Will Voxeljet Benefit From Planned Investments?

(RTTNews) - This German 3D printer maker has been establishing its large scale service centers, expanding sales & marketing footprints and focusing on new product innovations to fortify its position in the 3D printing industry. The company believes its planned investments in additional capacity in Europe and new service center in the United States and the United Kingdom should position it to generate higher growth in its Services segment in the future.

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The Stock In Focus

voxeljet AG (VJET) provides high-speed, large-format 3D printers and on-demand parts services to industrial and commercial customers.

The company's 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. voxeljet offers its customers the highest volumetric output rate in the industry due to the combination of its large build boxes and print speeds.

It provides its 3D printers and on-demand parts services to industrial and commercial customers serving the automotive, aerospace, film and entertainment, art and architecture, engineering and consumer product end markets.

The company operates in two principal segments: Systems and Services.

Its Systems segment focuses on the sale, production and development of 3D printers. In addition, it sells refurbished 3D printers, which were produced for and used in its Services segment. It also provide consumables, including particulate materials and proprietary chemical binding agents, maintenance contracts and spare parts to the customers.

Revenues from the Systems segment for 2014 were €9.1 million, up 42.8% over 2013. The total number of units sold rose 35.7% to fourteen in 2014 in comparison to nine in 2013.

In its Services segment, the company prints on-demand parts for the customers. It operates service centers in Germany, the United Kingdom, and the United States. At its service centers, voxeljet create parts, molds, cores and models based on designs produced using 3D computer-aided design, or CAD, software.

Revenues from the Services segment for 2014 were €7.1 million, which represents an increase of 32.9% over revenues of €5.3 million in 2013, primarily due to increased capacity at the company's recently expanded service center in Germany as well as the inclusion of results from UK subsidiary in the fourth quarter of 2014 which contributed revenue of €0.9 million.

Sales & Customer Concentration

The company provides high-quality systems and services in the marketplace with strong relationships with a number of leading multinational customers, including Daimler AG, BMW AG, Ford Motor Company, Liebherr Group, Alphaform AG, 3D Systems Corp., Volkswagen AG and Porsche SE, as well as with other key users of additive manufacturing, and technical universities such as the University of Rostock, and the Vaal University of Technology.

It also collaborates on research and development projects with a number of its automotive and technical university customers, including Daimler AG, BMW AG, Ford Motor Company, Volkswagen AG and the Technical University of Munich.

voxeljet's top five customers represented 26%, 41%, and 29% of total revenues for the years ended December 31, 2014, 2013, and 2012, respectively.

The company derives revenue primarily from sales of its 3D printers, consumables and custom 3D printed parts produced at its service centers.

Revenues by geographic region for the year ended December 31, 2014 were EMEA 65%, Asia Pacific 27% and Americas 8%, as compared to EMEA 97%, Asia Pacific 1% and Americas 2% for the same period in 2013, and EMEA 85%, Asia Pacific 11% and Americas 4.0% for the same period in 2012.

Sales outside of Germany represented 71%, 62%, and 53% of the company's total sales in 2014, 2013, and 2012, respectively. About 43.7% and 43.6% of voxeljet's revenues were derived from sales outside of the eurozone region in 2014 and 2013, respectively.

Annual revenues were €16.2 million for 2014, €11.7 million for 2013, and €8.7 million for the year ended December 31, 2012.

Growth Strategies

Establish Large Scale Service Centers

The company recently expanded its service center in Germany, which now contains about 43,000 square feet of production space. voxeljet believes that this service center is one of the largest additive manufacturing service centers in Europe.

October 1, 2014, voxeljet AG completed the acquisition of all outstanding shares of Propshop (Model Makers) Ltd. Terms of the deal remain undisclosed.

Propshop is a physical and digital asset production company primarily focused on building props for the entertainment industry. Propshop is based at Pinewood Studios in London, England. In addition to manufacturing physical props, Propshop provides specialized 3D modelling and scanning facilities. Propshop's clients include Warner Bros., Universal Pictures, Sony Pictures, Disney and BBC Films. Propshop contributed to such films as Zero Dark Thirty, Skyfall and The Dark Knight Rises.

Propshop became voxeljet UK Ltd., a wholly-owned subsidiary of the company, and continues to support the film and entertainment industry, as well as the consumer market for on-demand 3D printing services.

February 5, 2014, Voxeljet's U.S. subsidiary, Voxeljet of America Inc. was incorporated in Delaware. Voxeljet of America is headquartered in its new leased facility near Detroit, Michigan and conducts its North American operations. It began printing on-demand parts at the facility in the first quarter of 2015.

Continue to Innovate

As of February 28, 2015, the company owned or co-owned 34 issued U.S. patents and 15 pending U.S. patent applications. In addition, it owns or co-owns patent rights in Europe, Asia and Canada. In total, as of February 28, 2015 its patent portfolio consisted of over 170 U.S. and international patents and patent applications.

March 2015, the company signed a licensing agreement with Evonik Industries for a 3D printing process using polymeric materials with distinct speed and cost benefits. The company expect the powder bed fusion process, which allows for production of parts with thermoplastic properties, to compete with more traditional plastic injection molding in both speed and part cost regarding ease of processing a wide range of materials. Voxeljet also expects to bring this process to a marketable product within 3 years.

Expand Sales and Marketing Presence

As of December 31, 2014, the company's worldwide sales staff for systems and parts consisted of 32 employees. Voxeljet also appointed managing director for North America and have added 9 employees in the U.S.

Latest Q4 Performance

The company incurred a net loss of $698 thousand or EUR 698 thousand or EUR 0.17 per share compared to a loss of EUR 2.55 million or EUR 0.85 per share in the prior year period.

Revenues increased to EUR 6.94 million from EUR 3.69 million generated a year ago, an increase of 87.8%.

Gross profit was EUR 2,988 in the fourth quarter of 2014 compared to EUR 1,525 in the fourth quarter of 2013. The gross profit margin increased to 43.1% from 41.3% in the previous year.

Ingo Ederer, Chief Executive Officer of voxeljet, said, "I am pleased with our fourth quarter results. We sold seven printers in the quarter and shipped record box volumes for sand parts and generated strong revenues for plastic parts. This helped us achieve the high end of the revenue guidance for the year which we provided back in November. With the first quarter of 2015 nearly complete and the progress of our strategic initiatives, we are off to a good start for the year and we reaffirm our full year 2015 guidance of between kEUR 23,000 and kEUR 24,000 for the group."

At December 31, 2014, the company had cash and equivalents of EUR 8,031 and held EUR 40,068 of investments in three bond funds which are included in current financial assets on consolidated statement of financial position.

Reaffirms FY15 Outlook

For fiscal 2015, the company reaffirmed its revenue forecast of EUR 23,000 - EUR 24,000, up from the prior year's guidance of between EUR 15,000 and EUR 16,000, which they provided on November 13, 2014.

The primary drivers of the Company's anticipated revenue growth for 2015 are expected to be: (1) increased global Systems sales; (2) continued Services revenue growth at its facility in Friedberg, Germany; (3) contribution from Voxeljet of America Inc., the company's Services facility in Canton, Michigan, which began operating in January 2015, and; (4) a full year's contribution from Voxeljet UK, the company's Services facility outside London, England. Based on these factors, the company expects Services revenue growth to outpace Systems revenue growth in 2015.

Long Term Target...

The company's long-term targeted revenue growth rate is in the range of 50%, with gross margins in the range of 45 %- 50%. Its long-term EBITDA and EBIT margins targets remain between 25% and 30% and 10% - 15%, respectively.

voxeljet believes that its continued robust investment in research and development will be the biggest factor in helping it to achieve these operating margins, and its plan is to continue to invest accordingly.