Market Overview

voxeljet AG Reports Financial Results for the Second Quarter Ended June 30, 2018

Share:

voxeljet AG (NYSE:VJET) (the "Company", or "voxeljet"), a leading
provider of high-speed, large-format 3D printers and on-demand parts
services to industrial and commercial customers, today announced
consolidated financial results for the second quarter ended June 30,
2018.

Highlights - Second Quarter 2018

  • Total revenues for the second quarter increased 2.1% to kEUR 5,262
    from kEUR 5,153
  • Gross profit margin slightly decreased to 39.0% from 40.9%
  • Systems revenues decreased 25.9% to kEUR 1,883 from kEUR 2,542
  • Services revenues increased 29.4% to kEUR 3,379 from kEUR 2,611
  • Reaffirm full year 2018 guidance

Dr. Ingo Ederer, Chief Executive Officer of voxeljet, commented, "We
started nearly 20 years ago as a spin-off from Technical University
Munich with a clear vision in mind: to replace conventional
manufacturing by constantly pushing technological boundaries. Today I
can say that, together with our partners, we are reinventing the
manufacturing landscape by launching the world's first fully automated
3D production solution capable of replacing conventional manufacturing
in serial-production. The 3D printing industry is at an inflection point
and this achievement marks a key milestone in our mission."

Second Quarter 2018 Results

Revenues for the second quarter of 2018 increased by 2.1% to kEUR 5,262
compared to kEUR 5,153 in the second quarter of 2017.

Revenues from our Systems segment, which focuses on the development,
production and sale of 3D printers, decreased 25.9% to kEUR 1,883 in the
second quarter of 2018 from kEUR 2,542 in last year's second quarter.
This was mainly due to a lower number of printer sales during the
quarter. The Company delivered one new 3D printer and one used and
refurbished 3D printer in the second quarter of 2018, compared to three
new printers delivered in last year's second quarter. Systems revenues
also include all revenues from consumables, spare parts and maintenance,
which remained flat compared to the last year's same period. Systems
revenues represented 35.8% of total revenues in the second quarter of
2018 compared to 49.3% in last year's second quarter.

Revenues from our Services segment, which focuses on the printing of
on-demand parts for our customers, increased 29.4% to kEUR 3,379 in the
second quarter of 2018 from kEUR 2,611 in the comparative period of
2017. This was due to higher revenue contributions mainly from our
subsidiary voxeljet America Inc. ("voxeljet America") as well as from
the German operation. The increase in revenue at our American service
center resulted from a growing market penetration in the North American
sales region which is accompanied by a larger customer base. The
increase from our German operation related to the robust economic
environment in Western Europe which resulted in lager orders from
existing customers.

Cost of sales was kEUR 3,209 for the second quarter of 2018 compared to
kEUR 3,043 for the second quarter of 2017.

Gross profit and gross profit margin were kEUR 2,053 and 39.0%,
respectively, in the second quarter of 2018 compared to kEUR 2,110 and
40.9% in the second quarter of 2017.

Gross profit for our Systems segment decreased to kEUR 561 in the second
quarter of 2018 from kEUR 925 in the second quarter of 2017. This was
mainly related to the lower number of printer sales compared to the last
year's same period. Gross profit margin for this segment decreased to
29.8% in the second quarter of 2018 compared to 36.4% in the second
quarter of 2017. This was mainly due to the product mix of the sold 3D
printers, which provided a less favorable gross profit margin
contribution.

Gross profit for our Services segment significantly increased to kEUR
1,492 in the second quarter of 2018 compared to kEUR 1,185 in the second
quarter of 2017. This is mainly due to the increase in revenues. The
gross profit margin for this segment slightly decreased to 44.2% in the
second quarter of 2018 from 45.4% in the second quarter of 2017. This
was mainly related to lower gross profit margin contributions from the
German operation, partially offset by increased profit margins from our
subsidiary voxeljet America. voxeljet UK still provided negative gross
profit contributions. The improvement regarding voxeljet America and
voxeljet UK resulted from a higher utilization of these service centers.

Selling expenses were kEUR 1,658 for the second quarter of 2018 compared
to kEUR 1,400 in the second quarter of 2017. The increase was mainly due
to higher personnel expenses resulting from the build-up of our sales
force especially within the German operation compared to the last year's
second quarter. In addition, delivery costs increased, in-line with the
increased revenues within our Services segment.

Administrative expenses were kEUR 1,392 for the second quarter of 2018
compared to kEUR 1,154 in the second quarter of 2017. The increase also
mainly related to higher personnel expenses resulting from higher
headcount especially regarding the German operation compared to the last
year's second quarter. Furthermore the expenses for external consulting
increased related to the on-going improvements of our Enterprise
Resource Planning (ERP) system.

Research and development ("R&D") expenses increased to kEUR 1,514 in the
second quarter of 2018 from kEUR 1,315 in the second quarter of 2017.
The increase of kEUR 199 was mainly due to higher personnel expenses
related to a slight increase in headcount in order to support further
research and development projects.

Other operating expenses in the second quarter of 2018 were kEUR 132
compared to kEUR 1,001 in the prior year period. This was mainly due to
lower losses from foreign currency transaction of kEUR 40 for the second
quarter of 2018 compared to kEUR 939 for the second quarter of 2017.

Other operating income was kEUR 440 for the second quarter of 2018
compared to kEUR 85 in the second quarter of 2017. The increase was
mainly due to higher gains from foreign currency transactions amounting
to kEUR 346 for the second quarter of 2018, an increase of kEUR 365
compared to last year's second quarter.

The changes in foreign currency losses and gains were primarily driven
by the valuation of the intercompany loans granted by the parent company
to our UK and US subsidiaries.

Operating loss was kEUR 2,203 in the second quarter of 2018, compared to
an operating loss of kEUR 2,675 in the comparative period in 2017. The
improvement was primarily related to a significantly lower other
operating expenses accompanied by higher other operating income
partially offset by higher operating expenses, compared to the second
quarter of 2017.

Financial result was negative kEUR 538 in the second quarter of 2018,
compared to a financial result of positive kEUR 1 in the comparative
period in 2017. The significant decrease was mainly related to the
revaluation of derivative financial instruments resulting in a finance
expense of kEUR 225 as well as interest expense for long-term debt of
kEUR 236.

Net loss for the second quarter of 2018 was kEUR 2,748 or EUR 0.74 per
share, as compared to net loss of kEUR 2,674, or EUR 0.72 per share, in
the second quarter of 2017.

Based on a conversion rate of five American Depositary Shares ("ADSs")
per ordinary share, net loss was at EUR 0.15 per ADS for the second
quarter of 2018, compared to a net loss of EUR 0.14 per ADS for the
second quarter of 2017. Earnings per share is computed by dividing net
income attributable to stockholders of the parent by the
weighted-average number of ordinary shares outstanding during the
periods. Earnings per ADS is calculated by dividing the above earnings
per share by five as each ordinary share represents five ADSs.

Six Months Ended June 30, 2018 Results

Revenues for the six months ended June 30, 2018 increased by 6.5% to
kEUR 10,314 compared to kEUR 9,683 in the prior year period.

Systems revenues were kEUR 3,258 for the first six months of 2018
compared to kEUR 4,235 for the same period last year. The Company sold
one new and three used and refurbished 3D printers during the first six
months of 2018 compared to five new 3D printers in the prior year
period. Systems revenues represented 31.6% of total revenue for the six
months ended June 30, 2018 compared to 43.7% for the same period a year
ago. Systems revenues also include all revenues from consumables, spare
parts and maintenance, where we recorded a slight increase compared to
the last year's same period.

Services revenues were kEUR 7,056 for the six months ended June 30, 2018
compared to kEUR 5,448 for the same period last year. This increase of
29.5% was mainly due to a higher revenue contribution from our
subsidiary voxeljet America and the German operation. Also our
subsidiary voxeljet UK recognized slight increases in Services revenues.

Cost of sales for the six months ended June 30, 2018 was kEUR 5,994, an
increase of kEUR 2, over cost of sales of kEUR 5,992 for the same period
in 2017.

Gross profit and gross margin for the six months ended June 30, 2018
were kEUR 4,320 and 41.9%, respectively, compared to kEUR 3,691 and
38.1% in the prior year period.

Gross profit for our Systems segment decreased to kEUR 990 for the six
months ended June 30, 2018 from kEUR 1,278 in the same period in 2017.
This decrease was mainly due to the lower number of printer sales. The
gross profit margin for this segment was almost unchanged with 30.4%
compared to 30.2% for the prior period.

Gross profit for our Services segment increased to kEUR 3,330 for the
six months ended June 30, 2018 from kEUR 2,413 in the same period of
2017. This was mainly related to the increase in revenues. The gross
profit margin for this segment increased to 47.2% for the first six
months of 2018 from 44.3% in the same period in 2017. Gross profit
margin contributions from voxeljet America as well as voxeljet UK
significantly improved, while voxeljet UK still generated negative
contributions. Gross profit margin at the German operation slightly
decreased.

Selling expenses were kEUR 3,394 for the six months ended June 30, 2018
compared to kEUR 2,785 in the same period in 2017, an increase of kEUR
609, or 21.9%. This was mainly due to higher shipping costs related to
the increase of Services revenues as well as higher personnel expenses
related to an increase in headcount resulting from the build-up of our
sales force.

Administrative expenses increased by kEUR 276 to kEUR 2,624 for the
first six months of 2018 from kEUR 2,348 in the prior year's period. The
increase was mainly due to higher personnel expenses related to
additional headcount.

R&D expenses increased to kEUR 3,111 for the six months ended June 30,
2018 from kEUR 2,812 in the same period in 2017, an increase of kEUR
299, or 10.6%. The increase was mainly due to increased expenditures for
personnel and materials to support existing and future projects.

Other operating expenses for the six months ended June 30, 2018 were
kEUR 490 compared to kEUR 1,191 in the prior year period. This
improvement was mainly due to lower losses from foreign currency
transactions amounting to kEUR 331 compared to kEUR 1,078 in the prior
year's period.

Other operating income was kEUR 842 for the six months ended June 30,
2018 compared to kEUR 382 in the prior year period. The decrease was
mainly due to higher gains from foreign exchange transactions amounting
to kEUR 600 compared to kEUR 35 in comparative period in 2017.

The changes in foreign currency losses and gains were primarily driven
by the valuation of the intercompany loans granted by the parent company
to our UK and US subsidiaries.

Operating loss was kEUR 4,457 in the six months ended June 30, 2018,
compared to an operating loss of kEUR 5,063 in the comparative period in
2017. The improvement was primarily related to a significant improvement
in gross profit, lower other operating expenses accompanied by higher
other operating income partially offset by higher operating expenses,
compared to the six months ended June 30, 2017.

Financial result was positive kEUR 140 for the six months ended June 30,
2018, compared to a financial result of negative kEUR 42 in the
comparative period in 2017. The increase was mainly related to the
revaluation of derivative financial instruments resulting in a finance
income of kEUR 716 partially offset by interest expense for long-term
debt of kEUR 467.

Net loss for the six months ended June 30, 2018 was kEUR 4,330, or EUR
1.16 per share, as compared to net loss of kEUR 5,105, or EUR 1.37 per
share in the prior year period. This is based on a weighted average
number of ordinary shares outstanding of 3.720 million for the first six
months ended June 30, 2018. Compared to the last year's same period, the
number of ordinary shares outstanding was unchanged.

Based on a conversion rate of five ADSs per ordinary share, net loss was
EUR 0.23 per ADS for the six months ended June 30, 2018 compared to net
loss of EUR 0.27 per ADS in the prior year period.

Business Outlook

Our revenue guidance for the third quarter of 2018 is in the range of
kEUR 6,000 to kEUR 8,000.

We reaffirm our guidance for the full year ended December 31, 2018

  • Full year revenue is expected to be in the range of kEUR 28,000 and
    kEUR 30,000
  • Gross margin is expected to be above 40%
  • Operating expenses for the full year are expected as follows: SG&A
    expenses expected to be in the range of kEUR 11,000 and kEUR 12,000
    and R&D expenses projected to be approximately kEUR 5,000 to
    kEUR 6,000. Depreciation and amortization expense is expected to be
    between kEUR 3,750 and kEUR 4,000.
  • Adjusted EBITDA is expected to be neutral-to-positive in 2018.
    Adjusted EBITDA is defined as net income (loss), as calculated under
    IFRS accounting principles before interest (income) expense, provision
    (benefit) for income taxes, depreciation and amortization, and
    excluding other (income) expense resulting from foreign exchange gains
    or losses on the intercompany loans granted to the subsidiaries.
  • Capital expenditures are projected to be in the range of kEUR 5,500 to
    kEUR 6,500, which primarily includes ongoing investments in our global
    subsidiaries.

Our total backlog of 3D printer orders at June 30, 2018 was kEUR 4,660,
which represents seven 3D printers. This compares to a backlog of kEUR
2,770 representing four 3D printers, at December 31, 2017. As production
and delivery of our printers is generally characterized by lead times
ranging between three to nine months, the conversion rate of order
backlog into revenue is dependent on the equipping process for the
respective 3D printer as well as the timing of customers' requested
deliveries.

At June 30, 2018, we had cash and cash equivalents of kEUR 3,643 and
held kEUR 13,194 of investments in bond funds, which are included in
current financial assets on our consolidated statements of financial
position.

Webcast and Conference Call Details

The Company will host a conference call and webcast to review the
results for the second quarter on Friday, August 17, 2018 at 8:30 a.m.
Eastern Time. Participants from voxeljet will include its Chief
Executive Officer, Dr. Ingo Ederer, and its Chief Financial Officer,
Rudolf Franz, who will provide a general business update and respond to
investor questions.

Interested parties may access the live audio broadcast by dialing
1-877-705-6003 in the United States/Canada, or 1-201-493-6725 for
international, Conference Title "voxeljet AG Second Quarter 2018
Financial Results Conference Call". Investors are requested to access
the call at least five minutes before the scheduled start time in order
to complete a brief registration. An audio replay will be available
approximately two hours after the completion of the call at
1-844-512-2921 or 1-412-317-6671, Replay Conference ID number 13681620.
The recording will be available for replay through August 24, 2018.

A live webcast of the call will also be available on the investor
relations section of the Company's website. Please go to the website https://event.webcasts.com/starthere.jsp?ei=1201968&tp_key=019c83f6da
at least fifteen minutes prior to the start of the call to register,
download and install any necessary audio software. A replay will also be
available as a webcast on the investor relations section of the
Company's website.

Non-IFRS Measure

The Company uses Adjusted EBITDA as a supplemental financial measure of
its financial performance. Adjusted EBITDA is defined as net income
(loss), as calculated under IFRS accounting principles, interest
(income) expense, provision (benefit) for income taxes, depreciation and
amortization, and excluding other (income) expense resulting from
foreign exchange gains or losses on the intercompany loans granted to
the subsidiaries. Management believes Adjusted EBITDA to be an important
financial measure because it excludes the effects of fluctuating foreign
exchange gains or losses on the intercompany loans granted to its
subsidiaries which are difficult to forecast for future periods.
Management regularly uses both IFRS and non-IFRS results and
expectations internally to assess its overall performance of the
business, making operating decisions, and forecasting and planning for
future periods. Management believes that Adjusted EBITDA is a useful
financial measure to the Company's investors as it helps investors
better understand and evaluate the projections our management board
provides. The Company's calculation of Adjusted EBITDA may not be
comparable to similarly titled financial measures reported by other peer
companies. Adjusted EBITDA should not be considered as a substitute to
financial measures prepared in accordance with IFRS.

Exchange rate

This press release contains translations of certain U.S. dollar amounts
into euros at specified rates solely for the convenience of readers.
Unless otherwise noted, all translations from U.S. dollars to euros in
this press release were made at a rate of USD 1.1658 to EUR 1.00, the
noon buying rate of the Federal Reserve Bank of New York for the euro on
June 30, 2018.

About voxeljet

voxeljet is a leading provider of high-speed, large-format 3D
printers and on-demand parts services to industrial and commercial
customers. The Company's 3D printers employ a powder binding, additive
manufacturing technology to produce parts using various material sets,
which consist of particulate materials and proprietary chemical binding
agents. The Company provides its 3D printers and on-demand parts
services to industrial and commercial customers serving the automotive,
aerospace, film and entertainment, art and architecture, engineering and
consumer product end markets. For more information, visit http://www.voxeljet.de/en/.

Cautionary Statement on Forward-Looking Statements

This press release contains forward-looking statements concerning our
business, operations and financial performance. Any statements that are
not of historical facts may be deemed to be forward-looking statements.
You can identify these forward-looking statements by words such as
‘‘believes,'' ‘‘estimates,'' ‘‘anticipates,'' ‘‘expects,'' ‘‘plans,''
‘‘intends,'' ‘‘may,'' ‘‘could,'' ‘‘might,'' ‘‘will,'' ‘‘should,''
‘‘aims,'' or other similar expressions that convey uncertainty of future
events or outcomes. Forward-looking statements include statements
regarding our intentions, beliefs, assumptions, projections, outlook,
analyses or current expectations concerning, among other things, our
results of operations, financial condition, business outlook, the
industry in which we operate and the trends that may affect the industry
or us. Although we believe that we have a reasonable basis for each
forward-looking statement contained in this press release, we caution
you that forward-looking statements are not guarantees of future
performance. All of our forward-looking statements are subject to known
and unknown risks, uncertainties and other factors that are in some
cases beyond our control and that may cause our actual results to differ
materially from our expectations, including those risks identified under
the caption "Risk Factors" in the Company's Annual Report on Form 20-F
and in other reports the Company files with the U.S. Securities and
Exchange Commission, as well as the risk that our revenues may fall
short of the guidance we have provided in this press release. Except as
required by law, the Company undertakes no obligation to publicly update
any forward-looking statements for any reason after the date of this
press release whether as a result of new information, future events or
otherwise.

voxeljet AG
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

     
Notes 6/30/2018 12/31/2017
(€ in thousands)
unaudited
Current assets 35,781 37,774
Cash and cash equivalents 7 3,643 7,569
Financial assets 2, 7 13,194 14,044
Trade receivables 2 4,211 5,093
Inventories 4 13,116 9,539
Income tax receivables 5 3
Other assets 1,612 1,526
 
Non-current assets 29,056 29,257
Financial assets 2, 7 1,072 357
Intangible assets 1,340 1,111
Property, plant and equipment 5 26,550 27,698
Investments in joint venture 32 39
Other assets 62 52
   
Total assets 64,837 67,031
 
Notes 6/30/2018 12/31/2017
 
Current liabilities 8,592 6,576
Deferred income 2 37 271
Trade payables 2 3,269 3,059
Contract liabilities 2 2,558 --
Financial liabilities 2, 7 972 1,162
Other liabilities and provisions 6 1,756 2,084
 
Non-current liabilities 16,612 16,537
Deferred income 2 18
Deferred tax liabilities 79 66
Financial liabilities 2, 7 16,349 16,413
Other liabilities and provisions 6 184 40
 
Equity 39,633 43,918
Subscribed capital 3,720 3,720
Capital reserves 76,526 76,227
Accumulated deficit 2 (41,958) (37,480)
Accumulated other comprehensive income 1,289 1,380
Equity attributable to the owners of the company 39,577 43,847
Non controlling interest 56 71
Total equity and liabilities 64,837 67,031

See accompanying notes to unaudited consolidated interim financial
statements.

 

voxeljet AG

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

         
Three months ended June 30, Six months ended June 30,
Notes 2018 2017 2018 2017
(€ in thousands except share and share data)
Revenues 2, 9, 10 5,262 5,153 10,314 9,683
Cost of sales (3,209) (3,043) (5,994) (5,992)
Gross profit 2, 9 2,053 2,110 4,320 3,691
Selling expenses (1,658) (1,400) (3,394) (2,785)
Administrative expenses (1,392) (1,154) (2,624) (2,348)
Research and development expenses (1,514) (1,315) (3,111) (2,812)
Other operating expenses (132) (1,001) (490) (1,191)
Other operating income 440 85 842 382
Operating loss (2,203) (2,675) (4,457) (5,063)
Finance expense 8 (549) (2) (592) (49)
Finance income 8 11 3 732 7
Financial result 8 (538) 1 140 (42)
Loss before income taxes (2,741) (2,674) (4,317) (5,105)
Income taxes (7) -- (13) --
Net loss (2,748) (2,674) (4,330) (5,105)
 
Other comprehensive income (12) 315 (91) 330
Total comprehensive loss (2,760) (2,359) (4,421) (4,775)
 
Loss attributable to:
Owners of the Company (2,739) (2,667) (4,315) (5,096)
Non-controlling interests (9) (7) (15) (9)
(2,748) (2,674) (4,330) (5,105)
 
Total comprehensive loss attributable to:
Owners of the Company (2,751) (2,352) (4,406) (4,766)
Non-controlling interests (9) (7) (15) (9)
(2,760) (2,359) (4,421) (4,775)
 
Weighted average number of ordinary shares outstanding 3,720,000 3,720,000 3,720,000 3,720,000
Loss per share - basic/ diluted (EUR) (0.74) (0.72) (1.16) (1.37)

See accompanying notes to unaudited consolidated interim financial
statements.

 

voxeljet AG

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

             
Attributable to the owners of the company
Accumulated
other
Subscribed Capital Accumulated comprehensive Non-controlling
(€ in thousands) capital reserves deficit gain (loss) Total interests Total equity
Balance at January 1, 2017 3,720 75,827 (28,971) 873 51,449 87 51,536
Loss for the period -- -- (5,096) -- (5,096) (9) (5,105)
Foreign currency translations -- -- -- 330 330 -- 330
Equity-settled share-based payment -- 122 -- -- 122 -- 122
Balance at June 30, 2017 3,720 75,949 (34,067) 1,203 46,805 78 46,883
         
Attributable to the owners of the company
Accumulated
other
Subscribed Capital Accumulated comprehensive Non-controlling
(€ in thousands) capital reserves deficit gain (loss) Total interests Total equity
Balance at December 31, 2017 3,720 76,227 (37,480) 1,380 43,847 71 43,918
Adjustment on initial application of IFRS 15 -- -- (100) -- (100) -- (100)
Adjustment on initial application of IFRS 9 -- -- (63) -- (63) -- (63)
Adjusted balance at January 1, 2018 3,720 76,227 (37,643) 1,380 43,684 71 43,755
Loss for the period -- -- (4,315) -- (4,315) (15) (4,330)
Net changes in fair value of available for sale financial assets -- -- -- (18) (18) -- (18)
Foreign currency translations -- -- -- (73) (73) -- (73)
Equity-settled share-based payment -- 299 -- -- 299 -- 299
Balance at June 30, 2018 3,720 76,526 (41,958) 1,289 39,577 56 39,633

See accompanying notes to unaudited consolidated interim financial
statements.

 

voxeljet AG

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

   
Six months ended June 30,
2018 2017
(€ in thousands)
Cash Flow from operating activities
 
Loss for the period (4,330) (5,105)
 
Depreciation and amortization 1,702 1,463
Foreign currency exchange differences on loans to subsidiaries (146) 194
Equity-settled share-based payment transaction 299 122
Impairment losses on trade receivables 152 147
Change in investment in joint venture 7 3
Non-cash interest expense on long-term debt 382 --
Change in fair value of derivative equity forward (715) --
Change in inventory allowance (327) (214)
Deferred income taxes 13 --
 
Change in working capital (396) (453)
Trade and other receivables, inventories and current assets (2,707) (1,103)
Trade payables 191 342
Other liabilities, contract liabilities, provisions and deferred
income
2,122 308
Income tax receivable and payable (2) --
Total (3,359) (3,843)
 
Cash Flow from investing activities
 
Payments to acquire property, plant and equipment and intangible
assets
(813) (1,999)
Proceeds from disposal of financial assets 7,025 922
Payments to acquire financial assets (6,175) --
Investment in joint venture -- (50)
Total 37 (1,127)
 
Cash Flow from financing activities
 
Repayment of bank overdrafts and lines of credit (49) (93)
Repayment of sale and leaseback obligation (211) (201)
Repayment of finance lease obligation (23) (21)
Repayment of long-term debt (393) (350)
Proceeds from long-term debt issuance 40 1,678
Total (636) 1,013
 
Net increase (decrease) in cash and cash equivalents (3,958) (3,957)
 
Cash and cash equivalents at beginning of period 7,569 7,849
Changes to cash and cash equivalents due to foreign exchanges rates 32 136
Cash and cash equivalents at end of period 3,643 4,028
 
Supplemental Cash Flow Information
Interest paid 111 107
Interest received 3 5

See accompanying notes to unaudited consolidated interim financial
statements.

voxeljet AG

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. Preparation of financial statements

Our consolidated interim financial statements include the accounts of voxeljet
AG
, which is listed on the New York Stock Exchange, and its
wholly-owned subsidiaries voxeljet America Inc., voxeljet UK Ltd. and
voxeljet India Pvt. Ltd., as well as voxeljet China Co. Ltd., which are
collectively referred to herein as the ‘Group' or the ‘Company.'

Our consolidated interim financial statements were prepared in
compliance with all applicable measurement and presentation
rules contained in International Financial Reporting Standards (‘IFRS')
as set forth by the International Accounting Standards Board (‘IASB')
and Interpretations of the IFRS Interpretations Committee (‘IFRIC'). The
designation IFRS also includes all valid International Accounting
Standards (‘IAS'); and the designation IFRIC also includes all valid
interpretations of the Standing Interpretations Committee (‘SIC').
Specifically, these financial statements were prepared in accordance
with the disclosure requirements and the measurement principles for
interim financial reporting purposes specified by IAS 34.

The IASB issued a number of new IFRS standards which are required to be
adopted in annual periods beginning after January 1, 2018.

   
Standard   Effective date   Descriptions
IFRS 9 01/2019 Amendments Prepayment Features with Negative Compensation
IFRS 16 01/2019 Leases
IAS 19 01/2019 Amendments Plan Amendment, Curtailment or Settlement
IAS 28 01/2019 Amendments Long-term Interests in Associates and Joint Ventures
IFRIC 23 01/2019 Uncertainty over Income Tax Treatments
Improvements to IFRS (2015-2017) 01/2019 IFRS 3, IFRS 11, IAS 12, IAS 23
Others 01/2020 Amendments References to the Conceptual Framework in IFRS Standards
IFRS 17 01/2021 Insurance Contracts
IFRS 10, IAS 28 indefinite Amendment Sale or Contribution of Assets between Investor and its
Associate or Joint Venture

The Company has not yet determined what impact the new standards,
amendments or interpretations will have on its financial statements.

The interim financial statements as of and for the six months ended June
30, 2018 and 2017 were authorized for issue by the Management Board on
August 16, 2018.

2. Summary of significant accounting policies

Except as described below, the accounting policies applied in these
consolidated interim financial statements are the same as those applied
in the Company's consolidated financial statements as of and for the
year ended December 31, 2017, which can be found in its Annual Report on
Form 20-F that was filed with the U.S. Securities and Exchange
Commission. The changes in accounting policies are also expected to be
reflected in the Company's consolidated financial statements as of and
for the year ending December 31, 2018.

The Group has initially adopted IFRS 15, Revenue from Contracts with
Customers
, and IFRS 9, Financial Instruments, on January 1,
2018. A number of other new standards are effective from January 1, 2018
but these do not have a material effect on the Company's consolidated
financial statements.

  • The adoption of IFRS 15 resulted in minor impacts related to the
    revenue recognition regarding the revenue streams from maintenance as
    well as extended warranty contracts. Those impacts include immaterial
    timing differences for revenue recognition related to these types of
    contracts with customers. The new guidance is not expected to have a
    material impact to net income (loss) on an ongoing basis.
  • The adoption of IFRS 9 resulted in a minor increase in impairment
    losses recognized on trade receivables.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether,
how much and when revenue is recognized. It replaced IAS 18, Revenue,
IAS 11, Construction Contracts
, and related interpretations. The
Group has adopted IFRS 15 using the cumulative effect method, with the
effect of initially applying this standard recognized at the date of
initial application (i.e. January 1, 2018). Accordingly, the information
presented for 2017 has not been restated – i.e. it is presented, as
previously reported, under IAS 18, IAS 11 and related interpretations.

The following table summarizes the impact, net of tax, of transition to
IFRS 15 on retained earnings as of January 1, 2018.

 
Impact at January 1, 2018   Impact on adopting IFRS 15 at January 1, 2018
(€ in thousands)
Retained earnings (100)
 
Recognition of revenues from maintenance and extended warranty
contracts
(100)

The following table summarizes the impacts of adopting IFRS 15 on the
Company's consolidated interim consolidated statement of financial
position as of June 30, 2018 and its consolidated interim statement of
comprehensive loss for the six months then ended for each of the line
items affected.

     
Amounts without
06/30/2018   As reported   Adjustments   adoption of IFRS 15
(€ in thousands)
Total assets 64,837 (248) 64,589
 

Current assets

35,781 (248) 35,533
Trade receivables 4,211 (248) 3,963
 
Total equity and liabilities 64,837 (248) 64,589
 

Current liabilities

8,592 (357) 8,235
Deferred income 37 245 282
Contract liabilities 2,558 (2,558) --
Other liabilities and provisions 1,756 1,956 3,712
 

Equity

39,633 109 39,742
Accumulated deficit (41,958) 109 (41,849)
 
Amounts without
06/30/2018   As reported   Adjustments   adoption of IFRS 15
(€ in thousands)
Revenue 10,314 9 10,323
Impairment loss on trade receivables (8) 8 --
Operating loss (4,457) 17 (4,440)
Loss before income taxes (4,317) 17 (4,300)
Net loss (4,330) 17 (4,313)
Total comprehensive loss (4,421) 17 (4,404)

The details of the new accounting policies and the nature of the changes
to previous accounting policies in relation to the Group's revenue
streams in relation to the Maintenance and extended warranty contracts
are set out below.

After the initial one year of statutory warranty period, the Company
offers its customers extended warranty and optional maintenance
contracts. Extended warranty and maintenance contracts are generally
provided for a period of twelve months and automatically extended for
another twelve months if not cancelled on a timely basis. Before the
adoption of IFRS 15 extended warranty and maintenance service revenue
has been recognized on a straight-line basis over the contractual term.

Under IFRS 15, the Company recognizes revenue based on input factors
like the number of service visits or the provision of certain goods, in
particular printheads under the maintenance and warranty contracts.
Therefore the expected number of service visits and goods to be provided
under a contract have been estimated by the Company's service department
based on historical experience. This leads to minor timing differences
for revenue recognition related to these types of contracts with
customers throughout the contract term.

IFRS 9 Financial Instruments

IFRS 9 sets out requirements for recognizing and measuring financial
assets, financial liabilities and some contracts to buy or sell
non-financial items. This standard replaces IAS 39, Financial
Instruments
.

The Company has taken an exemption not to restate comparative
information for prior periods with respect to classification and
measurement (including impairment) requirements. Differences in the
carrying amounts of financial assets and financial liabilities resulting
from the adoption of IFRS 9 are recognized in retained earnings and
reserves as of January 1, 2018. Accordingly, the information presented
for 2017 does not reflect the requirements of IFRS 9 but rather those of
IAS 39.

The details of new significant accounting policies and the nature and
effect of the changes to previous accounting policies are set out below.

Classification and measurement of financial assets and financial
liabilities

IFRS 9 largely retains the existing requirements in IAS 39 for the
classification and measurement of financial liabilities. However, it
eliminates the previous IAS 39 categories for financial assets of held
to maturity, loans and receivables and available for sale.

Under IFRS 9, on initial recognition, a financial asset is classified as
measured at: amortized cost, fair value through other comprehensive
income (FVOCI), or fair value through profit or loss (FVTPL). The
classification of financial assets under IFRS 9 is generally based on
the business model in which a financial asset is managed and its
contractual cash flow characteristics.

A financial asset is measured at amortized cost if it meets both of the
following conditions and is not designated as at FVTPL:

  • it is held within a business model whose objective is to hold assets
    to collect contractual cash flows; and
  • its contractual terms give rise on specified dates to cash flows that
    are solely payments of principal and interest on the principal amount
    outstanding.

On initial recognition of an equity investment that is not held for
trading, the Company may irrevocably elect to record subsequent changes
in the investment's fair value in OCI. This election is made on an
investment-by-investment basis.

All financial assets not classified as measured at amortized cost or
FVOCI as described above are measured at FVTPL. This includes all
derivative financial assets. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise meets the
requirements to be measured at amortized cost or at FVOCI as at FVTPL if
doing so eliminates or significantly reduces an accounting mismatch that
would otherwise arise.

A financial asset (unless it is a trade receivable without a significant
financing component that is initially measured at the transaction price)
is initially measured at fair value plus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition.

Under IFRS 9, our investments in bond funds will be classified as fair
value through other comprehensive income (FVTOCI). As permitted by IFRS
9, the Company has designated these investments at the date of initial
application as measured at FVOCI. Unlike IAS 39, the accumulated fair
value reserve related to these investments will never be reclassified to
profit or loss.

Under IAS 39 as well as upon adoption of IFRS 9, our derivative
financial instruments have been designated as at FVTPL.

Impairment of financial assets

IFRS 9 replaces the ‘incurred loss' model in IAS 39 with an ‘expected
credit loss' (ECL) model. The new impairment model applies to financial
assets measured at amortized cost, FVOCI and contract assets. Under IFRS
9, credit losses are recognized earlier than under IAS 39.

The Company's financial assets at amortized cost consist of trade
receivables and cash and cash equivalents. For cash and cash equivalents
the adoption of IFRS 9 did not have any impact regarding impairment.

Under IFRS 9, loss allowances are measured on either of the following
bases:

  • 12-months ECLs: these are ECLs that result from possible default
    events within the 12 months after the reporting date; or
  • lifetime ECLs: these are ECLs that result from all possible default
    events over the expected life of a financial instrument.

When determining whether the credit risk of a financial asset has
increased significantly since initial recognition and when estimating
ECLs, the Company considers reasonable and supportable information that
is relevant and available without undue cost or effort. This includes
both quantitative and qualitative information and analysis, based on the
Group's historical experience and informed credit assessment and
including forward-looking information.

The Company considers a financial asset to be in default when:

  • the borrower is unlikely to pay its credit obligations to the Company
    in full, without recourse by the Company to actions such as realizing
    security (if any is held); or
  • the financial asset is more than 90 days past due.

The Company considers an investment to have low credit risk when its
credit risk rating is equivalent to the globally understood definition
of ‘investment grade'. The Company limits its exposure to credit risk by
investing only in bond funds which are fully guaranteed by the financial
institutions and therefore represents short term credit rating of A-3
based on Standard & Poor's or P-2 based on Moody's.

Trade receivables

The Company measures loss allowances for trade receivables at an amount
equal to lifetime ECLs. ECLs are a probability-weighted estimate of
credit losses. The Company calculates the ECL based on the risk scoring
its customers' according to an external rating agency. Following the
risk score of each customer, the trade receivables are clustered into
different grades. For each grade, the ECL is calculated after deducting
from trade receivables a loss allowance based on actual credit loss
experience. In addition the Company uses qualitative assessment of the
trade receivables, where default has incurred.

The Group considers an equity security to have low credit risk when its
credit risk rating is equivalent to the globally understood definition
of ‘investment grade'. The Group limits its exposure to credit risk by
investing only in bond funds which are fully guaranteed by the financial
institutions and therefore represents.

Presentation of impairment

Loss allowances for financial assets measured at amortized cost are
deducted from the gross carrying amount of the assets and presented
within other operating expenses.

Impairment losses on financial assets classified as FVTPL and FCOCI are
presented within the finance expense and other comprehensive income,
respectively.

The following table presents the original measurement categories under
IAS 39 and the new measurement categories under IFRS 9 for each class of
the Company's financial assets and financial liabilities as of January
1, 2018.

       
Original New
Original classification New classification carrying amount carrying amount
01/01/2018   under IAS 39   under IFRS 9   under IAS 39   under IFRS 9
(€ in thousands)
Financial assets 27,063 27,000
 

Non-current assets

Equity securities Available-for-sale financial assets FVOCI 5 5
Derivative financial instruments A financial asset or financial liability at fair value through
profit or loss
Mandatorily at FVTPL 352 352

Current assets

Bond funds Available-for-sale financial assets FVOCI 14,044 14,044
Cash and cash equivalents Loans and receivables Amortized cost 7,569 7,569
Trade receivables Loans and receivables Amortized cost 5,093 5,030
 
Financial liabilities 20,416 20,416
 

Non-current liabilities

Long-term debt Financial liabilities measured at amortized cost Amortized cost 16,242 16,242
Finance lease obligation Financial liabilities measured at amortized cost Amortized cost 171 171

Current liabilities

Bank overdraft Financial liabilities measured at amortized cost Amortized cost 58 58
Long-term debt Financial liabilities measured at amortized cost Amortized cost 796 796
Finance lease obligation Financial liabilities measured at amortized cost Amortized cost 308 308
Trade payables Financial liabilities measured at amortized cost Amortized cost 2,841 2,841

Impact of the new impairment model

For assets in the scope of the IFRS 9 impairment model, impairment
losses are generally expected to increase and become more volatile. The
Company has determined that the application of IFRS 9's impairment
requirements at January 1, 2018 results in an additional impairment
allowance as follows.

       
 
(€ in thousands)
Loss allowance at December 31, 2017 under IAS 39 482
Additional impairment recognized at January 1, 2018 on:
Trade and other receivables as at December 31, 2017 62
Additional trade receivables recognized on adoption of IFRS 15 1
Loss allowance at January 1, 2018 under IFRS 9 545

The following tables provides information about the exposure to credit
risk and ECLs for trade receivables as of January 1, 2018 and June 30,
2018. This was calculated after a specific assessment of the trade
receivables and after recording a specific debt allowance.

           
January 1, 2018
Equivalent to external
credit rating Probability of Gross carrying Impairment loss Net carrying
Grades   (Standard & Poor's)   default   amount   allowance   amount
(€ in thousands)
Grades 1-4: Low risk BBB+ to AAA 0.2% 3,274 5 3,269
Grades 5-7: Fair risk B+ to BBB 1.3% 1,674 22 1,652
Grades 8-9: Substandard CCC- to B 7.0% 363 25 338
Grade 10: Doubtful C to CC 25.0% 14 3 11
Grade 11:   Loss   D   100.0%   8   8   --
                5,333   63   5,270
 
June 30, 2018
Equivalent to external
credit rating Probability of Gross carrying Impairment loss Net carrying
Grades   (Standard & Poor's)   default   amount   allowance   amount
(€ in thousands)
Grades 1-4: Low risk BBB+ to AAA 0.2% 1,730 3 1,727
Grades 5-7: Fair risk B+ to BBB 1.3% 1,964 26 1,938
Grades 8-9: Substandard CCC- to B 7.0% 448 31 417
Grade 10: Doubtful C to CC 25.0% 172 43 129
Grade 11:   Loss   D   100.0%   94   94   --
                4,408   197   4,211

3. Share based payment arrangements

On April 7, 2017, voxeljet AG established a share option plan that
entitles key management personnel and senior employees of voxeljet AG
and its subsidiaries to purchase shares of the parent company.

Total options available under the share option plan are 372,000. 279,000
options (75%, Tranche 1) were granted on April 7, 2017. 93,000 options
(25%, Tranche 2) were granted on April 12, 2018.

The vesting conditions include a service condition (the options vest
after a period of four years of continued service from the respective
grant date) and a market condition (the options may only be exercised if
the share price exceeds the exercise price over a period of 90
consecutive days by at least 20% in the period between the grant date
and the respective exercise time frame) which both conditions must be
met.

The fair value of the employee share option plan has been measured for
Tranches 1 and 2 using a Monte Carlo simulation. The market condition
has been incorporated into the fair value at grant date.

The inputs used in the measurement of the fair value at grant date are
as follows:

   
Tranche 1 Tranche 2
Parameter
Share price at grant date USD 13.80 USD 16.15
Exercise price USD 13.90 USD 16.15
Expected volatility 55.00% 58.40%
Expected dividends -- --
Risk-free interest rate 2.49% 2.85%
Fair value at grant date USD 8.00 USD 9.74

The respective expected volatility has been based on an evaluation of
the historical volatility of the Company's share price as at the grant
date. As at June 30, 2018 no options are exercisable and 372,000 options
are outstanding. The weighted-average contractual life of the options at
June 30, 2018 amounts to 9.0 years (June 30, 2017: 9.8 years).

The expenses recognized in the profit and loss statement in relation to
the share-based payment arrangements amounted to kEUR 171 in the three
months and kEUR 299 in the six months ended June 30, 2018. (three months
and six months ended June 30, 2017: kEUR 122 and kEUR 122, respectively).

4. Inventories

           
6/30/2018 12/31/2017
(€ in thousands)
Raw materials and merchandise 4,419 3,017
Work in progress 8,697 6,522
Total 13,116 9,539

5. Property, plant and equipment, net

   
6/30/2018 12/31/2017
(€ in thousands)
Land, buildings and leasehold improvements 17,325 17,415
Plant and machinery (includes assets under finance lease) 7,670 8,650
Other facilities, factory and office equipment 1,476 1,625
Assets under construction and prepayments made 79 8
Total 26,550 27,698
Thereof pledged assets of Property, Plant and Equipment 6,833 7,046
Leased assets included in Property, Plant and Equipment: 417 881
Printers 258 613
Printers leased to customers under operating lease -- 97
Other factory equipment 159 171

6. Other liabilities and provisions

             
6/30/2018 12/31/2017
(€ in thousands)
Customer deposits -- 373
Liabilities from VAT 14 12
Employee bonus 90 303
Accruals for vacation and overtime 409 222
Accruals for licenses 179 140
Liabilities from payroll 272 236
Accruals for commissions 92 50
Accruals for compensation of Supervisory board 130 180
Accrual for warranty 328 286
Others 426 322
Total 1,940 2,124

After the adoption of IFRS 15 customer deposits amounting to TEUR 1,932
are presented within contract liabilities.

7. Financial instruments

The following table shows the carrying amounts and fair values of
financial assets and financial liabilities, including their levels in
the fair value hierarchy.

                 
Carrying amount Fair Value
At Other Total
amortized financial carrying
6/30/2018 FVTPL FVOCI cost liabilities amount Level 1 Level 2 Level 3 Total
Financial assets measured at fair value

Non-current assets

Derivative financial instruments 1,067 -- -- -- 1,067 -- 1,067 -- 1,067
Equity securities -- 5 -- -- 5 -- -- 5 5
 

Current assets

Bond funds -- 13,194 -- -- 13,194 13,194 -- -- 13,194
 
Financial assets not measured at fair value

Current assets

Cash and cash equivalents -- -- 3,643 -- 3,643 3,643 -- -- 3,643
Trade and other receivables -- -- 4,211 -- 4,211 -- -- -- --
 
Financial liabilities not measured at fair value

Non-current liabilities

Long-term debt -- -- -- 16,262 16,262 -- 15,017 -- 15,017
Finance lease obligation -- -- -- 87 87 -- 82 -- 82
 

Current liabilities

Bank overdraft -- -- -- 8 -- -- -- -- --
Long-term debt -- -- -- 805 805 -- 798 -- 798
Finance lease obligation -- -- -- 159 159 -- 155 -- 155
Trade payables -- -- -- 3,269 3,269 -- -- -- --
             
 
A financial
asset or
financial liability
at fair value Held-to- Available- Financial liabilities
through profit maturity for-sale Loans and measured at
12/31/2017   or loss   investments   investments   receivables   amortized cost   Fair Value   Level
Assets
 

Non-current assets

 

Equity securities -- -- 5 -- -- 5 Level 3
Derivative financial instruments 352 -- -- -- -- 352 Level 2

Current assets

Bond funds -- -- 14,044 -- -- 14,044 Level 1
Cash and cash equivalents -- -- -- 7,569 -- 7,569 Level 1
 
Liabilities
 

Non-current liabilities

Long-term debt -- -- -- -- 16,242 15,119 Level 2
Finance lease obligation -- -- -- -- 171 163 Level 2

Current liabilities

Bank overdraft -- -- -- -- 58 58
Long-term debt -- -- -- -- 796 787 Level 2
Finance lease obligation -- -- -- -- 308 310 Level 2

The fair value of the Company's investments in the bond funds was
determined based on the unit prices quoted by the fund management
company.

The fair value of long-term debt was determined using discounted cash
flow models based on the relevant forward interest rate yield curves.
The fair value of finance lease obligations was determined using
discounted cash flow models on market interest rates available to the
Company for similar transactions at the relevant date.

Due to their short maturity and the current low level of interest rates,
the carrying amounts of credit lines and bank overdrafts approximate
fair value.

8. Financial result

   
Three months ended June 30,
2018 2017
(€ in thousands)
Interest expense (549) (2)
Finance lease obligations (23) (8)
Long-term debt (236) 8
Expense from revaluation of derivative financial instruments (225) --
Other (65) (2)
Interest income 11 3
Income from bond funds 9 --
Other 2 3
Financial result (538) 1
 
Six months ended June 30,
2018 2017
(€ in thousands)
Interest expense (592) (49)
Finance lease obligations (59) (18)
Long-term debt (467) (29)
Other (66) (2)
Interest income 732 7
Income from bond funds 14 1
Income from revaluation of derivative financial instruments 716 --
Other 2 6
Financial result 140 (42)

9. Segment reporting

The following table summarizes segment reporting. The sum of the amounts
of the two segments equals the total for the Group in each of the
periods.

 
Three months ended June 30,
2018 2017
(€ in thousands)
SYSTEMS SERVICES SYSTEMS SERVICES
Revenues 1,883 3,379 2,542 2,611
 
Gross profit 561 1,492 925 1,185
Gross profit in % 29.8 % 44.2 % 36.4 % 45.4 %
 
Six months ended June 30,
2018 2017
(€ in thousands)
SYSTEMS SERVICES SYSTEMS SERVICES
Revenues 3,258 7,056 4,235 5,448
 
Gross profit 990 3,330 1,278 2,413
Gross profit in % 30.4 % 47.2 % 30.2 % 44.3 %

10. Revenues

                 
Three months ended June 30, Six months ended June 30,
2018 2017 2018 2017
(€ in thousands) (€ in thousands)
EMEA 3,690 3,554 6,822 6,393
Germany 1,220 2,023 2,737 3,454
France 1,160 503 1,749 1,028
Others 1,310 918 2,336 1,911
Asia Pacific 449 1,001 1,217 1,280
China 135 808 328 932
South Korea 181 165 307 256
Others 133 28 582 92
Americas 1,123 598 2,275 2,010
United States 1,115 579 2,254 1,831
Others 8 19 21 179
Total 5,262 5,153 10,314 9,683

11. Commitments, contingent assets and liabilities

In March 2018, ExOne GmbH, a subsidiary of The ExOne Company, notified
voxeljet of its intent not to pay its annual license fees under an
existing intellectual property-related agreement and asserted its rights
to claim damages pursuant to an alleged material breach of the
agreement. At this time, the Company cannot reasonably estimate a
contingency, if any, related to this matter.

View Comments and Join the Discussion!