SLM Solutions (ETR: AM3D) had a solid performance in the first half of the year. The laser-based metal additive manufacturing company posted a slight year-over-year revenue increase for the six months ending June 2021 and a significantly strong order intake bolstered by an order backlog that even surpassed pre-pandemic levels. During the period, SLM received orders totaling €24.7 million ($28.9 million), an 80% increase compared to only €13.7 million ($16 million) in the first half of 2020, which was heavily burdened by Covid-19-related lockdown measures. If the backlog continues to increase, then the company forecasts revenue growth for the second half of the year.
Against the backdrop of the global pandemic, SLM – like other 3D printing companies – began recovering towards the end of 2020 and are now returning to pre-pandemic operating levels. As a result, the German 3D printer manufacturer announced on August 12, 2021, year-over-year growth in sales of only 2%, from €31.2 million ($36.5 million) in 2020 to €31.7 million ($37.1 million).
However, since 2016 the business has struggled to post annual profits. In 2019, losses for the first six months of the year reached €30.8 million ($36 million), while 2020 witnessed a significant improvement, but still with losses of €12.5 million ($14.6 million). During the first half of 2021, SLM continues to post net losses of €12.3 million ($14.4 million) but exhibited a slight improvement year on year.
CEO Sam O’Leary said the easing of Covid-19 related meetings, travel, and other restrictions due to an increase in the vaccination levels globally have improved overall operating conditions considerably. However, the big difference between the first half of 2020 and 2021 is in the order intake and backlog. Order backlog gained 58% year on year, from €19.2 million ($22.5 million) to €30.2 million ($35.4 million). Moreover, this difference has provided what the company describes as a “healthy basis” for the acceleration in revenue growth that is expected for the second half of 2021.
The order intake improvement reflects a strengthening demand for AM technology globally. In line with the general trend, SLM received orders of €11.3 million ($13.2 million) in the second quarter of 2021. Working to enhance its presence in a renewed market, O’Leary highlighted that a few weeks ago, SLM Solutions signed the first deal with a major original equipment manufacturer (OEM) in the United States aerospace industry to deliver SLM’s industrial metal 3D printer NXG XII 600, launched in March 2021. The first system delivery is scheduled for the second quarter of 2022, and the CEO anticipates that the platform is “evolving as intended” and as “the important driver of SLM’s further growth” beyond 2021.
Additionally, SLM is centering on wrapping up negotiations with two other key players in the same segment during the third quarter of 2021. Given the ongoing positive momentum of the NXG XII 600 across the automotive, aerospace, and energy industries, SLM expects to deliver between 10 and 15 machines in 2022 and has received purchase orders for four systems, three in backlog and one in beta already delivered.
“From our point of view, these encouraging dynamics on the sales side illustrate that the NXG XII 600 is well underway to become the laser powder bed fusion system of choice for key players in the aerospace, automotive, and energy sectors,” concluded O’Leary.
Moreover, as the U.S. space industry continues to thrive, SLM realized this is a major opportunity for additive manufacturing companies, as space startups are veering towards 3D printing service bureaus for complex spacecraft part production. To satisfy the growing demand in this arena, SLM announced it will build a center of excellence for nickel-based superalloys on the country’s west coast, which is expected to be operational in the fourth quarter of 2021.
With a market capitalization of €387.9 million ($454.3 million), investors are looking at the company’s stock price, which is having a bit of a rollercoaster year in 2021, oscillating between share prices as low as €15.32 ($17.94) and peaks of more than €20 ($23.42) on the German Stock Exchange. Fortunately, the company continues to benefit from multiple one-off effects such as a forgivable loan for its U.S. entity, short-time work at its German headquarter in Lübeck, and the release of accruals.
Additionally, in June, SLM was granted patent protection for its proprietary industry-leading multi-laser overlap technology. The company also said it has “notably strengthened” its balance sheet over the last months after having received in April the second tranche of €15 million ($17.6 million) from its 2020 convertible bond agreement and raising €25 million ($29.3 million) in capital. The proceeds from both transactions will help support investments in strategically important areas such as the NXG XII 600, as well as the expansion of its international sales and service network.
Overall, based on the sound order backlog and the overall business dynamics, SLM Solutions reaffirmed its outlook for 2021 and expects revenue growth of at least 15% compared to 2020, along with a year-on-year improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA).
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