Johannes Pesch - Manager, Investor Relations and Business Development Ingo Ederer - Chief Executive Officer Rudolf Franz - Chief Operating Officer and Chief Financial Officer

Troy Jensen - Piper Jaffray Kenneth Wong - Citigroup James Medvedeff - Cowen and Company Saliq Khan - Imperial Capital Shenlun Wang - Brean Capital LLC Ben Hearnsberger - Stephens Inc

Greetings, and welcome to the voxeljet Second Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's my pleasure to introduce your host Mr. John Pesch, of Investor Relations. Thank you. You may now begin.

Thank you, operator, and good morning everyone. With me today are Dr. Ingo Ederer, voxeljet's Chief Executive Officer; and Rudi Franz, voxeljet's Chief Financial Officer. Yesterday after the market closed, voxeljet issued a press release announcing its second quarter results for the period ended June 30, 2016. The release as well as the accompanying presentation for the conference call is available in the Investor Relations section of the company's website at voxeljet.com. During our call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance and therefore one should not place undue reliance upon them. Forward-looking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release, as well as the Risk Factors contained in the company's filings with the Securities and Exchange Commission. With that, I would now like to turn the call over to Ingo, Chief Executive Officer of voxeljet.

Thank you, Johannes, and good morning, everyone. Thank you for joining us on our earnings call today. I'm going to give a brief overview of our results for the first quarter and then update you on the status of our strategic initiatives. Rudi will provide a more detailed review of our financial results for the period. Overall, I’m pleased with our consistent strong execution and the focus on service excellence by the internal voxeljet team as we work through this challenging operating environment. I want to thank everybody at voxeljet for their continued dedication to our customers in our company. I strongly believe we are well positioned to build deals successfully with the recent market sector and continue expanding our leadership position in the 3D printing industry. Let’s turn to Slide 5 of the presentation and begin with the highlights for the second quarter 2016. Revenue for the quarter was €6.3 million, which represents a 50% growth compared to last year’s second quarter. We did not get final approval for one system and we therefore missed our Q2 guidance slightly. Revenues from our Systems segment which focuses on the development production and sale of 3D printers increased 97% to €3.8 million in the second quarter of 2016 from €91.million in last year’s second quarter. We delivered six printers in this year’s second quarter compared to three printers in last year’s second quarter. Systems revenue also includes all revenues from consumables, spare parts and maintenance. Revenues from our services segment, which focuses on the printing of on-demand cards for our customers decreased 30% to €2.5 million in the second quarter of 2016 from €3.5 million for the same quarter last year. This was mainly due to the lower revenue contribution from our subsidiary voxeljet UK. Please keep in mind, we successfully restructured our subsidiary in UK and focused the activities on selling printers and supplying on-demand parts only. The drop in revenues in the UK of approximately €1.1 million compared to last year’s second quarter is primarily due to the discontinued labor intensive post processing activity. This drop was partially offset by significantly increased service revenue contribution from our subsidiary voxeljet America. Moving to Slide 7 and 8, I would like to take the time to update you on our growth strategy. The first driver of our business is large scale service centers across the globe, in line with this, we successfully started our own operation in the U.S., UK, India, and China. We now have an active presence in the most relevant manufacturing markets around the world. With the right infrastructure in place, we are training our new colleagues and focusing our activities on driving sales. For example, last month I was in China with my team, visiting several of our customers. As stated in previous prospects this market carries a huge potential and we have just started to take advantage of it by having a local presence with our subsidiary voxeljet China. We already have a strong team in all subsidiaries and continue to hire additional sales [indiscernible]. The second driver is our focus on continued innovation and advancement in technology for ongoing research and development, you have heard me speaking extensively about this in the past, but we are currently in the various stages of developing new and improved mature path including various [indiscernible]. This is extremely important to our future growth as we diversified our revenue stream and create new opportunities. For example, we have successfully introduced Phenolic Direct Binding. And now the interesting is confidence our inorganic, we are seeking great improvement in quality and reviewing a lot of positive feedback from metal casting benchmark. Furthermore, we found other interesting applications for our material in concrete caste. We have already conducted short benchmarks for complex forward the result exceeds our expectations. Our printers' unit space size of up to eight cubic meters is our key advantage here and we are working on some larger projects. This means we are not only addressing metal foundries, but also concrete casters designers and [indiscernible] manufacturing. The third driver to our business is to expand our sales and marketing metrics, which we believe will increase our market penetration and facilitate the adoption of our technology. Slide 9 and 10, gives us a view on the expansion for our headquarter. The new office building and increased systems assembly capacity is beginning to take shape. We are excited about the progress we have made and expect construction to be completed in early 2017. The new building offer 3000 square meter of production space and 1000 square meters of office space and will support our long term growth strategy. This also optimizes our financials as we no longer have to rent expensive external space. Before I conclude my remarks and turn the presentation over to Rudy, let me take a moment to reflect on the current market environment. Our [indiscernible] system which consists of potential customer base for which we expect to receive purchase order and the Q2 remains strong. However, as we have seen from our earnings release yesterday, we experienced delayed customer adoption rate. We see lead times between three and nine months and could not yet convert enough of our opportunities into backlog. This would put pressure on our top-line growth for the second half of 2016. We have therefore lowered the forecast for expected full-year revenues to a range of €24 billion to €25 billion, which we present the range of [0%] (Ph) to 5% growth. The adjustment is not the result of the actual performance in the first six months but reflect our updated expectations of bookings in the month ahead. The reason here is twofold first, we continue to operate in a more and more complete economic environment and are subject to volatile foreign currency [indiscernible]. For example, the oil price declined as had also put impact on investments and oil and gas extraction equipment. Company is operating in the oil and gas industry a very interesting segment for us, as part of which tend to be complex in lot sizes are reasonable. Generally speaking, we learn from our customers that recent political development increased on processes and leads some of them to delay the plants investment. second, the transitional format production to mass capitalization requires organizational changes on our customer side, because this product manufacturing supply chain redesign is used by 3D printing significantly [indiscernible] core for organization such changes and therefore investments are not yet happening as quickly as expected. We are currently in the heart of the transformation zone and we have said what we believe are realistic numbers while we make our way through the transition periods. The automotive industry is an interesting example with industry being on the verge of [indiscernible] shift toward electrification, global OEMs and the supplier are seeking differentiator to set them apart as leaders in this new function. Many of them are evaluating our technology and they are finding make us very confident about the future. In line with our vision 2020 on Slide 11, we identify manufacturing and supply chain initiatives to address these current challenges and already completed actions to better align our cost structure and position us to navigate more effectively through this transition period. As you can see in all of the areas under our control, we are working hard and we are making progress. With the strong liquidity base, we are well prepared to execute on our vision to 2020 and to deliver long-term value to our shareholders. That brings me to the end of my part of the formal presentation. I will now turn the call over to Rudi. Rudi.

Thank you, Ingo. Good morning everyone. I'll now take you through the financials. Turning to Slide 13, our total revenues increased 15% to €6.3 million for the second quarter compared to €5.5 million in the last year's second quarter. Gross profit and gross margin in the quarter were €2.3 million and approximately 37% compared to €1.8 million and 34% in last year's second quarter. The next slide shows our segment reporting for the quarter. On Slide 14, revenue from our systems segment, which includes revenues from selling 3D printers, consumables and spare parts as well as maintenance, increased 97% to €3.8 million for the second quarter of 2016 from €1.9 in last year's second quarter. We sold three new and three refurbished printers in second quarter compared to three new printers in last year same period. System revenues represented 61% of total revenues in the second quarter 2016 compared to 35% in last year's second quarter. Gross profit and gross margin for our systems segment in the quarter was €1.1 million and 29% compared to €0.6 million and 33% in last year's same period. The reason for lower gross margin is twofold, new process typically contribute lower gross profit at the beginning of the product large cycle due to higher warrantee spending. Second we prepare ourselves for future growth by increasing staff like [indiscernible] installation service technicians especially for our Asia and U.S. subsidiary. As this utilization picks up, we expect gross margin from system segment to be in the range of 40% to 45% consistent with the outlook we have given in the past. On Slide 16, service revenues decreased 30% to €2.5 million in the second quarter of 2016 compared to €3.6 million in the last year's same quarter. The decrease is mainly due to lower service revenue contribution of voxeljet UK amounted to €1.1 million. Last year’s second quarter was particularly strong in service revenues, but weak on margins in line with effect to the restructuring of voxeljet UK. Our gross profit increased to 48% in addition to that utilization in our U.S. operations picks up. As mentioned in previous calls the innovation is key to earnings that across margin. Looking now through the rest of the income statement on Slide 16, SG&A expenses were €2.4 million in the second quarter of 2016. This compared to €2.8 million in last year's second quarter. Research and development expenses were €1 million compared to €1.4 million in last year's second quarter. The decrease is related to the termination of certain non-core R&D projects at voxeljet UK as part of our restructuring. We continue to invest in core R&D in Germany with a number of active projects in various stages of development, which strengthens our leadership and technology. Our operating loss of €1.6 million in the second quarter of 2016 was a result of lower gross profit contribution from lower segments as well as traditional foreign currency losses. The change in foreign currency losses in gain were primarily driven by the valuation of the inter company loans credited by the parent company to its U.S., UK subsidiaries. The financial impact primarily reflect the weakening of the GDP in the second quarter of 2016 following the Brexit vote compared to gains in the comparative period. This was partly offset by lower operating expenses with the functions SG&A and R&D. Net loss for the quarter was €1.7 million or €0.46 per share, as compared to net loss of €2.1 million, or €0.57 per share, in the prior year quarter. On an ADS basis. net loss of €0.09 per ADS compares to net loss of €0.11 per ADS in second quarter of 2016. We have provided same presentations for the six months period ended June 30, 2016 on Slide 17 through Slide 20. Slide 21, shows selected balance sheet items. At June 30, 2016, the company had cash and cash equivalents and short-term investments in bond funds of roughly €32 million. Total debt at June 30, 2016 was approximately €2.9 million. Weighted average shares outstanding for the quarter was €3.72 million, which equates to €18.6 million ADSs. We believe that our balance sheet positions us well for the long-term. Moving now onto Slide 22 and our revenue guidance for the year; we lowered our targets for expected full year revenue to €24 million to €25 million, the gross margin is expected to be in the range of 35% to 40%. SG&A spending is expected to be in the range of €9 million to €9.5 million, and R&D spending to be approximately €4 million to €5 million. As a consequence, we expect become EBITDA neutral to positive, on the fourth quarter of 2016. CapEx spending for 2016 should be in the range of €10 million to €11 million, which primarily consists of ongoing investments in our global subsidiary, as well as the construction of two new buildings at our companies in Germany to support increased production capacity. Our [indiscernible] revenue guidance for the third quarter of 2016 is revenues in the range of €4.5 million to €5.5 million. We expect to release our financial results for the third quarter of 2016 after the closing of the financial markets on Thursday, November 10, 2016, and host a conference call and webcast to review the results for the quarter on Friday, November 11, 2016 at 8:30 A.M Eastern Time. This concludes my remarks. And with that, we will now open the call for your questions. Operator?

Thank you ladies and gentlemen. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of. Please go ahead.

First of all, I guess if you think over the past three months, three month ago [indiscernible] think really positively [indiscernible] pipeline and that was a change from where we learned mindset in February. So can you sort of talk about kind of what to inspire in the past couple of months to see such a dramatic change and you guys since done in the second half here?

This is Ingo. So what we see is currently what I already expressed also in my presentation is I let's say, more difficult environment in getting the prospects from the being a prospect to customer. I think we still a very [indiscernible] list of prospects, but we see it becomes more challenging for to us to turn them into customers and bring them to an order.

I think I asked Ingo was this lost deal to a competitor or is it just kind of [Indiscernible] that you think you are going to still win?

Of course we see it on both sides, so we have also competitor acting in field, but other side it's also a I would say a bit of cool down in the overall economical situation.

Okay that’s fair. And how much of reduced guidance would be lower system demand versus lower services expectations?

We did not give guidance for that Troy, but based on what we achieved in the first half of the year, I would say it's very likely that it's in the same ratio. So we had all at 60% systems revenue, 40% services, currently we don’t believe that we can catch up what we lost in the service revenue in the second half. So I would say it's should be in the same range.

Okay and how much of it - is it safe to assume on services side really some significant weakness rather than German automotive [indiscernible].

We spoke about the service revenue in our Q1 early call already if you reconsider. We had a poor first quarter, which really improved in the second a lot in Germany. In Germany we are well back on track, the U.S. is catching up, but what happened in the first quarter in January, February, we could not make or we could not increase as much in the second. And therefore as now we said we have to be realistic what can we achieve in Q3 and Q4. So we don’t mean that we are negative but we were ambitious and try to get more business into to get back to the previous guidance. But again, we become more comfortable and that will be reduced this [indiscernible].

[indiscernible].

Can you please repeat it Troy I didn’t get you.

Thank you. Our next question comes from the line of Ken Wong from Citigroup. Please go ahead.

Hey guys So, Ingo you called about the oil and gas energy sector I’m just wondering outside of that particular customer base, are you seeing weakness from many of your other customer verticals?

Thank you, for this question. Currently what I can say is that that there is we are still positive with this, it's not the way that we don’t see a potential front. What I am saying is that some of the [indiscernible] we are studying to becoming more cautious. Oil and gas business is good example ,but we have similar development also in other areas and to be honest this is also regional things. You know we have still issues with the Russia we have the Turkey is being coming up, we have the Brexit, we have the currency changes. It's becoming overall a bit more challenging for us. And the growth rate we wanted to achieve are ambitious also my colleague said, we are currently saying we are still on track, we are making good business but the growth rate under this environment is a bit more tricky.

As Ingo said, Russia, Turkey, UK are quite interesting markets, and in the current environment we have to be realistic what can be achieved and how to those country stabilize going forward. Currently we don’t know what happen in Turkey and in Russia it's for at least two year pretty dry for us.

Got you and then in the earlier question from Troy and you guys did kind of call out competitive dynamics a little bit just wondering how you are seeing that [indiscernible] business is it on pricing, is it customers choosing, the competitive alternatives, essentially you are saying technology but obviously from a different angel?

What we see for sure in all of our products that we have competition in some more and some less. Some competitors are prepared to take high discounts on the equipments will be simply say it doesn't make sense to us to compete. We seeks for other opportunities and therefore we prefer our sales for lots going into price discussions we are still in the very early stage of the adoption of this technology and there are opportunities for us. But that’s what we current we have accept that in some product, in some products we definitely see quite interesting quotations from competitors.

Got you and then last thing for me, on the CapEx you guys trimmed it from €12 million to €13 million to €10 million to €11 million. Is this that just you guys just pulling back on the spending a little bit or just you guys are pushing out some of the investments to next year how should I interpret that?

I think you gave the answer already. It's exactly as you said.

Okay is it just you guys are deliberately being conservative on spending or again it is just you guys might have a facility, you guys are planning to rollout in that cap and now like to pushed to 2017.

We have been more aggressive for example on our engine activities currently we have to set out there and initially we plan to have a service center in Q2 that moved down to Q4 quite down as well. We plan to shift certain printers or printing equipments into subsidiary little later until we see the utilization is on the right level. It's more or less a balancing and it moves the quarter to end again the main drive to us is first of all gross margin. We want to see the gross margin in a range always 40% to 45%. We believe that the gross margin services show some good momentum and our [indiscernible] system we have results a good opportunity overall to get organization to become EBITDA positive as well, something where we are really focused on. And all this together try our current planning therefore we in some respect are more cautious and very focused on how to spend the cash.

Okay. Thanks for that clarification really.

Thank you. Our next question comes from the line of James Medvedeff from Cowen and Company. Please go ahead.

On the new profit that included in the couple of printers that we shifted this quarter. How does that rollout into the future another words the learning curve or the cost down curve on that takes how long to get back to full profitability?

So we are here addressing specifically the direct finding, we are very much track through that on our product and we expect to be in a standard task for the second half of this year.

So when you talk about 40% to 45% gross margin in the system business, is that achievable still this year?

Honestly said I just like to go back to my script and there we said we expect gross margin between 35% and 40% for the Company when we guidance. We believe that systems growth is about 40 - system growth is beyond 40 in this current environment. And as Ingo said, in the second quarter we recently will benefit from what we learned in the first half of the year in lobby installation we had with [indiscernible] and we sure about the significant less warrantee spending and all associated spending for this, so travelling expense, technicians et cetera spare parts.

Okay thanks. My follow-up question is on expenses, it seems that the last year the LCTIP was increasing expenses and this year you are releasing those which actually expenses, but when I net the two out it appears that expenses were about flat year-over-year, is that you said about right?

There is partly right, we have reduced spending on top of that, pursuing SG&A so we did not target as aggressive as last year. And we as well for example in SG&A we did not participate in as many exhibitions, so therefore sure with some reduction out of the operations businesses so. But if you take it out its flat and that should give you a signal as well that we reached a decent level in the organization and we are currently prepared for sure to increase revenues with not more SG&A and R&D spending to the €5 million, €6 million, €7 million easily in that organization. So therefore, we would say we are well on track and how shape the organization.

So just a follow up to that, the LTCIP was adding to expenses for each of the next two quarters last year, Q3 and Q4, is that right? And then is that fully released in Q3 for this year, so that next year we would be back to a more clean number without those impact?

Yes.

Okay. Thank you.

Thank you. Our next question comes from the line of Saliq Khan from Imperial Capital. Please go ahead.

A couple of quick questions, first one being is that although the revenues from the leasing of the machines have been not going all that material in the past, and understand that leasing is also very situational, is this scenario that you could open the further exploring and seeing how could improve the adoption rate?

You talk about the financing instruments or structuring or operate leads, was that your question?

Exactly, so leasing it to your customers.

We as always said we don’t have a financing plan or program. We occasionally also operating lease contracts and that makes sense in the current market, the borrowing money is direct in expenses. It doesn’t make a lot of sense for clients to step into a rental contract. Sometimes that are still happy in markets like in India you have operate lease models, which we don’t do super aggressive, just because of it’s a tricky market. We did and those [indiscernible] with the selected customers, we don’t push revenues through put in risk on our balance sheet either operating particular condition to operate lease contracts or to financing, that’s not what our plan is.

In relation to the energy sector, you have noted in prior quarters that the company was seeing a slowdown in the cash parts of demands, however we are not all that heavily dependent on the sector, has that change over the last couple of quarters?

Well we have various customers coming from different fields, the automotive is one of our strong area. But also we have customers out of the oil and gas sector, we have also customers coming from general, industrial applications and others. So of course especially in the area of oil and gas we see immediately a slowdown. The good news for us here in Germany is that the percentage of those customers is not that big so we still certainly slow down by the deduction effect the overall business not in a major quantify. But again, it is definitely seeable that those customers are not ordering for the mortgage.

Really just one last question on my end and I'll hop back in queue, regarding the restructuring of the UK business, how we should be thinking about the revenue and the margin contribution from this business going forward?

First of all, we don't show the individual subsidiary and we don't give guidance for the individual subsidiary. Overall, the service segment is planned to be above 40% for this 45 long-term above 45% and the occasion is definitely will constitute to that target. And as we have seen in this current earnings release, gross margin in our service segment came back to 48% and that is well a good contribution from the UK already.

Great. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Shenlun Wang from Brean Capital. Please go ahead.

So I guess follow-up on Ken's question, you said I think overall CapEx for the rest of the year is down but you are more aggrieve on Indian. Does that mean you are less aggressive in China or what is the region now you are pulling back relatively and also can we get a quick update on the China's activities and when do we expect see significant revenue recognition or ramp up from the recent [Indiscernible]? Thank you.

So the western side we pushed hard in our U.S. market there we invest unchanged, we pushed hard in our Chinese market. Ingo will give you more details on that. And we just slow down the Indian operational a bit with starting the service center that is stored at least two quarters. And I think that was in respect of slow down and the rest is as we talked before moving investments into 2017 or just do it in different way. And your question regarding China, we have set up there a subsidiary, which is currently starting to start make revenues, [Indiscernible] in plan for the second half of next year. But the plan is unchanged to see some revenue contribution from this subsidiary for the second half of this year already.

Got it thanks, and just on the gross margin, what gives you the confidence being system margins you take back out in the second half as it is from the pipeline that you have already see or is there anything extra you are looking to do. And also how sustainable is the service margin for the rest of the year? Thanks, that’s it for me.

Well in respect of the systems, I already mentioned that there is the system margin was heavily under pressure, because of introduction of new product. For the first half of the year as that we are making good progress with this product, we believe that most of the findings we had are already solved for the second half of the year we expect a more solid gross margin similar to that what we saw in the past, hopefully better than this. I said there is a supply chain and also [indiscernible] systems is well on track. Therefore, we are quite confident to achieve better margins for the second half of this year. In respect of the services, the services margin is mainly affected by utilization and for the moment, we see no impact on our business, no major impact on the business due to [utilization] (Ph) still okay. That means we are confident to work on similar margins as we showed for that for the first half of the year.

Got it, just a follow up, does the macro slowdown also affects your utilization or is that sort of changed?

I said, the utilization rate is critical for the moment, the utilization is on a good level so we achieved, good gross margin, we don’t expect a decline in services revenues toward the end of the year. The opposite is the case, usually the fourth quarter is the strong quarter in that business.

Very helpful. thanks guys.

Thank you. Our next question comes from the line of Ben Hearnsberger from Stephens Inc. Please go ahead.

Hey thanks for taking my question. I wondered if you would give us an update on where you are in the Americas capacity ramp and really anything is changed with regard to your outlook there?

Currently the operations there are mostly fully expressed, so they have several cash sequences, they have several large frame sand printers. There is still room to grow in, but for the moment there is a main topic is to take advantage of the capacity and bring utilization up. So we are quite happy with the development and as soon as we see the need for more capacity, we are prepared to ship other or other large frame machine over.

Okay and then on your product development pipeline I know the Phenolic Bind has been important focus are there some other areas you can call out that you are excited about?

I don’t want to be too specific but as you know we are working on the high speed [indiscernible] with excellent resource, so this will be a very large product for the future. We are having several [indiscernible] applications where we do all the business within our product line, so I think we are went on track on this in this respect. We see all the new applications out of the existing [indiscernible] for one of them, I mentioned in this script, which is the concrete casting. This is an interesting and amazing market for us completely new. So there is a lot of opportunities and yes I think we quite positioned - good position to explore those opportunities.

Okay. Thank you.

You are welcome.

Thank you.

Thank you. Ladies and gentlemen, we have no further question in queue at this time. I would like to turn this floor back over to management for closing comments. A - Rudolf Franz: Thank you. So with an active presence in all of our major markets, we successfully prepared our group for continuous growth. Now time has to capitalize on our global reach and to increase our customer base on a global scale. To sum up we focus on the long-term and are confident to deliver sustainable value to our customers and shareholders. Thank you again for your participation in today's call. We look forward to speaking with you again in November when we report our results for the third quarter of the current business year. Thank you. Good bye.

Thank you. Have a great weekend. Bye-bye.

Thank you ladies and gentlemen. This does conclude our teleconference for today. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.