German 3D printer manufacturer SLM Solutions maintains that it has made “a solid start” to the year, despite reporting a revenue decline of 13% during Q1 2021.
In the course of Q1 2021, the firm generated €15.4 million in revenue, €2.4 million less than the €17.8 million reported during the last pre-pandemic period of Q1 2020. However, SLM Solutions’ sales drop can largely be traced back to a 17% fall in its Machine revenue, and the company anticipates that its order backlog of €31.8 million, will allow it to achieve annual growth of at least 15% for the overall year.
Despite SLM Solutions’ positive outlook, its shares have fallen 5% since the results were announced, potentially reflecting investor concern that its EBITDA remained negative for Q1 2021 at -€2.1 million. According to the firm’s CEO Sam O’Leary, its first quarter revenue was “in line with expectations,” but he now expects to see its substantial order backlog being converted into revenue in the near future.
“With order intake gaining traction over the last quarters, SLM Solutions has had a strong start to the new year,” said O’Leary. “A notable portion of our backlog will be converted into revenue over the next quarters, as we project a significant acceleration of our growth especially in the second half of the year.”
“The reported results are entirely in line with our operating plan and the NXG’s commercial progress continues to exceed our strong expectations.”
SLM Solutions’ Q1 2021 results
SLM Solutions reports its revenue across two main segments: Machines and After Sales. While the firm’s Machines division continued to be its highest earner during Q1 2021, it only generated €11.2 million in revenue, a 17% reduction compared to the €13.5 million reported in Q1 2020.
The company’s After Sales revenue, meanwhile, fell slightly less from the €4.4 million raised in Q1 2020 to €4.1 million in Q1 2021, making Machine sales the main reason for its overall decline during the period. Contrastingly, over the course of Q2 2021, SLM Solutions expects to convert 13% of its €32 million backlog into revenue, adding €4 million to its Machines revenue before the quarter has even started.
Additionally, in Q3 and Q4 2021, the firm has forecasted further conversions of around 8% and 5%, setting it up for strong revenue results within its remaining 2021 financials. In other areas such as EBITDA, SLM Solutions also reported improved performance between Q1 2020 and Q1 2021, boasting a €0.9 million rise due to the company’s cautious spending approach.
Geographically, SLM Solutions says that its market share increased most within the EMEA and U.S. regions during Q1 2021, largely due to the strong performance of its new products, including the NXG XII 600 3D printer. Based on AM POWER’s latest survey, the firm also believes that wider trends towards multi-laser technology, have now positioned it as a leader, in a market that’s set to grow 29% by 2025.
|SLM Solutions’ Financials (€)||Q1 2020||Q1 2021||Variance (€)||Variance (%)|
Unpacking SLM Solutions’ backlog
Although SLM Solutions didn’t manage to get enough orders over the line in Q1 2021 to achieve annual revenue growth, it has already seen its technology applied in multiple new areas so far this year. Just last month, the firm worked with Safran Landing Systems to deploy its SLM 800 3D printer as a means of producing a novel piece of business jet landing gear.
The company has also partnered with Elementum 3D to expand on its material offering to clients, and collaborated with Wabtec as part of a locomotive part production program. Elsewhere, with regards to the sales of its NXG XII 600, SLM Solutions has provided a detailed launch update, revealing that it has now sold ten of the machines, with two of these accounted for within its Q1 2021 order backlog.
While the company remains unable to publicly identify its clientele, it has announced that it recently signed two further MoUs, that could translate into full sales during the year, including one with a “major energy OEM.” Interestingly, in the firm’s earnings call, O’Leary was quite defensive about its rate of order conversion, saying that the deals aren’t “a kick the tires and sign a contract” style transaction.
“The NXG is enabling our customers to completely transform how they architect their manufacturing processes,” explained O’Leary. “This means that there’s a very rigorous selection process, and while this means that the initial sales cycle can take several courses, it also means that once a customer partners with us, the barriers to entry or replacement are extremely high.”
“The process is long, conducted at high levels of our customers organisations and is always based on detailed technical review and testing,” he added. “This doesn’t happen overnight, and nor should it.”
A high-conversion projection
Based on the strong projected conversion of its order backlog, SLM Solutions has stated that it expects to achieve “at least” 15% annual revenue growth for FY 2021, as well as a rise in its EBITDA compared to FY 2020. To supplement this anticipated growth, the company is also considering a secondary listing on the U.S. market, and O’Leary has said that the firm is weighing up a “cost benefit analysis” of the move.
Additionally, SLM Solutions was able to improve its liquidity position last month through the issuance of a second tranche of convertible bonds. The company raised a total of €15 million via the transaction, and it intends to leverage this funding as a means of ramping-up the production of its NXG XII 600 system, and expanding on its existing sales and service network.
“We see continued application of our technology across all major industries, resulting in solid and defensible market share gains,” concluded O’Leary. “Whilst we are happy to report strong and continued commercial progress, there exists plenty of room to further improve, and this is very much a work in progress.”
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Featured image shows SLM Solutions team members being trained on its new NXG XII 600 3D printer. Image via SLM Solutions.