Greetings and welcome to voxeljet AG Second Quarter 2020 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] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Johannes, Director of IR and Business Development. 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 and first half 2020 financial results for the period ended June 30, 2020. The release as well as the accompanying presentation for this 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, including expectations on results from our current order backlog. 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, including the risks and uncertainties caused by the current COVID-19 pandemic and the resulting uncertainty in the global economy. 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. Good morning, everyone. Thank you for joining us on our earnings call today. Today, we will take you through some highlights of our second quarter and first half 2020 performance. We were off to a decent start in 2020. In Germany, we received one of our largest individual orders for 3D printed parts from a supplier to a leading U.S. electric carmaker. Order backlog for 3D printers was growing to a new record in March 2020 and continued to increase from there. In planning early 2020, we had already anticipated a significant impact of COVID-19. Nevertheless, the impact with customer shutdowns and travel restrictions were tougher than we thought initially. Meanwhile, we see a recovery in almost all relevant markets. On June 1, we have issued a press release announcing the expansion of our partnership with the European Investment Bank to bring 3D printing into series production. We received additional funds of €5 million under the venture debt contract with EIB on June 19, 2020. With that €15 million of the total of €25 million have been disbursed. Before we start with the formal part of the presentation, let’s quickly remind those who are new to what we do. Turning to Slide 5. We are in the business for additive series production. We design, manufacture and sell high performance 3D printing solutions for cost efficient manufacturing. We have invested significantly into our IP portfolio over the last year and now hold over 420 patents and patent applications. Looking at Slide 6 and our integrated business model. With this integrated model, we can capture business either at 3D printer sale or on-demand printing contract. In the Services segment, on the left side of the slide, we operate our own 3D printers in three facilities around the world to offer affordable on-demand access to our technology. The barriers to entry are very low as customers just need to send in the 3D data, and we will print parts for them. This is a great and easy way for our customers to understand new business opportunities in 3D printing. The short sales cycles and services help us balance the typical long sales cycles in our Systems segment. Going forward, we expect to benefit from the increased demand for solutions for additive series production. We anticipate to commercialize 3D production cells with multiple 3D printers each and sell large volume contracts for 3D printed parts. In our Systems segment, we manufacture and sell industrial-grade, high-speed, large-format 3D printing systems geared towards mass production of complex models, modes and direct parts. Systems revenue also includes recurring revenue from the sale of consumables, maintenance contracts, upgrades and other after-sales activities. On Slide 7, we described our technology in the additive manufacturing market. We have probably more than 10 different technologies, each with its specialized field of application. We use a technology called binder-jetting. Binder-jetting is especially suited for high volume production, because of its potential to scale. What does this really mean? Let’s turn to Slide 8 into case study. On the left side, we see a car’s underbody consisting of 70 individual pieces of metal. On the right side, you can see a different car’s updated underbody consisting of only two and eventually one piece of metal. This means the complexity in manufacturing of the car with the updated underbody on the right side of this slide has reduced significantly, which means lowering the cost. Now these underbodies are made by high pressure die casting of aluminum. If you were to try to directly print those in metal, it would be way too expensive and too slow if at all possible because of their size. The steel tool for the die casting of such a large component is complex. Such large steel tool can easily cost more than US$1 million. With our VX4000 3D printer, which is our largest 3D printer, we can 3D print very large and complex sand molds in short time for a fraction of those costs. While you can use our sand mold only once, you can use the steel tool for several hundred thousand shots, means, it depends on the production quantity, if you use 3D printing or not. With VJET X, which is our latest and fastest 3D printer, it is something completely different. Remember, we are currently implementing a fully automated production solution for a leading German carmaker. Part of the new component are too complex that you cannot make it with conventional casting. You need to match 3D print with sand cores and then cast them. Because VJET X is very fast and all processes are fully automated, you can print several hundred thousand parts per year with the one production cell. Let’s turn to Slide 9 into another case study. The aluminum fin on the left side of this slide takes serious damage during landing due to the high temperatures, they had to replace frequently. The fin on the right side is made out of titanium. Titanium has a higher melting point at 1,600 degree C, three times higher than what the aluminum fins can stand. The titanium fins are also stronger, but still light enough to rival aluminum. They also have a completely different shape. This new shape provides better zero-lift total drag and lift-to-drag ratio over the older one. In the middle of the slide, you can see a 3D printed pattern for the casting of the titanium grid fins. This pattern was printed on one of our VX1000 PMMA 3D printer. On Slide 10, we have summarized some key facts on our company. At June 30, we employed roughly 275 employees in production facilities in China, Germany and U.S., and in our sales offices in UK and India. Slide 11 shows our global sales network and production footprint. As you can see, we have reached and established position in all major markets in Europe, U.S., as well as China. We focus on educating our channel partners to ensure a true global coverage. Turning to Slide 12. We differentiate ourselves from our competitors by build size, material, diversity and speed. Our printing systems are modular, versatile and highly scalable, and therefore uniquely positioned to support critical demanding applications and address the challenges and needs that are most important to our customers. We have established an excellent relationship with blue-chip customers from various industries. Products made with our technology are flying in space, and we are engineering with VJET X, a unique additive manufacturing solution for true additive series production. With direct parts from High Speed Sintering, we have successfully expanded our addressable market and are working with high priority on the launch of the new HSS printer. Let’s start with the formal part of the presentation. I will begin with an overview of the results of the second quarter and first half 2020. Rudi will then provide a more in-depth view of our financials and our outlook for the second half and full year 2020. Following his comments, we will be happy to take your questions. Turning to Slide 14. Total revenue for the second quarter decreased 23% to €3.9 million. This is primarily related to a lower demand in our on-demand printing segment, which revenues – where revenues decreased by roughly 30% as compared to the second quarter 2019. As that, we started the year pretty well in the German 3D printing center. For example, we were up 50% in the first quarter of 2020 as compared to the fourth quarter of 2019. In U.S., revenue was down 15% and China 12% for the same period. Then in the second quarter 2020, Services revenue from EU was 18% lower as compared to the second quarter 2019. In China and U.S., the decrease was 15% and 35%, reflecting the economic slowdown, mainly due to the ongoing global pandemic of COVID-19 disease. To offset this loss in U.S., we successfully applied for and received a grant under the U.S. Federal Paycheck Protection Program of $325,000. Now things are starting to improve in certain parts of the United States as well. For example, we have just received a larger order for another batch of components for space rockets from a supplier to leading U.S.-based exploration company. Looking at the Systems segment. Total revenue for the second quarter was €1.9 million. Of this, roughly €1 million came from the sale of two 3D printers which were installed in Europe. The balance of €0.9 million is revenue from after-sales, which was weaker in the second quarter, because our service and maintenance teams could not travel much to client sites due to COVID-19. Looking at the right side of this slide in gross margins, gross profit margin from Services was lower as a result of lower utilization. In Systems, gross margin improved to 33%. If you break this down, the gross margin contribution from 3D printer sales was around 40% and the contribution from our consumable segment around 50%. On Slide 15, we have summarized the results for the first half of 2020. Slide 16 breaks down order backlog by quarter, revenue by geography and operating expenses by category. I would like to highlight that order backlog for 3D printers was growing during the first half of 2020, which is great news. In August, we received a follow-up order for another VJET X system. When looking at revenue by geographic region, EMEA share was growing significantly, Asia was stable and U.S. dropped for the reasons mentioned earlier. We are looking carefully at reducing operating expenses and have summarized activity to reduce our spending in a program called Essentials2020+. As the name suggests, we are focusing on essentials, means our sales and the completion of development of the new 3D printed VJET X and VX1000 HSS. This program consists of two parts, that one has been implemented and we expect to see full P&L impact from the fourth quarter 2020 onwards. We will present a more detailed breakdown in the financial section of this presentation. But annual savings from this program are estimated to be in the range of €2.5 million to €3 million. Step two is currently being implemented and we expect it to be substantially completed by the first quarter of 2021. Let’s move to Slide 18 and our growth driver. With High Speed Sintering or HSS, we combine the advantages of two existing additive processes, final part properties from selective laser sintering and high throughput from binder-jetting. On the left side of this slide, you can see a 3D printed shoe sole which was printed on our VX200 HSS with TPU material which is flexible and has good cushioning characteristics. The picture was taken at last year’s Formnext show at the booth of Covestro. Covestro is among the world’s leading manufacturers of high-tech polymers. On the right side, you can see nesting of shoe soles in a VX1000 job box. In this case, it’s 250 pieces. Depending on the configuration and material, one VX1000 HSS printer can print more than 30,000 pieces per year. It means you would need approximately 30 printers to print 1 million pieces per year. Keep in mind, the new printer has a build volume of 250 liters, which would be six times more than comparable products of our competitors. In addition, operating cost are low because only one ink is required, which means our customers save cost for consumables like detailing agents. This is only one possible application of HSS, we are also talking to customers from other industries like audio equipment, automotive interiors and exteriors, sealings, gaskets, valves, grippers and other consumer products. We believe we can achieve high powder recycling rates with HSS, which means non-sinter powder can be reused. This helps to reduce waste in production and keep operating costs lower. On Slide 19, we have summarized the advantages of the new HSS printer. We plan to start commercialization in the first half of 2021 and expect to enroll first beta customers in the next months. Let’s turn to Slide 20 and an update on VJET X. We continue to make progress. We expect the book revenue for the first two units shortly and have received the order for another VJET X unit last week. While the full execution of the project remains challenging, I’m confident in our ability to execute on this. With that, I would now like to turn the call over to Rudi.

Thank you, Ingo. Good morning, everyone. When we went public almost seven years ago, our main targets were, a, establish large on demand printing service centers in our core market; b, bring our technology into industrial production; and c, increase our addressable market by developing new material sets. Now let’s see where we stand on those targets. We meanwhile had three large-scale on demand printing centers in Europe, the U.S. and Asia and are supplying parts to blue-chip customers from various industries. Regarding the second point, in a consortium with two partners, we have signed a contract with a leading German carmaker to develop a new 3D printing solution for high-volume industrial production, VJET X. The development of this solution is complex, because it involves using a new environmental friendly material set, also VJET X is integrated into fully-automated processes to support high volume production. The first two VJET X units have been carmakers plant in Germany since June 2019. We used the time to improve the system than the least we have made a significant step forward during the last month. Just last week, we received the order for another VJET X unit, regarding new material set to increase our addressable market. High Speed Sintering, we have successfully developed a new technology to 3D print final part. The process is currently available on our smallest system and we are finalizing the development of large HSS production printer. In HSS, for example, we are broking with high global U.S. sports equipment company. But there is always room to improve and development project can take longer than initially anticipated. We believe we are following the right path. Now let’s look into the results for the second quarter and first half of 2020. In the first month of 2020, we have undertaken a number of actions to manage the evolving situation by accelerating cost savings, reducing expenses and strengthening our liquidity position. The cost saving actions are summarized on Slide 22 as our Essentials2020+ program, that one is implemented and we expect to see full P&L saving impact of annually €2.5 million to €3 million from the fourth quarter 2020 onwards. We reduced headcount by 40 or roughly 10%, reduced OpEx and delayed CapEx spending. We have launched two of our structural efficiency program and on progress of implementing it. We expect it to be substantially completed by the first quarter of 2021. This will comprise additional savings in labor spending although through the use of government programs like short-term book and further reducing OpEx and CapEx spending. All functions are subject to this program. However, it is essential to balance the cost reduction response against the need for capacity to manage the economic recovery that has started. I’m confident that the actions implemented in plant are positioning us well to benefit from any demand recovery. Let’s turn to Slide 23. We’re happy to say that we expand our partnership with the European Investment Bank to bring 3D printing into series production. Additional €5 million under the venture debt contract with the EIB was disbursed in June 19, 2020 to strengthen our liquidity position. This is excellent news and we are happy to have EIB as our partner on board. Regarding COVID-19, we did not encounter any new material disruptions due to COVID-19 to our own operation. We continue to work with some special measures in place around installation and contamination protocols to ensure the safety of our employees and to reduce the risk of operational disruption. Looking ahead, while the uncertainty remains high, we see improvement potential from the fact that the sales trend was positive during the last week. I will now take you through the financials for the second quarter and first half of 2020. After that, we are happy to take your questions. Turning to Slide 24, total revenues decreased 22.5% to €3.9 million in the second quarter of 2020 as compared to €5.1 million in last year’s second quarter. Gross profit and gross margin in the quarter were €1 million and 25.9% compared to €1.5 million and 30.2% in last year’s second quarter. If you break this down, Systems provided improved gross profit margin. This was offset by a drop in Services gross profit as a result of lower overall utilization. The next slide shows our segment reporting for the quarter. On slide 25, revenue from our Systems segment, which includes revenue from selling 3D printers, consumables and spare parts as well as maintenance decreased 12.1% to €1.9 million for the second quarter of 2020 from €2.1 million in last year’s second quarter. We sold two new printers in the second quarter of 2020 as compared to two new printers for the same period in 2019, of the €1.9 million total revenue in this segment, around €1 million was from 3D printer sales and the remainder from our after-sales activities. Revenue from after-sales were weaker mainly due to the travel restriction and customer shutdowns caused by COVID-19. We will continue to make use of government support programs like short-term work to counter this. Let’s turn to Slide 26 and an overview of the development of order backlog for 3D printers over the last quarter. We can clearly see the positive trend of order inflow, which continued throughout the first half of 2020.

Thank you for your patience. We seem to be having some technical difficulties. [Technical Difficulty] Mr. Johannes, you may begin.

Okay. So, we are back. Hello.

Sorry for the interruption. Let’s turn to Slide 26 and an overview of the development of order backlog for 3D printers over the last quarter. What we can clearly see is the positive trend of our order inflow, which continued throughout the first half of 2020. I would like to highlight the order backlog for August 2020, includes one additional VJET X unit which was ordered last week, that is really excellent news. On Slide 27, Services revenues decreased 30% to €2 million in the second quarter of 2020 compared to €2.9 million in last year’s second quarter. Services gross profit decreased to 19.4% in the second quarter of 2020 from 34.1% in last year’s same quarter as a result of lower utilization. Revenue from our European service center in Germany was up to 50% in the fourth quarter 2020 as compared to the fourth quarter 2019. During the first month of 2020, we received a significant order for printed parts in Germany. This was one of the largest individual order we have received for printed parts in three years. Our customer is a supplier to a leading U.S. electric carmaker. Then revenue from Services in Europe and China were both approximately 15% lower for this year second quarter as compared to the second quarter 2019. In the U.S., revenues dropped 35% as compared to the second quarter 2019. Looking now to the rest of the income statement on Slide 28. Selling expenses were €1.3 million in the second quarter of 2020. The majority of our selling expenses are personnel expenses and distribution expenses, such as freight and commissions for sales agents. This compares to €1.8 million in last year’s second quarter. Administrative expenses were €1.8 million as compared to €1.6 million in the same quarter last year. The increase was driven by one-time non-recurring advisory fees. Keep in mind, we typically spend more than €1 million in auditing fees per year and €0.5 million in legal consulting fees. Research and development expenses were €1.6 million in the second quarter compared to €1.7 million in last year’s second quarter. Most of R&D expenses related to VJET X and the new HSS printer. Operating loss was €3.96 million in the second quarter of 2020 compared to an operating loss of €4.2 million in the comparative period last year. The improvement is largely driven by reducing selling expenses and higher other operating income, which includes the grant received by voxeljet America under the U.S. Federal Government Paycheck Protection Program. Net loss for the quarter was €5.1 million or €0.21 per ADS compared to a net loss of €3.9 million or €0.16 in the prior year same quarter. We have provided same presentation for the first half period ended June 30, 2020 on Slide 29 through 32. Slide 33 shows selected balance sheet items. At June 30, 2020, the company had cash and cash equivalents and short-term investments in bond funds of roughly €10.7 million. Total debt at June 30 was approximately €26 million. Of this, €25 million are non-current and long-term. Long-term debt primarily consist of €15 million from EIB Horizon2020 venture debt program. Weighted average number of outstanding shares were 4.836 million, which equates to 24.18 million ADS. Moving now onto Slide 34 for our financial guidance for the full year. Full-year 2020 revenue is expected to be between €26 million and €30 million. The gross margin is expected to be about 40%. SG&A spending is expected to be in the range of €13 million to €13.25 million, and R&D spending is expected to be between approximately €5.75 million to €6.25 million. Depreciation and amortization expenses are expected to be between €3.75 million and €4 million. Cash CapEx spending for 2020 is projected to be in the range of €0.5 million to €1 million, which primarily consist of ongoing investments in our global subsidiaries. Adjusted EBITDA, which includes the impact of foreign exchange valuation, is expected to be neutral to positive for the second half of 2020. Revenue for the third quarter of 2020 is expected to be in the range of €6 million and €8 million. This concludes my remarks. And with that, we now open the call up for your questions. Operator?

[Operator Instructions] Our first question comes from the line of Robert Smith with Center for Performance Investing. You may proceed with your question.

Hi. Thanks for taking my questions. Can you speak to when you might achieve certain yards – profitability yards sticks? I mean, for example, you spoke to EBITDA, how much cash flow positivity? And can you also address the question of competition, who do you consider your main competition, especially in the larger machines?

So, this is Rudi. I take over the first part of your question, and Ingo probably answer the second part of the question. It is our target, as we have said for the second half of 2020, to become EBITDA positive. Becoming EBITDA positive is primarily driven by higher revenues which is supposed to come out of system sales and a better utilization in our service center activities. Our long-term business model is to grow the company significantly by utilizing all the investments we did in R&D. We spoke about VJET X, we spoke about HSS. And as said, we expect to see and to benefit from those investments within the next two business years 2021, 2022. Ingo?

So I take over the part for the competition. So, well, to be clear on that, the biggest competition card we face from conventional tooling, means if you heard me saying that you can produce castings or other metal parts through tools and pedal. This is still the main method to produce these items and we provide an alternative, much faster and mostly more cost effectively way to overcome the older group. Within 3D printing, there are of course other vendors, which are to some extent compete with us to some extent, not in this very particular, depending on the field. So for instance, in plastic part, we have laser sintering or FDM as competitors. On the scale of machines, probably only SLA is capable to print similar sizes as we do. In the sand area for instance, we have competition from X1 which are not providing the sizes we currently do and we have also a bunch of Chinese competitors, which are mainly making copies of the machines from X1 and on. Then we have HSS. HSS is a unique process. You see similar type of process with HP, but they focus on a different market more of a consumer-oriented market with business machines and lower cost machines. So we are more on the professional side, and of course you can see SLS machines, laser sintering machines as a competition but they are not providing the size and speed of our HSS solution. I think that’s it, Johannes.

Yes.

Yes.

Thank you.

You’re welcome.

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back over to Dr. Ingo for closing remarks.

Thank you. To summarize, earlier this year, we received one of our largest individual orders for 3D printed parts from a supplier to a leading U.S. electric carmaker, then came COVID-19 and we really started to feel the impact with the customer shutdowns and travel restrictions. In June, we successfully improved our cash position by expanding the partnership with the EIB. When you look ahead, we are encouraged by a positive sales trend over the last weeks, and we are optimistic that this trend will continue during the second half of 2020 and beyond. We are especially excited with the increase in order backlog for 3D printers. Just last week, we received the order for another VJET X unit. So thank you for joining us on today’s call and we are looking forward to speaking with you again in November this year. Bye-bye.

Thank you. Bye-bye.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for participation. Have a great day.