Shapeways Holdings, Inc. (SHPW) This autumn 2023 Earnings Name Transcript

Shapeways Holdings, Inc. (NASDAQ:SHPW) This autumn 2023 Earnings Convention Name March 28, 2024 5:00 PM ET

Firm Contributors

Nikki Sacks – Investor Relations
Greg Kress – Chief Government Officer
Alberto Recchi – Chief Monetary Officer

Convention Name Contributors

Greg Palm – Craig-Hallum Capital Group

Operator

Good afternoon girls and gents, and welcome to Shapeways Fourth Quarter 2023 Earnings Convention Name. Presently, all traces are in a listen-only mode. [Operator Instructions] This name is being recorded on Thursday, March 28, 2024.

I might now like to show the convention over to Nikki Sacks with Investor Relations. Please go forward.

Nikki Sacks

Greetings, and welcome to Shapeways fourth quarter and year-end 2023 earnings name. Presently, all individuals are in a listen-only mode. An issue-and-answer session will observe the ready remarks. As a reminder, the convention is being recorded.

Earlier than we get began, I might wish to remind everybody that administration might be making statements throughout this name that embrace forward-looking statements inside the that means of federal securities legal guidelines, that are made pursuant to the secure harbor provisions of the Non-public Securities Litigation Reform Act of 1995. Any statements contained on this name that aren’t statements of historic info ought to be deemed to be forward-looking statements.

All forward-looking statements, together with, with out limitation, statements relating to our enterprise technique, future monetary and working efficiency, projected monetary outcomes for the primary quarter of 2024, timing or outcomes of any strategic transactions or future cost-cutting measures, new choices and market alternative are primarily based on present estimates and varied assumptions. These statements contain materials dangers and uncertainties that would trigger precise outcomes to vary materially from these anticipated or implied by these forward-looking statements. Accordingly, you shouldn’t place undue reliance on these statements.

For descriptions of the dangers and uncertainties related to our enterprise, please see the corporate’s SEC filings, together with the corporate’s annual report on Kind 10-Okay for the yr ended December 31, 2023. The data offered on this convention name speaks solely to the printed date at this time, March 28, 2024. Shapeways disclaims any obligation, besides as required by regulation, to replace or revise forward-looking statements.

Additionally, in the course of the course of at this time’s name, we seek advice from adjusted EBITDA, which is a non-GAAP monetary measure. There’s a reconciliation schedule displaying GAAP versus non-GAAP outcomes at the moment obtainable in our press launch issued after market shut, which could be discovered on our web site, shapeways.com.

On the decision at this time are Greg Kress, Chief Government Officer; and Alberto Recchi, Chief Monetary Officer.

And now, I might like to show the decision over to Greg. Greg?

Greg Kress

Good afternoon, everybody. Thanks for becoming a member of us to debate Shapeways fourth quarter and yr finish 2023 monetary outcomes, progress on our key initiatives and an replace on our strategic options. I’ll start by offering a enterprise replace. And Alberto Recchi, our CFO will then talk about our monetary outcomes.

Within the fourth quarter and year-to-date 2024, we have continued to execute our technique to develop enterprise manufacturing and software program revenues, in addition to make progress on exploring strategic options to maximise shareholder returns. Our fourth quarter outcomes have been according to our expectations, as we grew revenues by 9% from the prior yr quarter to 9.5 million and realized 500 foundation factors of gross margin enlargement to 46% in comparison with the identical interval in 2022. These outcomes mirror the progress of our enterprise manufacturing gross sales effort and better contribution from our software program choices.

When it comes to enterprise gross sales, we have continued to offer our high-quality enterprise-level manufacturing options to prospects specializing in our goal industries of automotive in addition to medical, robotics and different industries. For instance, we have made traction within the automotive trade, as our options to drive dynamic manufacturing calls for with each additive and conventional manufacturing capabilities. We’ve seen success with Tier 1 provider and OEM direct multiyear manufacturing contracts and publish yr finish signed a $1.5 million multi-year contract with an trade main American automotive producer.

This was an enlargement of a previous contract with this buyer, who leverages Shapeways expansive additive and conventional manufacturing capabilities. This is only one instance of how we’ve got continued to extend our share of pockets with current prospects on multiyear income tasks. For the complete yr 2023, income from our prime 250 prospects grew 29% in comparison with the prior yr.

Shapeways resolution help firms throughout the globe with their provide chain challenges by offering enhanced flexibility and manufacturing. This contains providing additive manufacturing, which we’ve got mentioned beforehand but in addition conventional manufacturing strategies, resembling Pc Numerical Management or CNC, which has an estimated $68 billion world market in 2023.

To additional develop this market, subsequent to yr finish, we launched a brand new CNC Prompt Quote function, which allows our prospects to seamlessly entry CNC manufacturing capabilities and improve our sturdy suite of enterprise manufacturing options.

When it comes to software program enterprise, in the course of the yr, we launched a number of key options to create a extra complete software program providing, together with enhancements to our ordering service and the flexibility for purchasers to supply discounted materials utilizing vitality supplies platform.

Lastly, I’ll present an replace on our value saving initiatives and strategic options course of. We’re seeing ongoing near-term challenges together with an elongated gross sales cycle for enterprise gross sales and longer than anticipated adoption of software program options.

In gentle of this backdrop, as we beforehand disclosed, we’ve got made value financial savings measures to raised align our value construction with our progress expectations over the near-term to cut back money burn. These measures embrace reductions in drive accomplished within the fourth quarter of 2023, a discount in new hires, and a discount in non-critical capital and discretionary working expenditures.

Moreover, as we mentioned final quarter, we’ve got been working with advisers and contemplating strategic options together with with out limitation, a sale of a fabric portion of the corporate’s property, a merger, enterprise mixture, liquidation of sure property, or different strategic transactions to maximise shareholder worth.

Based mostly on market checks performed by our advisers in addition to preliminary dialogue with and suggestions from potential purchasers, in gentle of the continued macroeconomic and trade pressures, the corporate is actively taking steps to promote a fabric portion of the corporate’s property.

In the midst of these preliminary discussions, potential purchasers have indicated an curiosity in buying both the corporate’s manufacturing enterprise or the software program enterprise, however not each.

We proceed to judge strategic options with regard to each the manufacturing and software program companies, together with ongoing discussions with potential acquirers. The corporate has not but signed a definitive settlement with respect to both the manufacturing or software program property and we will present no assurances that any of those processes will lead to any transaction. Nonetheless, we are going to present updates as applicable.

Whereas we’re exploring what’s greatest to maximise shareholder worth, we are going to stay disciplined and prudent as we execute our working plan. I want to thank the whole Shapeways’ crew, our prospects, our buyers, and all of our stakeholders for his or her ongoing help.

Alberto will now talk about our monetary leads to extra element.

Alberto Recchi

Thanks Greg. I am going to present a recap of the fourth quarter and full yr 2023 efficiency, give an replace on our steadiness sheet place, and supply steering for the primary quarter.

For the fourth quarter, income elevated to $9.5 million, up 9% from the prior yr interval. For the complete yr, income was up 4% to $34.5 million with progress in software program enterprise gross sales, partially offset by decrease gross sales from market and self-service.

Our gross margins within the fourth quarter have been 46% in comparison with 41% within the fourth quarter of 2022 and have been 42% for the complete yr as we noticed extra contribution from greater margin software program gross sales, the advantages from the consolidation of our U.S. manufacturing operations, and elevated volumes from our enterprise gross sales.

Fourth quarter adjusted EBITDA was a lack of $5.1 million an enchancment from a lack of $5.6 million within the fourth quarter of final yr. And full yr adjusted EBITDA was a lack of $22.5 million in comparison with a lack of $19.8 million within the prior yr interval. SG&A bills for the fourth quarter have been $9.2 million in comparison with $7.3 million within the prior yr interval.

As Greg talked about, within the fourth quarter, we applied value alignment initiatives together with a discount in drive of 15% of our complete world staff included in OpEx. We anticipate realizing roughly $6.2 million in annualized value financial savings because of the discount in drive mixed with the elimination of sure open positions.

Within the fourth quarter, we acknowledged non-cash impairment costs. These included $3 million associated to gear that was being held on the market. As well as we acknowledged a $1.1 million goodwill impairment cost associated to goodwill recorded on the time of the acquisition of MFG, which we imagine has a declining worth within the present market circumstances and primarily based on the suggestions from our strategic options course of.

Turning to our steadiness sheet. As of December 31, 2023, our money and money equivalents and marketable securities complete 12.2 million. Through the quarter, we deployed roughly 5.4 million in money, which was an enchancment on the money deployed within the earlier quarter and demonstrates our concentrate on additional bettering our money stream.

Trying forward for the primary quarter of 2024, we anticipate revenues to be within the vary of $8.3 million so $8.6 million.

With this, we accomplished our ready remarks and can now open the decision for query. Operator?

Query-and-Reply Session

Operator

Thanks. Women and gents, we are going to now start the question-and-answer session. [Operator Instructions] Your first query comes from the road of Greg Palm from Craig-Hallum Capital Group. Please go forward.

Greg Palm

Yeah, thanks. Good afternoon everyone. Greg you talked a couple of strategic, or I suppose a income progress quantity out of your prime accounts? I do know strategic or enterprise has been a key focus. So questioning should you may give us an total replace there and I missed precisely what that quantity is. So should you might make clear.

Greg Kress

Hey, thanks for becoming a member of Greg. Yeah, so we have seen a substantial momentum on the enterprise facet of our enterprise as you realize all year long we have hung out and vitality specializing in that. If we carve out and simply sort of isolate our prime 250 prospects, they grew over 29% year-over-year versus the prior yr. So we see that continued funding in these gross sales sources which are targeted on very particular industries and bringing actual options to our prospects. Not solely are we bringing on new buyer acquisition, however we’re seeing these prospects proceed to develop their pockets. So we’re pleased with the progress there and we’re seeing good outcomes up to now.

Greg Palm

Bought you. After which simply your follow-up on the on the method I am curious the way you view the time line from right here and the way you are measuring success from — does the potential sale of both asset or extra property? And once more simply the way you’re interested by creating shareholder worth from that going ahead?

Greg Kress

Yeah. I imply in the end we’re taking an enormous step again and interested by what we ought to be doing with the corporate. The corporate continues to point out have a very, actually robust basis continues to point out momentum in sure areas, however stay small and considerably subscale for the bills of being a public firm and so re-evaluate how can we strategy that and so proper now we won’t share an excessive amount of, however we’re having conversations and we needed to ensure folks have been conscious that. I believe over the following quarter, we’ll be capable of present one other replace as we make extra progress having conversations with strategic different.

Greg Palm

Okay. After which only one fast one. Money burn expectations for the yr what ought to we predict?

Greg Kress

I imply, proper now we’re nonetheless seeing about 1.6 million of money burn per thirty days. That does enhance as we proceed to develop prime line income preserve money from decreasing working bills. However proper now from a modeling perspective, I might say we’re at the moment working at that $1.6 million.

Greg Palm

Okay, good. I’ll depart it there. Thanks.

Greg Kress

Thanks. Greg.

Operator

Thanks. There are not any additional questions at the moment. Mr. Kress please proceed.

Greg Kress

I simply needed to take a time and thank everybody for becoming a member of us at this time on behalf of myself and the Shapeways crew. Thanks for becoming a member of the decision. We sit up for offering extra updates within the coming months. Thanks everybody.

Operator

Thanks. That concludes our convention at this time. Thanks for taking part. You might all disconnect.