Since Elliot turned down GE’s takeover offer in 2016, SLM Solutions, one of the leading manufacturers of metal AM systems, has been on a bit of a roller coaster. The arrival of Mr. Meddah Hadjar (from GE) at the helm seems to have brought more order and now the company (COVID-19 permitting) is on a clear upward trend. Results for Q1 2020, closed on March 31st, were straight-up stellar, with +148% revenues and SLM Solutions 2020 sales starting on the right foot.
“Despite the unprecedented macroeconomic headwinds brought on by the COVID19 pandemic, Hadjar stated, “we continued to make good progress in the first quarter of 2020 in capturing market share and continued reversing our financial trend from last year. We see customers continue to gain confidence in our technology and engage more actively with us on their future plans.”
SLM generated total revenues of 17.8 million euros in the first quarter of 2020 (against 7.3 million euros in the same period of the previous fiscal year). Of these, 13,4 million euros were generated by hardware sales (against 4 million euros the previous year), representing 75.6% of total revenue (prior year: 55.3%). The segment “After Sales Business” generated revenues for 4.3 million euros, a 32.8% increase over the previous year’s level.
In the quarter the company was able to fulfill some of the purchase orders secured in Q3 and Q4 2019 and recorded revenue in total for 22 machines compared to 7 machines in the previous year quarter. Also, the mix of machines sold improved in favor of larger, multi-laser machines (a trend we also recently saw in voxeljet’s fiscal report).
During the first quarter of 2020 SLM Solutions secured orders for 7 more machines (order value of 3 million euros), which is stable if compared with 7 machines in Q1/2019. The order value in total, as well as the average value per order, decreased by 16%, due primarily to product mix. The order intake in the first quarter of 2020 was as follows: three SLM®125s and four SLM®280s. In terms of revenue, the mix was as follows: two SLM®125s, seventeen SLM®280s and three SLM®500s were invoiced in the first quarter of 2020.
The order backlog as of March 31, 2020 comprised 29 machines with a total value of 23.7 million euros. This represented a 235.0% increase in backlog value compared to the 11 machines with a value of kEUR 7,071 as of March 31, 2019. This increase is still based on solid performance in terms of orders in Q4 2019, especially in the Americas region.
In Q1 2020, EBITDA, the most common profit indicator, remains in negative territory but it improved significantly compared to Q1 2019, from -8,1 million euros to -3 million euros. EBITDA was positively impacted by the overall revenue increase, however, despite the implementation of various cost-saving initiatives, increased investments in future growth will likely continue to weigh on profitability and cost structure in the medium term. This is quite common to many AM companies, as AM in general remains largely an investment-centric market building towards the future rather than a profitable one for the present. COVID-19 does place yet another question mark even though most agree that AM companies are better suited than traditional manufacturing companies in addressing the changing global supply chain scenarios.
“In spite of the encouraging development of our business in the last two quarters, raising capital and ensuring liquidity is vital for SLM, especially against the backdrop of the uncertainties the COVID19 pandemic has cast over economies across the globe and it is unclear how long this market environment will persist. While our first quarter was strong in terms of revenue generation, we started to feel the implications of the COVID19 pandemic in markedly lower order intake. The resulting economic slowdown hits some of SLM’s key end markets like the aircraft, the aero engines and the oli&gas industries,” Mr. Hadjar added in his opening remarks.
We have made significant progress in building and strengthening the organization by hiring highly experienced leaders. The new talent is well equipped to build a strong winning business and to position us as an industry leader. On June 1, Dirk Ackermann will join us as CFO and complete the senior management team at SLM. Dirk joins from General Electric’s Corporate Audit Staff where he was a senior finance manager,” he concluded.
Mr. Ackerman will have his work cut out for him.