Johan Pesch - Director, IR and Business Development Ingo Ederer - CEO Rudi Franz - COO and CFO

Rob Stone - Cowen and Company Troy Jensen - Piper Jaffray Ken Wong - Citigroup Saliq Khan - Imperial Capital

Greetings, and welcome to voxeljet's AG Second Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I’d now like to turn the conference over to your host, Johan Pesch. Thank you. You may 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 financial results for the period ended June 30, 2017. The release as well as the accompanying presentation for this conference call is available in the Investor Relations section of the Company's Web site 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, Johan, and good morning, everyone. I want to thank everybody for joining us today. I’d like to remind those who might be new to our company about voxeljet’s core business model shown on Slide 4. In our Systems segment, we manufacture and sell industrial grade, high speed, large formats 3D printing systems, geared towards mass production of complex models and modes. In our Services segment, we operate such systems and several facilities around the world to offer affordable on-demand access to our technology. This proprietary technology is reshaping the way things are made and is truly disruptive to the traditional methods of manufacturing. Slide 5, highlights our operational footprint. We are a truly global acting company. Overall, I’m pleased with our performance, our gross profit and gross profit margin increased sequentially from the first quarter of 2016 to first quarter of 2017, and the second quarter of 2017. To put this into perspective, absolute gross profit increased 68% from €1.25 million in the first quarter of 2016 to €2.1 billion in the second quarter of 2017. Regarding our Services segment, revenues for the first half of 2017 increased 19% compared to the same period in 2016. Regarding our Systems segment, it's important to note that revenue recognition for one VX100 printing system slipped into the next quarter as I go into more details in the next minute. We are working in a highly dynamic environment with huge opportunities in front of us, a few this year or that can appear to have dramatic changes, but that is simply because of the arbitrary [ph] nature of when a quarter ends and when revenue can be recognized. From a big picture point of view, we are executing well on our key goals of increasing awareness in the adoption of our solutions more effectively targeting companies with 1,000 or more employees with larger customer lifetime values. For example, we expect to deliver full production solutions to touch clients in the future. I will go into more details in the following session. Our base funnel looks pretty impressive and our colleagues all around the world are working hard to turn these prospects into orders. Our approach will remain focused around the work that we can win at margins that represent the value that we deliver. Let's start with the formal part of the presentation. I’m going to begin by providing some highlights from the second quarter and then spend some time discussing our portfolio for advanced technology. We will then provide a more in depth view of our financials and our outlook for third quarter of 2017. Following his comments, we will be happy to take your questions. Let's turn to Slide 6 of the presentation, begin with the highlights for the second quarter 2017. Revenue for the quarter was €5.2 million, which represents an 18% decrease compared to last year's second quarter. Revenues from our System segment which includes revenues from selling 3D printers, consumables, and spare parts as well as maintenance, decreased 33% to €2.5 million in the second quarter of 2017 from €3.8 million in last year's second quarter. We delivered three new printers compared to three new, and three refurbished printers in last year's second quarter. As figures themselves do not necessarily paint the full picture, I would like to add a bit of color here and share some additional insights with you. We are proud to say that in early May this year we have successfully inaugurated our first PMMA based system in India. The customer is a leading investment casting company in the northern part of India and is producing very complex investment castings in a wide range of material specifications. They supply the products globally. This particular deal was designed as a random [ph] agreement with revenue being recognized on a monthly basis. As such, the impact on the quarterly Systems revenues is limited. The foundry industry in India is traditional in its approach and operations, but things are changing rapidly with the pertinent shift towards new technologies. With the world wide proliferation of 3D printing technologies, the foundries in India continue to increase their interest in voxeljet's unique product portfolio. We certainly expect this trend to continue and to sell an increasing number of printing systems in India. Another point I’d like to make as you heard me talking in previous calls, we continue to research new and advanced materials and components with a higher knowledge content, new functionalities and improved performance. One specific example for these advanced materials are ceramic applications. Printed ceramic components can provide considerable benefits like freedom of design over conventionally made ceramics and can be used for example as [indiscernible] carrier in chemical industry. Many intermediate and end product in the chemical industry can only be produced with the help of catalyst. We are in the final stages of successfully qualifying our VX1000 printing system to run with specific ceramic materials. This is a joint development project with a multibillion company based in Europe. The engineering team of this customer [indiscernible] couple of weeks ago and in fact they’re quite impressed. We did expected that revenue for VX1000 linked to this project in the second quarter this year. However, as it can happen in complex development projects, we experience some unexpected delays which meant that revenue [indiscernible] into the next quarter. We are quite optimistic that the successful development of this printing system can increase our sales in the future, and this customer has the potential need for multiple systems to support its manufacturing operations. In China, one of our largest systems were delivered to a huge and leading research institute. We expect them to be of great market dictator for our ongoing expansion in China. As of now, we have a system [indiscernible] of roughly €5.1 million. This compares to a backlog of €4.3 million at the end of last quarter, which represents an increase of roughly 19%. I would like to highlight that demand to achieve much better gross margins of 36% in our systems segment compared to 29% in last year's second quarter, which means we are heading the right way. Revenues from our Services segment, which focuses on the printing of on-demand parts for our customers, increased 5% to €2.6 million in the second quarter of 2017 from €2.5 million for the same quarter last year. Slide 7, summarizes the results. I want to highlight two points. First, looking at the break down by geography. Revenues in the U.S increased by 352 basis points in the second quarter of 2017 compared to last year's period. This was offset by a decline in Asia. Please keep in mind, this is to a large extend growth from our printer sales in the respective regions, and therefore quite [indiscernible]. Going forward, our global footprint will serve the increased ability by balancing revenue stream, provide you opportunities for growth and ultimately help us attain sustainable success. Second, looking at operating expenses. Other operating expenses are largely related to changes in the valuation of intercompany loans granted to our subsidiaries in the U.K and U.S. Regarding research and development, we saw an increase of 225 basis points, or 27% of sales. Let me add a couple of things inside here. To stay ahead of the curve, we follow this strategic decision which we remain unchanged since our IPO in 2013. To add new technology and capabilities to further strengthen our solutions portfolio highlighted on Slide 8. These investments in core growth areas include the addition of more advanced and higher knowledge materials like high speed sintering, ceramics, inorganics, and phenolics based applications. In addition to that, as we go more and more into production, the conversation with our customers is no longer focused around the pricing of our products, but rather about the [indiscernible] cost of ownership. [Indiscernible] we continue to invest a significant part of our development expenses into further improving the reliability and performance of our systems. We conducted feasibility studies in increasing possible print head performance is absolutely amazing. But to be clear, it takes time from something working in the lab to working at moderate production levels to working at higher production levels to optimize costs. Although we’re working on the set up of a modular printing farm, which feature first [indiscernible] automation. We then plan to bring this one step to other by fully automating subsequent processes by unpicking [ph] and finishing. I cannot go too much into details, but we’re working with global acting multibillion companies on exactly that. All of these activities are centered around our core strength summarized on Slide 9. And our stronger alliance with a growing trend for higher performance product across all of our end use markets summarized on Slide 10. Our printing systems are modular [indiscernible] and highly scalable and therefore uniquely positioned to support critical demanding applications and address the challenges that are most important to our customers. This brings me to Slide 11, and our growth strategy which remains unchanged. Innovation fuels growth. We have significantly invested in innovation over the past few years, and we expect to start beginning in the [indiscernible] that can be generated for incremental investments. We are in the best position to drive growth against the biggest opportunity summarized on Slide 12 and Slide 13. I’ve given you some examples of these opportunities in my opening statement. Turning to Slide 14, and sales execution. We continue to improve the performance of our sales teams along with growth, and investing in sales leadership, additional sales representatives and train. In addition to that, we focus on educating our channel partners to ensure a true global coverage. One topic we focus on in sales execution is to create a culture of accountability and create expectations. We will not expect [indiscernible]. To keep improving the efficiencies and effectiveness of our sales to improve the use of software tools. Thanks to all cloud based customer relation management tool. We are in a position to monitor our pipeline on a daily basis and to make adjustments where necessary. The pipeline itself comprises data point plan to customer, expected revenue, probability of receiving order weighted revenue, type of system and expected installation among others. So this really helps us to further improve our visibility into and the understanding of what the probabilities of closing at year [ph] and converting it into extra shipment arm. This will also better align our production and sales functions. Turning to Slide 15, we are making good progress in especially the aerospace industry and are in advanced discussions about multiple system sales. On Slide 16, from our customers in the German automotive industry, we hear that they plan the strengthening of Germany's status as a manufacturing location for e-mobility. Going forward, nearly all of their plants will be able to build vehicles with combustion engines, plug-in [ph] hybrids and all electric models on a single production line. This kind of flexibility is ideally suited for our corporate [indiscernible], 3D printing technology, and we expect to benefit from advanced value added opportunities over the next year. It is a better moment over the past several months, so it performed very well in some areas and other areas require improvements. We are putting very clear actions in place both organizationally and operationally to address these areas of improvement to achieve accelerated performance 2018 and beyond. As we execute on these and other opportunities, I expect to deliver increased value to our customers and shareholders with a culture of accountability that consistently meet or exceed expectations. With that, I’d like now turn the call over to Rudi.

Thank you, Ingo and …

Rudi?

… good morning to everyone. Yes. Thank you, Ingo. I would like to begin by providing financial details and adding some additional context to our slides before discussing our outlook for the rest of 2017. Turning to Slide 17, our total revenues decreased 18% to €5.2 million in the second quarter compared to €6.3 million in last year’s second quarter. Gross profit and gross margin in the quarter were €2.1 million and 41% compared to €2.3 million and 37% in last year’s second quarter. The next slide shows our segment reporting for the quarter. On Slide 18, revenues from our Systems segment which includes revenues from selling 3D printers, consumables and spare parts as well as maintenance decreased 33% to €2.5 million for the second quarter of 2017 from €3.8 million in last year's second quarter. We sold three new printers compared to three new and three refurbished printers in last year's same period. Systems revenue represented 49% of total revenues compared to 61% in last year's second quarter. Gross profit and gross margin for our Systems segment in the quarter was held at €9 million and 36% compared to €1.1 million and 29% in last year's same period. As utilization picks up we expect gross margins from the Systems segment to be in the range of 40% to 45% consistent with the outlook we have given in the past. Cost absorption in our factories will continue to improve and it should lead to further improvements in margin outcome in product sales as the year progresses. Our goal is simple deliver solution to serve our customers problems. While we have made significant progress in our cost structure at the end, our work here is not complete [indiscernible] function that we performed through a continuous improvement mindset. [Indiscernible] and appropriate cost structure for the covenant future environment as well improve support to our customers. We continue to invest and improve system, implement best practices in inventory and supply chain management, and continue to improve our communication coordination between our engineering and manufacturing teams. On Slide 19, revenues increased 5% to €2.6 million compared to the €5 million in last year's second quarter. This was mainly due to higher revenue contribution from our subsidiaries in China and Europe and partially offset by lower contribution from the U.K. Gross profit for our Service segment was almost constant at €1.2 million. Gross profit margin contributions from voxeljet America as well as voxeljet China improved. From our German operations, we recorded an almost unchanged gross profit margin contribution, while the contribution from voxeljet U.K decreased. As stated previously, utilization is key to realization of better gross margin. Looking now to the rest of the income statement on Slide 20. SG&A expenses were €2.6 million in the second quarter of 2017. This compares to €2.4 million in last year’s second quarter. Research and development expenses were €1.3 million compared to €1.0 million in last year’s second quarter. As Ingo highlighted, we continue to invest in core R&D in Germany to maintain our position as a technology leader in 3D printing. Operating loss was €2.7 million in the second quarter of 2017. We book foreign currency losses amounting to €0.1 million compared to €0.6 million in the comparative period last year. The increase of losses from foreign currency transaction was primarily driven by the valuation of the intercompany loans granted by the parent company to our U.K and U.S subsidiaries. The loans are denominated in GBP and US dollar, respectively. The financial impact reflects the strengthening of the euro against GBP as well as the US dollar in the second quarter of 2017. Net loss for the quarter was roughly €2.7 million or €0.72 per ordinary shares compared to a net loss of €1.7 million or €0.46 per ordinary share in the prior year’s quarter. On an ADS basis net loss was €0.14 per ADS compared to net loss of €0.09 per ADS in the second quarter of 2016. We’ve provided same presentation for the six months period ended June 30, 2017 on Slide 21 through 24. As you might have seen yesterday we’ve filed a Form F-3 for the [indiscernible] statement with the Securities and Exchange Commission. Once the [indiscernible] accepted by the SEC, we may offer to the public in bond or more offerings ordinary shares, debt securities, warrants or rights to subscribe for ordinary shares up to a total aggregate offering amount of US$75 million. If it changes [indiscernible] prices and in terms to determinate at the time of any such offerings. We anticipate that the [indiscernible] registration that provides more efficiency aspect to the capital markets and allow us to look to [indiscernible] in support of our growth objectives. Slide 25, shows selected balance sheet items. At June 30, 2017, the company had cash, cash equivalents and short-term investments in bond funds of roughly €15.7 million. We continue to inventory rationalization [indiscernible] and enter the quarter with inventory of €905 million. We continue to see opportunities to improve working capital performance. We remain comfortable with our cash balance and overall liquidity position. We believe that our balance sheet with an equity ratio of roughly 80% positions us well for the long-term. Total debt at June 30, 2017 was €7.2 million. Weighted average shares outstanding for the quarter were 3.72 million, which equates to 806 million ADSs. Moving now on to Slide 26 and our revenue guidance for the quarter. For the third quarter of 2017 we expect revenues in the range €7 million to €8 million. Full year 2017 revenue remains unchanged and is expected to be between €26 million and €28 million. The gross margin is about 40%. SG&A spending is expected to be in the range of €9.25 million to €10.25 million and R&D spending to be approximately €4.75 million to €5.75 million. Depreciation and amortization expenses are expected to between €3 million to €4 million. EBITDA is expected to be neutral to positive in 2017. CapEx spending for 2017 should be in the range of €8 million to €9 million, which primarily consist of ongoing investments in our global subsidiaries. This concludes my remarks. And with that, we will now open the call for your questions. Operator?

Thank you. [Operator Instructions] Our first question is from Rob Stone with Cowen and Company. Please state your question.

Hi. Guys. My first question is on sort of your visibility for the second half, the guidance implies pretty good sequential growth in Q3 and again in Q4. And so any color you could provide on the metrics you’re watching that give you a confidence in that outlook will be great?

Hi, Bob. This is Ingo. So, thanks for your question. The visibility for the moment is quite good. As you see from our backlog for the Systems, we have a decent amount of Systems already as orders and we expect further orders to come. So that’s why we’re -- we’ve true confident or we’re confident to reach our numbers. According to the outlook we gave and then you see on the Services side, our Services is -- overall is picking up all around the globe. So we’ve good business, especially here in Europe, but also in U.S and in China. I think with the move of our U.K facility, which is I think finalized in September, we expect [indiscernible] also there. So we’re quite optimistic to reach the goal.

So with respect to the Systems, you mentioned the sales funnel and expectations on converting orders, are you prepositioning perhaps some work in process in expectation of orders in order to shorten the lead times for some Systems?

Well, with some of the deals I’m talking about, we’re in the procurement state, which means they’re quite finalized these deals and we expect signatures on the contracts very soon. Some others are in the later stage of benchmarking of parts, so we’re -- as said, we’re quite optimistic on that and with the software tools we have in place now, all are on the verge of we are quite good prepared to have this all on a transparent basis.

Great. On the -- go ahead, Rudi.

Rob, I think if you look into our 6-K, our inventory besides our work in progress did have the flexibility to ship in future -- during Q4 on quite low to high, so we’re prepared for shipments in Q3 and Q4.

Great. So on Service, Ingo, I was going to ask, historically the European activity would normally see some seasonal slowing in the September quarter, but you have significant growth coming from other locations. So do you -- what can you say about the seasonal trend you’re expecting for Services in Q3?

Well, this is absolutely right what you’re saying. Usually after the summer break, we see traditionally a slightly slowdown here in Europe. This is not the case in China, and not the case in the U.S. So it is very likely that we balance this slowdown in our Services business out. For the moment, what I can say is also in August which is usually a traditional vacation months here in Europe, we have extremely good business, much better than previous years. So the expectation is relatively high.

Great. Thanks. I will jump back in the queue.

Thank you.

Our next question is from Troy Jensen with Piper Jaffray. Please state your question.

Hey, good afternoon, gentlemen.

Hi. Good morning.

Hey, so just maybe a couple of questions for Ingo here, and I want to start with high speed sintering. I guess, have you thought in more about how you plan on distributing this product with the speed [indiscernible] some investments and more sales headcount or will you be channel partners?

This is a very good question, Troy. So definitely this product is different in its approach and especially in its use to the existing platforms and the existing [indiscernible]. Currently we believe a rate or a big customer sector logical for this product could be the automotive sector where we’re extremely well positioned and I think also our dealer network is extremely experienced with these guys. So there we are quite confident to reach the right addresses. I think with the other verticals, it may be the case that we need to add one or the other dealer to the network and it could be the case that we’re talking also with other companies in that area about collaboration -- sales collaboration.

Okay. That’s fair. And then on material side, is that single -- is it going to be like your [indiscernible] business where you only capture the material sales agent or will you be selling the nylon-12 powder and capturing a bigger revenue stream on the material side of the [indiscernible]?

So, since we’re targeting with the agents as production it is clear for us that the material side is very crucial for our customers, especially if you look at the total cost of ownership of such machine. So the current [indiscernible] is that we need to keep because of warranty issues and warranty questions, we need to keep the binder business as long as the machine is under warranty. We also deliver powders to our customers with the machine, but we’re also open to take powders from the customers and qualify them for the process. So it's a two-fold business model, of course, with a bunch of materials which are highly adopted to the system with the parameters tested here in voxeljet and hand it over to the customers, but we are -- as that we are open to take materials from the customer itself.

Yes, understood. So then the last question for me and I [indiscernible]. If you think about the addressable market for your current business, the same [indiscernible]? And then if you think about the addressable market opportunity for high speed sintering, which one is bigger?

This is a good question. I think the main difference is the readiness of adoption in both segments. So we have a pretty developed market in the casting area, so 3D printing there is I think are well-known message to make unique castings. Everybody is aware of and some of the customers as mentioned in the graph, are already thinking about production [technical difficulty] method, so replacing other production technique with it. It is probably the case that we need to talk to the next two or three years to try before we reach in [indiscernible] at a similar level of adoption. So that’s why you need to expect us as voxeljet probably having more business with our casting alliance in the next two years than with [indiscernible]. But in the end [indiscernible] market is probably bigger than the casting market.

Yep. I would agree. All right. And how about just one for Rudi here. Just on the gross margins up nicely, [indiscernible] revenues, is this -- I mean, year-over-year basis? Is that just primarily the last year we had some refurbished machines in the mix here or is there something -- anything else going on margins?

Gross margin on the System segment, Troy, that’s your question?

In aggregate it was up nicely, so I’m just trying to [indiscernible] systems, but I’m assuming it's just -- go ahead, I’m sorry.

I would say since we optimized our cost structure and definitely benefit from seeing [indiscernible] than optimize them and [indiscernible] I see that improving on operating basis and we assume that gross margins up to be about 40%.

Okay, right. Guys, keep up the good work.

Thank you.

Our next question is from Ken Wong with Citigroup. Please state your question.

Hi. Good morning, guys. On -- in terms of the deal that slipped in terms of the System, the System sale that slipped, can you help us quantify kind of what that amount might be and then whether or not that transaction is officially closed in Q3?

Okay. So, -- hi, Ken. This is Ingo. I will answer shortly. So this is a VX1000 system. So what we did here, this is very special. We took a standard VX1000 system from the production line, but tailored it to the need of the customers working with the specific ceramic [indiscernible]. So that’s why the total amount of that system is slightly higher or let's say its materially higher than a standard VX1000 because its [indiscernible] with the tailoring, means a lot of work is around the tailoring and that’s also not recognized as revenue for this system. Hopefully [multiple speakers].

Got it. And then, I guess, just whether or not -- so that System sale has officially closed now and you guys have recognized the revenue as of Q3, I assume?

Well, this machine is voxeljet shipped last week is on the track -- on the way to the customer and we are quite confident to book revenue for this quarter.

Got it. And then on maybe diving in a little bit on high speed sintering again, you guys talked about having some applications in place now, you’re working with some customers on it. Can you give us a color in terms of the vertical segments that you guys are working with at the moment? And then any sense for how many -- again, kind of how many customers might be working with you guys on high speed sintering at this time?

So on the high speed sintering side, we are taking advantage of our good connection with the automotive industry. We have a lot of automotive customers, clients directly working with us on that topic, especially in automotive industry you have a need for customized plastic part especially for interior applications. Those guys are all highly interested in additive manufacturing, especially for these needs. And I think we’re quite good working with them. We see also good applications in the -- in the [indiscernible] equipment business and also again as with the other technology in the aerospace. For the moment, I think that the main task for us is to limit ourselves to the most perspective customers, so we could probably take much more customers into the beta program for the moment, but out of limited resources we need to see that we took the right customers out of the line of potential and I think we’re working well on that. Out of them are also some [indiscernible] companies. They’re interested in supplying specifically adopted materials to the later [indiscernible] of companies.

Got it. And then when we think about the full-year guide, do you -- have you guys embedded much revenue coming in from the high speed sintering systems or should we think of that contribution coming more in '18?

So we are selling these machines under beta contract. So you will see probably some revenue contribution from them in this year, but not that much. We expect more to come in 2018 and of course the following years.

Got it. Okay. That is it for me. Thanks a lot, guys.

Thank you.

Thank you.

Our next question is from Saliq Khan with Imperial Capital. Please state your question.

Hi, Ingo. Hi, Rudi.

Hi.

Hi.

Yes, couple of questions, if I may. And first one is, I understand that you’ve been increasing the spend on R&D as well as the SG&A. The whole idea was to be able to improve the growth either sequentially or on a year-over-year basis. However, if you take a look at the [indiscernible] expected growth from the investors over the last several quarters, how does your view on operating expenses change as you look at on to the several upcoming quarters?

I will take that question [indiscernible] remains on that level. It’s the only driver in SG&A primarily our agent commission and shipping expenses [indiscernible] printers. But overall it remains on that level and [indiscernible] on a low basis with the current plan at least for the next four quarters.

Yes.

For the operating profit definitely it should benefit from acquiring revenue if that SG&A remains more or less the same.

Got it. And I know it's been a whilst you guys talked about this, but can you give us any update on the partnership that you’ve announced long time ago with S&P -- SAP, excuse me, and UPS. When does that opportunity have look like for you over the last several quarters and how do I think about that in the coming quarters?

Johan, do you want to take this question.

The answer is -- hi, its Johan Pesch speaking. Hi. So the answer, this is going well, so we are in constant [indiscernible] and we’re developing a platform [indiscernible] and this other customers is based on. For example, HP is part of the [indiscernible] part of it and its really interesting. Absolutely we’re making good progress.

Okay. And guys, if I think about the industry and how it's really developed over the last several years, maybe even over a decade now, still the industry is still very fragmented. So what are your thoughts on becoming a consolidator as opposed to the way that we are seeing now where you’re competing with other privately held companies, some publicly held companies as well across the globe.

Ingo, you want to answer?

Well, so you [indiscernible] the printing market is highly fragmented not just because of the businesses itself, but also because of the different applications. It is pretty unlikely that you see a overall consolidation on all these areas under one or two umbrella. I think there is enough room and enough space for highly specific adopted companies like us for specific areas. I do think that the overall trend will leave us in a position where you see only two or three market leaders in future. This is more likely that we have in some specific areas like the [indiscernible] printing for instance consolidation as it takes place for the moment, but as you know as we differ with our printing technology and vertical through the others, I think it is much more important for us to develop our key strength forward and to develop our applications independently.

Okay. And guys just one last question, which is could you highlight what the capacity utilization rate looks like across the facilities?

Well, there is still room to growing. And I think the utilization rates are different in our different locations. We have in Europe quite mature service center, which works on a very high level of utilization. So this gives extremely good margins and you see in our numbers. We have U.S expanding much better and with a better utilization in the recent quarters. I think China and U.K., they still have room to grow in, but in general, we are quite pleased with the performance in the Services business.

Great. Thank you.

Thank you.

Thank you.

Ladies and gentlemen, we’ve reached the end of our question-and-answer session. I’d like to turn the call back over to management for closing remarks.

So thank you. For the second half of the year we’re seeing increased market interest in our portfolio across all product lines. We will continue to invest strategically to support our momentum and to drive higher revenue growth in the second half of the year. This gives me confidence in our growth prospect for the future. The passion and commitment of our colleagues I have met on my [indiscernible] coupled with the strong foundation we have laid [ph] will enable us to continue to seek opportunities available to profitably grow our business and drive value for our shareholders. Thank you very much.

Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.