Seeking Alpha
Long/short equity, growth, newsletter provider
Profile| Send Message|
( followers)  

Cautionary Statement on Forward-Looking Statements: This interview may contain forward-looking statements concerning our business, operations and financial performance. Any statements that are not of historical facts may be deemed to be forward-looking statements. You can identify these forward-looking statements by words such as ''believes,'' ''estimates,'' ''anticipates,'' ''expects,'' ''plans,'' ''intends,'' ''may,'' ''could,'' ''might,'' ''will,'' ''should,'' ''aims,'' or other similar expressions that convey uncertainty of future events or outcomes. Forward-looking statements include statements regarding our intentions, beliefs, assumptions, projections, outlook, analyses or current expectations concerning, among other things, our results of operations, financial condition, business outlook, the industry in which we operate and the trends that may affect the industry or us. Although we believe that we have a reasonable basis for each forward-looking statement contained in this press release, we caution you that forward-looking statements are not guarantees of future performance. All of our forward-looking statements are subject to known and unknown risks, uncertainties and other factors that are in some cases beyond our control and that may cause our actual results to differ materially from our expectations, including those risks identified under the caption "Risk Factors" in the Company's Registration Statement on Form F-1 and in other reports the Company files with the U.S. Securities and Exchange Commission. Except as required by law, the Company undertakes no obligation to publicly update any forward-looking statements for any reason after the date of this interview whether as a result of new information, future events or otherwise.

Based in Friedberg, Germany, 3D printing company voxeljet AG began trading publicly on the NYSE under the ticker (VJET) on 10/18/2013 and has been the best performing IPO of the year. voxeljet makes commercial grade 3D printers that utilize plastic and sand materials.

For their Q3 of 2013 voxeljet reported much stronger numbers than analyst expectations for revenue which was up 77% to $4.7M USD, and positive earnings (converted to USD) of .15/share vs. a loss of .04/share for their Q3 of 2012. Overall margins improved to 45.6% from 38.2% in the prior year period.

3D Printing Investor: Congratulations on the very successful IPO and the strong Q3 results. Can you give readers an overview of the company's history- when it was founded, some key milestones, and something I've wondered about, why a lower case letter "v" is used in the company name?

Dr. Ederer:

Thank you. Our IPO is a significant event for voxeljet and is the next phase in our evolution as a company. With the IPO proceeds we will expand our European on-demand parts service center and establish new on-demand parts service centers in North America and Asia. We will also use the proceeds to invest in research and development and sales and marketing initiatives to drive our growth and shareholder value.

voxeljet's roots reach back to the year 1995 when dosing of UV-resins was successful for the very first time. Our first patent was granted in 1998 and we printed our fist sand molds at the Technical University of Munich in 1998.

Voxeljet was then founded on May 5, 1999 with four employees at the TU Munich. In 2002, we sold our first particle material printers to BMW AG and Daimler AG, thus launching us into the automotive space. We launched our services business the next year.

During the next 10+ years, we built out our portfolio of 3D printing systems and today, we offer a full range of machine platform sizes, from smaller entry-level models to large-format machines, offering the perfect 3D print systems for diverse application areas.

Most notably, we launched the first commercially available continuous 3D printer, the VXC800 in 2012. This innovation establishes a completely new generation of machines that allows the building and unpacking process steps to run at the same time, without having to interrupt the operations of the system.

We now have an installed base of 52 printers worldwide, and we currently operate one service center. We are in the process of expanding our existing European service center from approximately 16,000 square feet to over 40,000 square feet of production space, and, with a portion of the proceeds from the IPO, we plan to establish new service centers in North America and Asia.

Regarding using a lower case letter "v" in the company name, it is purely for design reasons - we like the way it looks better than with a capital "V".

3D Printing Investor: Gross margins increased in both systems and services sales, with services increasing to 53.1% in Q3 2013. What changed from last year to increase the service margins by such a great extent, and do you expect to see 50%+ margins in the services segment going forward?

Dr. Ederer:

The increase in gross margin in the quarter was driven by higher utilization (in both segments) which leads to lower relative contribution of fix cost, and a different product mix to the previous quarter in Services. The gross margin in services is highly influenced by product mix. We expect service margin to remain in the range of 40% to 45 % in the near term and we expect services margin to expand in the longer term to 45% to 50%.

3D Printing Investor: Keeping with the Q3 results, only 2% of sales were from the Americas. How does voxeljet plan to ramp sales in the region, particularly in the U.S.?

Dr. Ederer:

We see significant opportunity in the U.S. To serve the U.S. market, we will be opening our first N. American service center in the U.S. Midwest, in closer proximity to our sales agents and end customers located there. We will further penetrate the U.S. market by adding sales agents and increasing our marketing efforts in order to increase sales of 3D printers and on-demand parts.

As we gain momentum in the U.S., we will invest in growing our business throughout the country.

3D Printing Investor: You mentioned opening a Service Center in the Midwest. What locations are you looking at, when will you announce the location, and when do you anticipate it will be fully operational?

Dr. Ederer:

What I can say is that of the $65 million of proceeds we raised from the IPO in October, roughly $40 million will be used for the expansion of our on-demand parts service center in Germany as well as the future establishment of new service facilities in North America and Asia. In North America we have chosen the U.S. Midwest because that's where the majority of our targeted industrial and commercial customers are located, which offers us the biggest opportunities for business development and growth. We have identified several possible locations and expect to make to make a more formal announcement regarding this expansion sometime in the first quarter of 2014.

3D Printing Investor: Will there be additional service centers in the U.S. planned for late 2014 or 2015?

Dr. Ederer:

We will see an additional voxeljet service center come online in Asia in 2015. Since our strategy is to operate our bigger service center hubs first, we will concentrate for the near future on our U.S. Midwest location.

3D Printing Investor: What are some of the competitive advantages of voxeljet 3D printers?

Dr. Ederer:

Our 3D printers employ a powder binding, additive manufacturing technology to produce parts using various material sets, which consist of particulate materials and proprietary chemical binding agents. Powder binding is a process in which layers of powder are bonded by a liquid agent that is deposited through a printhead. This process has the fastest build speeds and the lowest materials cost relative to other additive manufacturing technologies.

We offer our customers the highest volumetric output rate in the industry due to the combination of our large build boxes and printhead speeds.

The size of the build box is important to many industrial and commercial customers, who may want to produce either large-scale industrial parts or large quantities of discrete parts in one batch. We currently offer six 3D printer platforms with varying build box sizes, ranging from 300 x 200 x 150 millimeters to 4000 x 2000 x 1000 millimeters. Among our systems, the VX4000 system offers a build box of 4000 x 2000 x 1000 millimeters, representing a volume that is more than six times the volume of the next largest commercially available 3D printer.

Our industry leading volumetric output rates enable us to produce parts meeting the specifications of our customers at a cost and speed that is attractive relative to traditional manufacturing alternatives, which effectively expands our addressable market.

We believe that our material sets and technology can more readily address industrial and commercial applications than other additive manufacturing technologies because our materials meet or exceed the desired performance characteristics for a wide range of industrial and commercial applications or are already commonly used in traditional manufacturing processes.

Our technology portfolio reflects our continued investments in a range of disciplines, including physics, chemistry, mechanical and electrical engineering and software development. We have a strong base of technology know-how, backed by a robust portfolio of intellectual property featuring patents and trade secrets covering processes, materials and equipment.

In total, our patent portfolio consists of over 170 U.S. and international patents and patent applications. We also exchange information between our Services and our Systems segments to ensure that our development efforts are aligned with our customers' needs. We believe that we have a culture of innovation, and we expect to continue to enhance our solutions both to drive further market adoption of 3D printing and to broaden our market reach.

3D Printing Investor: Investments in R&D increased in the last quarter to about 17% of sales, a level much higher than Stratasys, 3D Systems, and ExOne (who spent between 8 and 11% of sales on R&D). I know you can't be too specific- but in general terms, what areas is voxeljet emphasizing in the expanded R&D efforts?

Dr. Ederer:

We collaborate on research and development projects with a number of our automotive and technical university customers, including Daimler AG, BMW AG, Ford Motor Company and the Technical University of Munich. Together, these relationships provide us with significant insights into our customers' needs and help us to direct our research and development efforts.

Our growth strategy is dependent in part on continuing our investment in research and development activities, which should enable us to meet the needs of our target customers through the development of new material sets and 3D printers with bigger build boxes and faster print speeds.

3D Printing Investor: Will voxeljet enter the metals market at some point?

Dr. Ederer:

We serve the metals market through our casting applications already. Of course we could also print directly in metal powders, but the result is not what our customers are looking for. We believe that providing moulds or patterns in this respect is much closer to production quality. And, there are other techniques out in the market that are much better suited for metals than our powder binder-jetting process, such as laser-melting. However, with some special metals like tungsten we think we can offer a competitive solution to our customers in the future.

3D Printing Investor: Citron Research recently came out with a short report on voxeljet that questioned the company and its growth prospects. What is your response to this report?

Dr. Ederer:

As you know, Citron is short voxeljet and has a vested interest in seeing our stock price drop. There were several factual inaccuracies in their report, combined with sensationalism and an inappropriate title that got the interest of the media and the public.

Nevertheless, we do understand the scrutiny that comes with being a public company - particularly one whose stock price has performed well in a relatively short period of time since its IPO. What I can tell you is that we are extremely focused on running our business - growing both our Systems and Services business. We offer our customers what we believe to be the industry's highest-speed, largest-format printers with the highest output rates which are key differentiators for industrial and commercial customers seeking to build either very large parts or large quantities of complex parts. Today we offer six different machines providing us with numerous ways to meet the growing demand for 3D printing in our target markets.

We know we have a real, long-term growth business in voxeljet and we are confident we will deliver shareholder value as we execute on our growth strategy.

We leave the valuation of our company to the market.

3D Printing Investor: Last question- Where do you see voxeljet five years from now in terms of new geographic markets and expansion into new industries that will adopt the utilization your machines?

Dr. Ederer:

In addition to our direct sales force, we have built an extensive global network of over 25 distributors in Europe, the Americas, the Middle East, Africa, Asia and Australia. We will continue to invest in expanding our distribution footprint to further penetrate our existing markets and to reach attractive new geographies.

We continue to actively pursue opportunities in our targeted verticals, which utilize larger scale parts that require customization, complexity and short lead times. We believe our planned service center expansions, our continued investment in research and development and expanded sales and marketing capabilities will help us further penetrate these verticals. We serve our targeted industry verticals both directly and indirectly through foundries and service bureaus. Our targeted industry verticals include:

  • Automotive
  • Aerospace
  • Film and entertainment
  • Art
  • Architecture
  • Engineering
  • Packaging
  • Education
  • Medical
  • Consumer products
Source: Q&A With Dr. Ingo Ederer, CEO Of Voxeljet AG