If you're following voxeljet (NYSE:VJET), you've likely already read the Germany-based 3-D printing company's first-quarter 2014 earnings release, as well as perhaps an article summarizing and analyzing the results, which were released last Thursday. You can read my article here.
Briefly, voxeljet beat earnings estimates and reiterated 2014 revenue guidance, which would translate to annual revenue growth of more than 50%. My purpose here isn't to rehash the results, but to supplement the information you've likely read with some additional color from voxeljet's conference call. There's a wealth of information an investor can glean from tuning into these calls. While there were too many valuable nuggets shared during the call to cover them all, here are four that you should know about:
1. Production capacity should increase by about 50% at German service center
This quote is from CEO Ingo Ederer's prepared remarks:
We expect to increase our printing capacity this year in Germany by approximately 50% compared to last year and we should begin to see the benefits of this increased capacity in the second half of the year.
This increased capacity is a result of voxeljet increasing the size of its facility, which is now approximately 40,000 square feet, more than twice the size of its prior building. The company is currently operating 10 3-D printers at this site, and will be adding more printers in the next few weeks. It completed its initial relocation into the new larger facility in April.
2. Materials development appears to be the key current focus
This quote is from Ederer's prepared remarks:
We are currently in varying stages of developing new material sets including various (not clear), PMMA-based plastics (think Plexiglas), ceramics, silicon carbide, tungsten carbide, wood powder and cement.
Voxeljet's printers can currently print in various sands and several plastics. The sand printers are used to produce molds that customers use to cast metal components.
Voxeljet "expects at least one release" of a new material this year -- and it sounds like it's going to be a ceramic. The company has been working with various customers to develop ceramics for its systems, and one of the two 3-D printers it sold in the quarter was dedicated to ceramics even though it hasn't yet released this material set.
Later in the call, while answering an analyst's question, CFO Rudy Franz stated, "We are working on concrete where we achieved very nice results." So, it looks like concrete is coming along nicely. None of the other publicly traded 3-D printer makers have concrete capabilities. The most likely primary use of a 3-D printer that prints in concrete would be for constructing houses and other buildings, though this application is in its early stages.
3. Voxeljet expects its gross margin over the longer-term to be 45%-50%
This quote is from Ederer's prepared remarks:
[W]e are reiterating our long-term target operating model. We believe that we can continue to grow our revenues in excess of 50% over the next several years, with gross margins in the range of 45% to 50%.
Voxeljet reiterated that it expects to achieve a gross margin in the range of 40%-45% this year. However, as per the above quote, it expects the gross margin to ramp up after this year. Gross margins in the 45% to 50% range for this relatively new public company (it went public last October) would be solid. For perspective, 3D Systems and Stratasys sported gross margins of 51.1% and 51.5%, respectively, in the first quarter.
4. Voxeljet expects to succeed in selling to foundries
This quote is from a response by CFO Rudy Franz to an analyst's question:
The main markets with the material sets we see today ... the foundry industry and there we put in either sand printers or our plastic printers. We launched a new material set for sand called renewal, which is quite attractive and definitely will give us the growth rates which we expect.
Investors should monitor how well voxeljet does selling its systems to foundries. It would be a big positive if the company experiences solid success in selling to these customers. Rival ExOne has run into headwinds selling its sand 3-D printers to foundries and, as a result, has launched a strategy called ExCast. ExCast involves selling directly to the original equipment manufacturers and providing a wider scope of services.
ExOne is voxeljet's primary competitor on the sand end, while 3D Systems and Stratasys are its publicly traded competitors on the plastics end. As I wrote in an article about voxeljet before it went public:
Given the similar technology and sand-based castings focus, it's not a surprise that there's a voxeljet-ExOne link. In 2003, voxeljet granted ExOne exclusive rights to make and sell machines related to certain patents and technology using binders and sand-based casting in return for royalty payments. Voxeljet can use these patents for printers working with plastics. The prospectus states: "We believe these restrictions will not materially impact the growth of our business, as we have developed processes which do not rely upon the subject patent portfolio and associated agreements."
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