 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.

[Ingo Ederer:]

Thank you, Johannes. Good morning, everyone. Thank you for joining us on our analyst call today. Let's turn to Slide 3. With respect to the year 1995 with the first successful dosing of the e-resins in the context of heating project initial 3D printing tests are performed at the Technical University of Norman . Our company was founded on May 5, 1999 as a student of the University with the key mission in mind to establish new manufacturing standards. We want to do this by developing new generated or 3D processes for the steered production of complex components. In early 2018, we were approached by a leading German carmaker who asked us if were able to develop and design a high-speed, fully automated 3D production line; this carmaker wants new additives manufacturing to make it's vehicles more efficient. Towards the end of 2018, it is designed in yield with them for the development of our new 3D printing solution, VJET X. Let's turn to Slide 4. Now, we are extremely sorry to report that while it might have taken us a bit longer than initially anticipated, we have reached three significant milestones in VJET X, and a new large high-speed influential 3D printer over the last month. First, we keep the follow-up orders for three additional VJET X unit, one VJET X unit was ordered in August 2020, and two VJET X units were order in September 2020. The follow-up orders came as part of a framed contract concluded in 2018 between us and our partners and the German carmakers. The first two VJET X units were orders mid-2018 and it is sold in mid-2019 at the carmaker's facility. Then we have significantly improved the printed and facility infrastructure to follow up orders during the current total five VJET X unit for this carmaker.

[Rudi Franz:]

Thank you, Ingo. Good morning, everyone. Overall, we are happy with the quarter as we have made significant progress towards our strategic goal. The highlights that we wanted follow-up orders from the carmakers positions voxeljet better . We had expected to book revenues for four additional printers in the third quarter of this year but we were also impacted by restriction due to COVID-19. As in turn, our installation teams could not travel to customer sites, service revenues in Europe is developing very nicely, and we are at the same level as in third quarter of 2019. For the first nine months of 2020, revenue contribution from VJET X was 5% below compared to first nine months of 2019. Assuming to improve in the rest of China, our colleagues are working hard to collect the order. We continue to monitor our costs very carefully with the additional funds from the European Investment Bank received in June 2020; we can continue our ambitious R&D targets. If you look at our P&L, you will not see revenue contribution from new products, always tends over the cost. Our expectation is that we can do pleasantly for the first five VJET X units in 2021; this carmaker, for example, has multi-year trend when it came to the rollout of this technology. Regarding COVID-19, we continue to work some special measures in place along safety and contamination protocols to ensure the safety of our employee and to reduce risk of operational disruption. Over the last week HSS sales gone up, we are monitoring the evolution -- evolving situation carefully. I will now take you through the financials for the third quarter, after that we are happy to take your questions. Turning to Slide 23. Total revenue increased 11% to €4.9 million in third quarter of 2020 as compared to €4.4 million in last year's third quarter. The increase was driven by higher sales in our Q2 segment, as from larger 3D printers. Revenue from our 3D parts productions have been generally in same level. I think third quarter 2019 had revenue contributions in the U.S. of roughly 30% lower for the same period, China was only flat. Gross profit and gross profit margin the quarter were €106 million and 32% compared to €109 million and 20% in last year's third quarter. If you break this down, systems provided improved gross profit margin close to the target which we have given in the past; absolute gross profits in this segment almost tripled as compared to the same period in the previous year. Gross margin from services also improved driven by strong results in our German facility. Our U.S. and China service centers are working hard to improve their gross margin contribution, so that they are with our guidance through operating for interest rates at improved level as well. The next slide shows our segment reporting for the quarter. On Slide 24, revenues from our service segment which includes revenue from current 3D printers, consumables and spare parts and service maintenance increased 64% to €207 million from the third quarter 2020, from €106 million in last year's third quarter. And what we especially can see the ratings from our after-sales segments in consumer goods as maintenance improved in Chile from the second quarter of this year. We are pleased that gross margin development in U.S. segment gross profit margin increased to 39.30% in the third quarter of this year, up from 22% in the same period last year. As such gross profit in systems segment almost tripled from €4 million in the third quarter last year to €1.1 million in the third quarter of 2020. Earlier this year, we implemented the first stage of our structural efficiency program extension to 2020 plus; we expect to see full P&L effect from the fourth quarter 2020 onwards, and annualized sales as advised to €3 million. Let's turn to Slide 25 and an overview of the development of order backlog for 3D printers in the last quarter. As we can clearly see it's the positive trend of order inflow, which continued throughout the year. For example, with the additional orders for Chile . At the end of the third quarter, order backlog was at €9.4 million. On Slide 26 service revenues increased 21% which was more than third quarter 2020 compared to €208 million last year's third quarter. Services gross profit increased 25% in third quarter 2020 from 18% in last year's same quarter. This improvement driven by strong gross margin contribution from the German service center growing sales at 40%. Looking out to the rest of the income statement on Slide 27; selling expenses were €1.3 million in third quarter of 2020, majority of our selling and administration expense are linked to distribution expenses such as freight and commissions. This compares to €1.7 million in last year's third quarter. Administrative expenses were €1.5 million as compared to €1.6 million in the same quarter last year. Keep in mind, we typically spend more than €1 million and also increased to year-end responsibilities in major consultancies. Research and development expenses were €1.5 million in the third quarter compared to €1.9 million in last year's third quarter. Most of our R&D expense is related to richer mix and the new HSS printer. Operating loss was €3 million in the third quarter 2020 compared to an operating loss of €2.5 million in the comparative period last year. The improvement is largely driven by reduced operating expenses across all functions, high gross margins, and high revenue stream out there, services segment. Net loss for the quarter was €4 million or €0.82 per ADS compared to a net loss €3.7 million or €0.76 in prior year's third quarter. The higher loss was driven by non-cash expense from the revaluation of the derivative financial instruments with the European Investment Bank. This provided the same presentation for the nine months ended September period 2020 throughout 2018. Slide 32 shows selected balance sheet item. At September 30, 2020 the company's cash, cash equivalents and short-term investments in bond funds of roughly €8.9 million. Total debt at September 30, 2020 was approximately €26.6 million. Of this, €25.5 million are non-current and long-term. Long-term debt primarily consist of €15 million from EIB Horizon2020 venture program. Weighted average number of shares outstanding for the quarter equates to 8.6 million ADS. Moving now onto Slide 33 and our financial guidance for the full year. Full-year 2020 revenue range is now expected to be between €20.7 million from currently €26.7 million. The key driver for the adjustment was the date of first of revenue recognition of VJET X and the continued impact of COVID-19. SG&A spending is expected to be in the range of €13 million to €13.5 million and we're really expecting this factor to be between approximately €5 million to €6.25 million. Depreciation and amortization expenses are expected to between €3.5 million and €3.75 million. Cash CapEx spending for 2020 is projected to be in the range of €1.5 million to €1.0 million, which primarily consist of ongoing investments in our global subsidiaries. Adjusted EBITDA which includes the impact of foreign exchange valuation is expected to be neutral to positive for the fourth quarter of 2020. Revenues for the fourth quarter of 2020 is expected to be in the range of €8 million and €10 million. This concludes my remarks. And with that, we now open the call for your questions. Operator?

[Operator:]

[Ingo Ederer:]

Thank you. With the follow-up order for B2B we reached a significant milestone in our mission to bring 3D printing into high volume industrial production. This is excellent news, and this not only highlights the significance of our technology, but also the confidence that leading German carmakers have in our solutions and the players behind it. Together with our partners, we tend to do offer solutions for the mass production of complex light metal parts, and what we believe to be a fraction of the cost compared to other players in the additive manufacturing industry. We plan to follow a similar path with our new large High-Speed Sintering printers and are extremely excited about the new opportunities and markets potential addressed with it. Thank you for joining us on today's call, and we are looking forward to speaking with you again, next year. Thank you.

[Rudi Franz:]

Thank you very much.

[Operator:]

Thank you, everyone. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.