While we’re seeing lower numbers and repeatedly hearing the word ‘decrease’ rather than ‘increase’ regarding Germany’s voxeljet and their first quarter earnings for 2016, they seem to be marching to their own drummer, thrusting forth positivity in the face of what actually looks like potential concern for shareholders. We definitely aren’t seeing a jumpstart for the year here, but the company remains focused on and committed to their outlook for 2016 as earnings continue to be erratic, following much of the same downslope as other large 3D printer manufacturers like 3D Systems and Stratasys. The word ‘challenging’ is used often to describe the atmosphere at what used to be considered to be the top of the industry, with operating costs often to blame for poor numbers.
Obviously revenue is being heavily scrutinized on all fronts, due to most of our titans showing weakness—and enough for concern. And while voxeljet has had a fairly auspicious start to the year in terms of appearances, due to winning the coveted ‘Component of the Year’ flagship award from the British Cast Metals Federation and then the highly advertised arrival of their VX4000 3D printer stateside to the Canton facility in Michigan—as we all know—the numbers don’t lie.
The report shows that total revenues decreased 12.9% to kEUR 4,870 from kEUR 5,589. And figures are lower for both sectors of their business:
The Systems division, focusing—as its name would suggest—on development, production, and sale of 3D printers, decreased 1.2% to kEUR 2,783 in the first quarter of 2016 from kEUR 2,817 in last year’s first quarter. Sales of hardware were down slightly as they delivered only three new printers in Q1 2016, compared to four printers last quarter. Systems revenues also encompass those from consumables, spare parts, and maintenance. Systems revenues represented 57.1% of total revenues in the first quarter of 2016 compared to 50.4% in last year’s first quarter.
Revenues from the voxeljet Services division, which centers around the printing of on-demand parts for customers, decreased 24.7%, to kEUR 2,087 in the first quarter of 2016 from kEUR 2,772 for the same quarter last year. The company states that this was primarily because of lower revenues from their subsidiary, voxeljet UK Ltd. Although ‘successfully restructured’ last year, the revenue from voxeljet UK was kEUR 117 compared to kEUR 912 in last year’s first quarter—and lower than demonstrated for this quarter last year.
Revenues from voxeljet AG for the first quarter of 2016 were lower too when compared to first quarter for last year. According to the company, this was partially offset by a higher revenue contribution from voxeljet America.
“I am pleased with our first quarter results, where we successfully installed two printers with our new PDB process,” said Dr. Ingo Ederer, Chief Executive Officer of voxeljet. “In addition, the establishment of our new subsidiaries in India and China shows great progress. Demand for both our systems and on-demand printed parts remains robust.”
Gross profit was kEUR 1,331 in the first quarter of 2016 compared to kEUR 1,879 in the first quarter of 2015, exhibiting another significant drop which the company attributes to lower gross profit contributions from voxeljet AG and voxeljet UK—although these figures were balanced out somewhat by the gross profit contribution from voxeljet America, which had improved significantly. Gross profit margin decreased to 27.3% in the first quarter of 2016 from 33.6% in the first quarter of 2016.
In terms of the Systems division, gross profit decreased to kEUR 693 in the first quarter of 2016 from kEUR 772 in the first quarter of 2015, and the gross profit margin for this segment decreased to 24.9% in the first quarter of 2016 compared to 27.4% in the first quarter of 2015. Powers that be at VoxelJet see this decrease as being due to two of the three 3D printers sold in the first quarter of 2016 being equipped with new processes. They go on to inform that ‘products incorporating new processes typically contribute lower gross profit at the beginning of the product life cycle.’ New employee count, which was increased due to growth strategy also resulted in lower gross profit.
“As of March 31, 2016, 68 people were employed in the Systems segment, compared to 41 as of March 31, 2015,” states the report—and of course, their hiring demonstrates confidence in their outlook for the rest of the year, and beyond.
Gross profit for the services division decreased to kEUR 638 in the first quarter of 2016 from kEUR 1,107 in the first quarter of 2015. The gross profit margin for this segment decreased to 30.6% in the first quarter of 2016 from 39.9% in the first quarter of 2015. Voxeljet explains this as being lower gross profit contributions from voxeljet AG, as well as voxeljet UK due to a lower utilization ratio–partially offset by higher gross profit and gross profit margin contributions from voxeljet America, again offering positivity for the company.
“Gross profit margin highly depends on the degree of capacity utilization,” states the company in their report. “A ramp-up in services revenues would lead to a stronger gross profit margin.”
Relevant expenses were accounted for as follows:
- Selling expenses were kEUR 1,203 for the first quarter of 2016 compared to kEUR 1,416 in the first quarter of 2015. This decrease was because of lower selling expenses for voxeljet UK.
- Administrative expenses were kEUR 1,096 for the first quarter of 2016 compared to kEUR 1,619 in the first quarter of 2015. This decrease was again due to less expenses in voxeljet UK because of restructuring.
- Research and development expenses decreased to kEUR 1,307 in the first quarter of 2016 from kEUR 1,560, again due to the restructuring of voxeljet UK, resulting in the canceling of R&D altogether.
- Other operating expenses in the first quarter of 2016 were kEUR 1,129 compared to kEUR 206 in the prior year period–due to expenses from foreign currency transactions amounting to kEUR 759 (Q1 2015: kEUR 100).
Operating loss was kEUR 3,087 in the first quarter of 2016, compared to an operating loss of kEUR 1,466 in the prior year period. This is significant because of lower gross profit contribution from both segments Systems and Services as well as a negative net impact from foreign exchange valuation amounting to kEUR 721 compared to a positive net impact of kEUR 824 in last year’s same period.
According to voxeljet, financial result was negative kEUR 27 in the first quarter of 2016, compared to a financial result of negative kEUR 99 in the prior year period. The decrease in interest expense was mainly driven by the reduced number of finance leases after the restructuring of voxeljet UK in 2015.
Net loss for the first quarter of 2016 was kEUR 3,114, or EUR 0.84 per share, as compared to net loss of kEUR 1,630, or EUR 0.49 per share, in the first quarter of 2015.
“We reaffirm our full year 2016 guidance of revenues between kEUR 28,000 and kEUR 30,000 for the Group,” said Dr. Ederer.
What’s driving this continued positive attitude? They expect to see:
- Increased global systems sales
- Continued services revenue growth at the facility in Friedberg, Germany
- Continued contributions from voxeljet America
Also lending to the air of optimism are two new subsidiaries: An Indian subsidiary, located in the city of Pune, near Mumbai; the establishment of a Chinese subsidiary, located in Suzhou, near Shanghai.
For Q2 2016, guidance is in the range of kEUR 6,500 to kEUR 7,000. The company currently has cash and cash equivalents of kEUR 1,589 with kEUR 30,727 and held kEUR 30,727 of investments in three bond funds and one note receivable.
The Company held a conference call and webcast regarding first quarter results this morning, with participation from Chief Executive Officer, Dr. Ingo Ederer, and Chief Financial Officer, Rudolf Franz. If you would like a recap, a live webcast will be available on the invester relations page at voxeljet. Discuss these earnings further in the voxeljet Q1 Earnings Report forum over at 3DPB.com.[Source: Business Wire]
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Preparation of financial statements
Our consolidated interim financial statements include the accounts of voxeljet AG, which is listed on the New York Stock Exchange, and its wholly-owned subsidiaries voxeljet America Inc, voxeljet UK Ltd. and voxeljet India Pvt. Ltd., which are collectively referred to herein as the ‘Group’ or the ‘Company.’
Our consolidated interim financial statements were prepared in compliance with all applicable measurement and presentation rules contained in International Financial Reporting Standards (‘IFRS’) as set forth by the International Accounting Standards Board (‘IASB’) and Interpretations of the IFRS Interpretations Committee (‘IFRIC’). The designation IFRS also includes all valid International Accounting Standards (‘IAS’); and the designation IFRIC also includes all valid interpretations of the Standing Interpretations Committee (‘SIC’). Specifically, these financial statements were prepared in accordance with the disclosure requirements and the measurement principles for interim financial reporting purposes specified by IAS 34.
The IASB issued a number of new IFRS standards which are required to be adopted in annual periods beginning after December 31, 2015.
|IAS 7||01/2017||Amendments Disclosure Initiative|
|IAS 12||01/2017||Amendments Recognition of Deferred Tax Assets for Unrealised Losses|
|IFRS 15||01/2018||Revenue from Contracts with Customers|
|IFRS 9||01/2018||Financial Instruments|
|IFRS 10, IAS 28||to be determined||Amendment Sale or Contribution of Assets between Investor and its Associate or Joint Venture|
The Company has not yet determined what impact the new standards, amendments or interpretations will have on its financial statements.
The interim financial statements as of and for the three months ended March 31, 2016 and 2015 were authorized for issue by the Management Board on May 12, 2016.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these interim financial statements are set out in the Company’s financial statements as of December 31, 2015, which can be found in its Annual Report on Form 20-F that was filed with the U.S. Securities and Exchange Commission. These policies have been applied to all financial periods presented.
|(€ in thousands)|
|Work in progress||7,516||6,095|
4. Intangible assets and goodwill
|(€ in thousands)|
|Prepayments made on intangible assets||177||159|
|(€ in thousands)|
The change in goodwill is related to foreign currency valuation.
5. Property, plant and equipment
|(€ in thousands)|
|Land, buildings and leasehold improvements||12,106||12,167|
|Plant and machinery (includes assets under finance lease)||7,284||7,702|
|Other facilities, factory and office equipment||1,400||1,413|
|Assets under construction and prepayments made||404||101|
|Leased assets included in Property, Plant and Equipment:||1,922||2,059|
|Printers leased to customers under operating lease||463||500|
|Other factory equipment||64||69|
No impairment of non-financial assets was recorded in the three-month period ended March 31, 2016.
6. Other liabilities and provisions
|(€ in thousands)|
|Liabilites from VAT||27||32|
|Accruals for management compensation||67||—|
|Accruals for vacation and overtime||251||110|
|Accruals for licences||193||183|
|Accruals for LTCIP||543||478|
|Liabilties from payroll||177||216|
7. Financial instruments
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair values and carrying amounts of financial assets categorized as loans and receivables and available for sale securities as well as of financial liabilities for the considered reporting periods were as follows:
|Restricted cash||—||—||—||206||—||206||Level 1|
|Bond funds||—||—||29,730||—||—||29,730||Level 1|
|Note receivable||—||—||997||—||—||997||Level 1|
|Cash and cash equivalents||—||—||—||1,589||—||1,589||Level 1|
|Long-term debt||—||—||—||—||492||470||Level 2|
|Finance lease obligation||—||—||—||—||642||599||Level 2|
|Long-term debt||—||—||—||—||208||206||Level 2|
|Finance lease obligation||—||—||—||—||529||553||Level 2|
|Restricted cash||—||—||—||206||—||206||Level 1|
|Customer loan||—||—||—||10||—||10||Level 2|
|Bond funds||—||—||30,661||—||—||30,661||Level 1|
|Note receivable||—||—||1,075||—||—||1,075||Level 1|
|Cash and cash equivalents||—||—||—||2,086||—||2,086||Level 1|
|Long-term debt||—||—||—||—||545||520||Level 2|
|Finance lease obligation||—||—||—||—||746||701||Level 2|
|Long-term debt||—||—||—||—||207||206||Level 2|
|Finance lease obligation||—||—||—||—||559||589||Level 2|
The fair value of the Company’s investments in the bond funds was determined based on the unit prices quoted by the respective fund management company.
The fair value of long-term debt was determined using discounted cash flow models based on the relevant forward interest rate yield curves. The fair value of finance lease obligations was determined using discounted cash flow models on market interest rates available to the Company for similar transactions at the relevant date.
Due to their short maturity and the current low level of interest rates, the carrying amounts of credit lines and bank overdrafts approximate fair value.
8. Segment reporting
The following table summarizes segment reporting. The sum of the amounts of the two segments equals the total for the Group in each of the periods.
|Quarter Ended March 31,|
|(€ in thousands)|
|Gross profit in %||24.9%||30.6%||27.4%||39.9%|
The Group’s revenues by geographic region were as follows:
|Quarter ended March 31,|
|(€ in thousands)|
10. Subsequent event
On December 1, 2015, voxeljet signed a definitive agreement to form a new entity named voxeljet China Co., Ltd. (“voxeljet China”) with Suzhou Meimai Fast Manufacturing Technology Co., Ltd. (“Meimai”) to pursue opportunities in the industrial 3D printing market in China. voxeljet AG injected € 0.9 million of cash in April 2016. The capitalization of voxeljet China will occur in stages and involve the contribution of certain assets and transfer of executory contracts, primarily a rent free lease, by Meimai. voxeljet AG will own at least 70% of the equity in voxeljet China and the interest owned by Meimai after its contributions will be subject to put and call options.
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