SLM Solutions (ETR: AM3D) released its earnings report for the first half of 2022, including record-breaking revenue for the company’s second quarter and the first half of the year, as well as an order backlog that is at its most prominent position for the third consecutive quarter.
“Multi-Record Breaking Quarter”
To put it briefly, SLM Solutions CEO Sam O’Leary said the metal 3D printer manufacturer is having a “multi-record breaking quarter” thanks to its Q2 revenue, which was up 60% year-over-year to €26.1 million from €16.4 million last year. This resulted in a 34% increase in H1 revenue of €42.5 million from €31.7 million in the same period of 2021.
Revenue performance was boosted by the first two deliveries of validated production state NXG XII 600 machines, robust performance from the existing portfolio, and further growth in the after-sales business segment. All the while minimizing the effects of the ongoing supply chain disruptions, which remain a critical risk.
Additionally, for the third consecutive quarter, SLM Solutions posted its largest ever backlog position of €49.1 million, up 62% year-over-year, while order intake for the second quarter stands at €22.6 million, up 100% from last year.
High-Profile Metal 3D Printing Customers
Other key milestones during the quarter include the groundbreaking and market-leading NXG XII 600 successfully moving into the production stage delivery phase and Rolls Royce purchasing two SLM 500 systems for the pre-production stage of its 18,000-pound-thrust Pearl 10X engine, the newest member of the Pearl family.
The first two validated production NXG XII 600 machines were delivered to SLM Solutions’ development partner Divergent Technologies, a longstanding customer with an installed base of 16 SLM systems, including five NXG XII 600 machines, with more on order for 2022 delivery. SLM’s NXG XII 600 is expected to become the AM driver of the Divergent Adaptive Production System, delivering sustainable volume manufacturing and disrupting the automotive industry.
Aside from Rolls Royce purchasing two SLM 500 machines, Bosch has completed the installation of two SLM 500 cordless machines to produce parts for its powertrain technology, including customer components for hydrogen and electric drive production applications.
However, the company’s loss for the year’s first half added up to €9.1 million. The second quarter, in particular, had a loss of €1.7 million; that is, an improvement over the previous half year and second quarter results, which recorded losses of €12.3 million and €7.1 million respectively.
During an earnings call with investors on August 18, 2022, O’Leary and Chief Financial Officer (CFO) Dirk Ackermann focused more on their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) numbers, which resulted in a net positive of €1.3 million for the second quarter, delivering early on the company’s 2022 guidance that had anticipated a positive EBITDA by the second half of the year.
Ackermann also commented on some of the headwinds SLM Solutions is facing: “Our gross margin is still notably impacted by low productivity across our production lines, which is mainly caused by the ongoing shortage of electronic components, and we do not expect an improvement in this area in the second half. Furthermore, we are also slowly experiencing increased direct material costs, given the overall inflationary pressure. EBITDA was positive in the second quarter, meaning we already achieved our FDA guidance ahead of plan. However, we’ve benefited from a release of a legacy accrual and positive FX impacts during the quarter.”
So, although the company anticipates a stronger second half of the year (which has also been historically the case), it is still notably impacted by part shortages, which may hinder its ability to execute on the backlog in the latter part 2022. Another position that could affect the second period of 2022 is the early repayment portion of the convertible bond 2017-2024 in October, which will be roughly €30 million.
Nonetheless, Ackermann assured investors that, as in the first part of the year, they are actively working on multiple mitigation actions to avoid any negative impact. That includes evaluating multiple options regarding new financing, although the executive said he would have more information about this in the coming weeks.
Finally, the company remains confident that it will reach its revenue target of at least €100 million in 2022. SLM Solutions reaffirms its guidance, given its strong backlog position and continued commercial strength. Finishing the first half of the year with €42.5 million in revenue, the company now requires at least €57.5 million in the second half. Regarding its EBITDA guidance for the full year 2022, SLM has already achieved break-even EBITDA in the second quarter due to one-off effects and aims to maintain a positive EBITDA in the year’s second half.
Looking ahead, O’Leary suspects that material availability of electronic components remains a crucial concern for the rest of the year. However, he remains optimistic about SLM’s product offerings and how they drive innovations across multiple industries and are “redefining manufacturing.”
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