The 3D printing market leader, 3D Systems (NYSE:DDD) recently released its primary earnings highlights for the year 2013. The stock market reacted very sharply after the news floated in, showing a decline in the whole industry stocks including Stratasys (NASDAQ:SSYS), Voxeljet (NYSE:VJET) and ExOne (NASDAQ:XONE). But this fall in price in the industry was not due to the inefficiency of the related companies, but rather a fear about the possible fall in the future growth of these companies. Similarly, Voxeljet has also faced its investor's curiosity over this event. But it's natural for the investors to be curious about such an emerging company in its relative booming industry. Voxeljet on the other hand, is very optimistic about its 2013 financial performance and future growth opportunities.
Solid Financial performance
The 3D printing industry has multiplied in the last couple of years and continues to increase with a projected growth rate of over 26% annually through 2017. Voxeljet has shown strong earnings performance in the year 2013. The past performance of the company is not very strong, but past performance is not always an accurate measure of the future performance. The net revenue increased by 21% in 2013 compared to the last year. This revenue increase is due to the strong sales in systems division of Voxeljet.
The services division showed a mere 0.27% increase in 2013 compared to the last year. The gross profits for the year 2013 have also improved to 7%. However, earnings per share have decreased a bit due to the increased R&D expenses incurred by the company in 2013. Moreover Voxeljet has reduced its finance costs by 74%, which should enable the company to achieve higher free cash flows in the coming years.
With its increasing global sales, Voxeljet has excelled in the European and Middle Eastern Region with a proportion of 45% of its revenue in the year 2013. The company is planning to expand its service centers - it includes the expansion in the existing service center from 16,000 square feet to 40,000 square feet, and new service centers in the U.S. and Asia with a portion of the proceeds obtained from IPO conducted in the last year.
Asian markets are an attraction for the 3D printing industry nowadays. China is the biggest automobile market in the world, and Voxeljet has to reach the Chinese market sooner rather than later. With Voxeljet's expertise in catering world's best car manufacturers earlier like Daimler AG and BMW, China will prove to be an extremely attractive market for the company.
Voxeljet has a unique printing technology that makes its products more efficient. The company offers two printing materials that are sand and plastics. It uses powder binding technology for 3D printing which has the fastest throughput and the lowest materials cost relative to other additive manufacturing technologies. This technology used by Voxeljet has a few advantages over direct 3D printing due to the less material usage through nozzles, and the customer can use a wide variety of materials, including metals and ceramics, as well as color. This puts the company ahead of its competitors in terms of productivity and efficiency.
Voxeljet has no recent plans to enter the consumer 3D printer market yet. It has to focus and fulfill the increasing demand of industrial printers. The competitors are focusing on the consumer printing industry, but the market is already swamped with many personal printers including Peachy (a $97 consumer printer). Voxeljet's future is supported by its own technology, which is patented. The company has around 130 patents in total which includes 20 awarded and 13 pending patents in US. The true potential of the 3D printing industry is in the industrial segment, and the company has very good presence in this segment - Voxeljet's technology and large printing platform allow the customers to achieve better productivity and efficiency. The expansion of service centers should allow the company to further enhance its penetration in the industrial segment.
Voxeljet's stock price has seen a lot of ups and downs since the IPO - however, despite massive swings in the price, the stock is still trading substantially higher than the IPO value. The stock's ability to maintain its price at these levels shows the level of confidence market has in it. As I said above, the main growth area in the 3D printing industry is the industrial segment. The company has one of the best industrial printers with a large printing platform and efficient printing technology. This competitive advantage should allow Voxeljet to further enhance its position in the industry.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.