voxeljet AG: Ongoing Cash Usage Results In Additional Dilution (NASDAQ:VJET)

Working 3D printer closeup.  Print 3D printer object.  Plastic Wire Filament.


Last month voxeljet AG (NASDAQ:VJET) or “Voxeljet” reported improved Q2 results with increasing sales, margins and backlog year-on-year:

Financial highlights

company presentation

On the conference callManagement emphasized higher contributions from the company’s service segment due to very high utilization of Voxeljet’s 3D parts production centers in Germany and the United States.

Q2 Results Summary

company presentation

Management also reiterated its earlier guidance for the full year with sales of between 25 and 30 million euros and gross profit margins of over 32.5%. Fourth quarter Adjusted EBITDA is expected to be breakeven or slightly positive.

Unfortunately, the company continues to burn through significant amounts of cash from operations and, according to management in the press release, would have needed additional funding by early 2023 at the latest.

Given that concern, this week’s capital raise came as no surprise, especially given that the majority of the proceeds from the €26.5 million sale and leaseback of the company’s German headquarters last month went towards paying down debt :

“As we continue on our path to profitability, this sale-leaseback transaction is consistent with our goal of raising non-dilutive financing,” said Rudolf Franz, COO & CFO of voxeljet. “We plan to use the proceeds to repay our outstanding financial debt and focus on our core business, which is the design, manufacture and sale of high-tech industrial 3D printers.”

Apparently, the transaction was necessitated by the Company’s inability to successfully restructure credit facilities provided by the European Investment Bank (“EIB”), according to statements in the Company’s 2021 Annual Report on Form 20-F (emphasis added). :

(…) We have significant financial commitments related to the repayment of Tranche A, including interest on the profit-sharing loan received from the EIB. Tranche A of €14.6 million is due in December 2022 reduced or increased by changes in the fair value of the performance participation interest. (…)

We are taking several steps to defuse the situation. We are currently in talks with the EIB to agree a drawdown of Tranche B2 and Tranche C of the €10.0m loan to restructure the debt. In addition, we are taking additional steps to raise additional funds, which may include debt or equity financing, not without mentioning that there can be no assurances that we will be able to raise additional funds on terms favorable to us, if at all. (…)

While we expect to continue as a going concern, our continued existence depends on our being successful in:

  • Successful negotiations with the EIB to draw down Tranche B2 and Tranche C under the Finance Agreement
  • Achievement of the planned turnover
  • successful raising of capital in the form of equity or debt

Should these dependencies not be successfully achieved, the management would consider selling the properties of voxeljet AG in order to raise sufficient funds to continue the company.

In principle, all proceeds from the sale and leaseback transaction will be used to settle the company’s debt to the EIB (€22.0m) and a regional savings bank (€4.1m).

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While the debt repayments relieve the company of all financial covenants, including a minimum liquidity requirement, new lease commitments for the company’s corporate headquarters will put additional pressure on operating expenses and future cash flow.

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At the end of the second quarter, the company reported EUR 14.6 million in cash and cash equivalents. Even with the $4.4 million in gross proceeds from Wednesday’s capital raise, Voxeljet will likely need additional funding through the second half of next year.

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bottom line

While the company’s recent Q2 report showed signs of improvement, Voxeljet’s increased cash burn requires the company to raise additional capital on a regular basis.

After the above repayments, the company will be debt-free, but new lease commitments for the company’s German headquarters will put an additional strain on operating expenses and future cash flow.

Please note that Voxeljet is expected to require additional funding no later than the second half of next year.

Given the issues discussed above, investors should wait for the company to get close to cash flow breakeven.