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Good morning, good afternoon, everyone. Let's dive into the presentation material. I'm glad to have you here on the call. And this month marks my first year anniversary with SLM Solutions. So looking back in the last 12 months, what a journey, and it has been a great year with significant accomplishments. And I'm very happy to highlight that SLM is much better positioned today, great talent, great leadership, great technology and great customers with well-established installed base. As a result of the great efforts we made in the last -- half of the year last year and beginning of this year, SLM delivered the best first quarter revenue performance in the company's history, generating close to EUR 18 million in revenues, with machine business as the key driver here. So this is a great accomplishment and a great milestone.I also want to highlight that -- on a positive note that our NextGen product, which is planned to be offered and delivered to Formnext this year, is on track. It remains on track and has not had any negative impacts due to coronavirus crisis or due to the company shutdown for 3 weeks. Heading into the second quarter, obviously, we see short-term headwinds regarding our order intake. This is relative to our original pre-COVID plan. This is really primarily driven by the corona crisis, and we are still in active discussions with our customers that -- those customers are still engaged, we're still in discussion.Uncertainty around the impact and the duration of coronavirus is, in particular, impacting key major customers, which is in the aviation industry. But the other industry, which is oil and gas, that's primarily driven by a drop in prices in addition to the coronavirus. So many of these projects are pushed out rather than canceled, which is -- so far, that is a good news. But unfortunately, in the short term, it's a headwind.While navigating these uncertain times, we were able to conclude a EUR 60 million convertible bond, which is a big achievement in the middle of the COVID-19 crisis. And it ensures our financial flexibility, including to support important development projects. We are also grateful for the vote of confidence from our largest shareholder. Despite the overall uncertainty around the implications of the COVID-19 situation, we see evidence that the increased focus on derisking global supply chain, it's clear, and it's -- it elevates the importance of the additive technology in the global manufacturing scheme. So these are some of the highlights.On a final note and on a positive note, we also have concluded -- successfully concluded our CFO search, and our new CFO will start June 1. Very happy to have him onboard, and he will be a great addition to the team. Mr. Ackermann who will be joining us shortly and will add significant talent to the leadership team, and that should conclude our leadership team here.On next page, while the COVID-19 is tragic and impacted us on many different levels, it also showed the human resilience and our ability to work together to solve many challenging problems. SLM Solutions took the lead to play a part in helping solve the COVID-19 challenges by creating an alliance with different customers, institutions and government entities. So we've been very busy during this crisis period. The SLM Additive Alliance against COVID-19 helped to create a network of different stakeholders and many different organizations to help fight against COVID-19 by finding solutions to spare parts, for example, filling gaps in the global supply chain of different manufacturers and find a solution that weren't possible with current manufacturing cycle or subtractive manufacturing. An example is, actually, we had one of our customers where we got engaged in and who was able to print injected molds with our machines here in the U.S. with less than 48 hours. And this would not have been possible without the AM3D printing.In the short term, COVID-19 has a negative impact on our business by reducing order intake. This is due primarily to customer and market uncertainties, as I said earlier. The thing that's really driving this order challenges is ability of the -- customers' availability and ability for us to travel, customers' travel to our facility and significant cancelations on trade shows. However, it's important to note that most of the orders and the projects that we're discussing with the customers are only on hold and are not canceled. Many of our customers continue to incorporate additive manufacturing in their plans for post-COVID. So it's -- this is a long-term strategy for many of our customers, and it's really, really encouraging to see the dedication, the commitment from customers to continue on this path even in tough times like COVID-19. Conversely, the crisis is even driving narrative around global supply chain optimization and the benefit of 3D printing.And on the remaining topics, the impact on our supply chain and our programs like the new NextGen, I'll let Sam walk you through some of the impacts of coronavirus on our supply chain.
Thanks, Meddah. Good morning, good afternoon, everybody. So from a production perspective, the impact has been very much manageable. Of course, we had the 3 weeks production stoppage at HQ but the reality of that is essentially 13 working days of production during a period that is generally heavily utilized for vacation anyway. Taking that into consideration, given that the booking was taken from the annual entitlement, the net labor hours available for the year remains completely unaffected.In terms of R&D, as Meddah already mentioned, we kept the NextGen project staff during the company holiday period. Development continued as planned, and the overall project schedule was unaffected. Progress remains positive and is entirely in line with our plan. Supply chain impact, in general, can be considered up to now as having a pretty negligible impact. Our supply chain is primarily localized and has continued to operate pretty much as normal and even, in some cases, with increased available capacity. We have seen, addressed and mitigated some component-level supply issues that are more globally dispersed. And as a further risk mitigation, and as I outlined in our last earnings call, we've increased levels of safety stock on components where we anticipate an increased level of risk in the future. And of course, this is a very dynamic situation and one the entire leadership team continues to monitor constantly.Okay. Over to you, Meddah.
Thanks, Sam. Yes. Let's talk about the order intake and discuss our Q1 results. Look, we finished, obviously, 2019 very strong with order intakes. And so building on that, we had a very strong pipeline going into Q1. However, the orders fell short of our plans due to the COVID and the cancellation of the meetings that we were planning with the customers and finalizing the deals that we were supposed to close in the second half of -- the quarter of Q1. It has nothing to do because of the AM adoption. Actually, we had significant AM adoption planned. The growth was substantial. Unfortunately, it's been hampered because of COVID. The AM adoption was strong, and even our go-to-market strategy, even stronger. So we had a strong team on the commercial, both in the U.S., in Europe and in China. So it's very, very strong organization and strong fundamentals in terms of delivering our go-to-market and growing the AM market.Even with the challenging global market the way we saw, we had the same number of machines we sold this year as we did last year, even this -- even though this is a very, very tough environment. It's a global impact, not an SLM impact. Even with that, we were able to secure 7 number of machines, similar to last year. Unfortunately, the mix was lower. Therefore, we missed -- we're down 16%. Our order backlog remains strong, and we will continue to be actively engaged to pave the path for future growth with our customers when COVID is behind us. So this is -- we are engaged, we are in dialogue, we will continue, and we'll keep monitoring the situation, and we'll update our -- either our forecast once we know better how the COVID situation will shape up.With that, we'll walk you through the revenues and the working capital. I'll let Sam take you through that, then I'll come back afterwards.
Okay. Thanks once again. So starting with revenue. It's, of course, pleasing to report our best ever Q1 performance alongside a very significant increase compared to the same period in 2019. We do already start to see the benefits of the operational rigor and processes that are being implemented, setting the foundations for continued improvement and, of course, manifested in the reporting period with a strong revenue performance, also as a function of our very strong backlog coming into the period, too.Aftersales performance also showed a very positive growth and delivered a significant contribution to the overall revenue figure. This growth is pleasing as it represents the continued operation of our installed base and, of course, the success of our customers. EBITDA for the period was minus EUR 3 million, again, representing a significant year-on-year improvement, and this figure also contains a substantial level of nonrecurring personnel costs.Next slide. So we also continue to make significant headway in our capital -- in our working capital management, delivering a 22% reduction year-on-year and a 13% reduction as a function of working capital ratio. Slight increase in inventories in the period, driven by the increased levels of safety stock to ensure we can meet the expected delivery time scales demanded by the market and, of course, as I mentioned earlier, to derisk any potential supply chain volatility.In terms of receivables, the level is flat year-on-year, an increase compared to Q4 '19, driven primarily by timing and payment conditions on orders that were shipped to the latter part of the reporting period. Cash flow from operating activities was negative EUR 1.6 million. Cash on hand at the end of the period, just over EUR 20 million. Of course, working capital continues to be a clear focus for myself and the leadership team as we continue through 2020.Okay. Back to you, Meddah.
Okay. Thanks, Sam. Moving on, let's walk you through some good news as well. As we have communicated earlier, and you probably have seen before, that we are happy to announce the issuance of a new convertible bond in March. Despite a difficult market environment, we're able to ensure sufficient funding for SLM growth plans and to bolster our liquidity position early on. This will help us to weather any potential temporary difficult demand environment due to the COVID-19 crisis.This [indiscernible] is quite special as it's planned in 3-tranched convertible bond, which you don't see every day. The first tranche details, proceeds is about EUR 15 million, and all of our shareholders are -- as well as holders of existing convertible bonds will be receiving subscription rights for this tranche. The 2 subsequent tranches with a combined volume of EUR 45 million will be issued at a later stage once certain conditions are met. These conditions mainly relate to the achievement of SLM growth targets going forward. These are consistent with our plans thus far. Holders of the tranche 1 will have the right to subscribe to tranche 2 and 3 afterwards.Our largest shareholder, Elliott Management, has agreed to fully backstop all 3 tranches, the convertible bond. And we are very, very grateful for this continued effort and continued commitment and vote of confidence in the company and the leadership of the organization. The beauty of this, certainly, is that it aligns with our interests, with the interest of the investors and the company and the leadership here alike while, at the same time, providing us with financial stability going forward. More details on the convertible bond, obviously, will be released later on with the publication of the securities prospectus once it's approved by BaFin. The subscription period will start in June. So hopefully, this is going in line with our plans, and it's a win-win for both shareholders and the company.Going to close, final page here, really just to summarize what we are talking about. Our company is well positioned today. If you look at where the company is today and what we have been able to accomplish, it's very, very -- I feel very good about it. We are very well positioned when the market picks up again. We continue to focus on our top line and bottom line growth. So we've taken actions both on a cost perspective as we have demonstrated with the 3 weeks' holiday, ongoing discussions with our customers and others in terms of costs and other things that we need to look at. So we are managing the company to the best that we can. Also, we are pursuing with our plans to launch the products on time, on schedule, despite this difficult time. And so we are firing on all cylinders, so to speak. And the NextGen machine really is key for our growth, so we continue to plan on offering that around Formnext once -- if Formnext happens. If it doesn't, then we will still continue to do it different ways, but we're still committed to the schedule that we have published earlier.We talked about 2019, 2020 as transition years, and we feel like that's still true. 2020 was definitely planned for mid-double-digit growth pre-COVID. Unfortunately, with the COVID, we'll let you know how that turns out once we know -- once we understand how the COVID situation is shaping up, we'll communicate clearly what we're going to be delivering. Again, strong fundamentals, strong company, motivated workforce. Our customers love our technology, and they love our products. And this is -- it gives me the most confident that the customers really, really love SLM. And they have their plans, they are aligned with our plans, and we feel very good about it.So with that, I will close here, the presentation, and we'll move on to any Q&A.
The first question is from Adrian Pehl of Commerzbank.
Well, first of all, could you please elaborate a little bit on the vertical markets that you serve? I mean, obviously, a lot of your products have been going into the aerospace sector and they seem to be pretty hard hit by the coronavirus. So maybe you have some thoughts around it. I mean the new tool that you're planning to bring to the market is probably intended to open up new verticals. But maybe you could address a little bit the recovery potential that you see in -- whenever it starts again, Q3, Q4, would be extremely helpful.The other 2, 3 questions are a bit housekeeping-wise. Well, first of all, in the first quarter, there are 2 effects that are popping up. Looking at it, personnel expenses, you addressed already, when I took you correctly, some one-offs there. Maybe you could quantify how much it actually is and what is, let's say, the underlying base we should use as a starting point modeling the expense line going forward. And linked to that, I was a little bit late into the presentation. Maybe you were already referring about some savings measures, including short-term work, whatever. So what should we think about the personnel expenses line to look like in the corona quarter, June quarter, and potentially also going into summer?And then thirdly, on the gross margin. They have been pretty strong in Q1. I was wondering, is that effect actually of still inventories being sold that you had so far in stock because it seems to be a number that is not necessarily sustainable going forward. Any explanation on that would really be helpful. And then I might have some follow-ups.
Adrian, I'll address some of the questions, then I'll pass it on to Sam, who's going to answer them. So hopefully, you're safe as well during this period, and thank you for the questions. Look, on the vertical markets, we are very diverse. So we have customers -- and we serve all the industries. Definitely, the aviation sector will definitely -- did see an impact. So some of the orders that we're supposed to get from Q1 was aviation orders, specifically related to OEMs and suppliers of that industry. We did see a hold and a pause to those projects. So we definitely -- we expect these won't come back probably until Q4 or even early next year, sometime early next year.Not all of them have been put on hold, there are a few that are still going on because of some of our customers who see this as a strategic move. So some of our customers still go -- are still proceeding with their plans. It might be delayed by a few months, but not as much as some of the majority of the customers in aviation. So definitely, the aviation was the hardest hit, and we don't expect significant growth in that market this year. So I think the rest of it, we seem to be okay. So the oil and gas was also one of our markets that we saw a hit due to the pricing of the oil and gas more than the COVID. So we expect that to recover once the pricing of the oil and gas stabilize. And the rest of it, they really seem to be doing okay. So the medical is still going. That -- we see activities in that or have -- we didn't see a lot of changes there. On the automotive, the sector that we serve, that's still -- also, we continue those conversations, discussions as scheduled. So hopefully, this answers your question.Look, I'm going to let Sam discuss the personnel expenses and some of the -- the second question that you asked related to Q1, personnel expenses and the savings and to addressing some of the labor. So Sam, you want to take that on? Or do you want me to take that up?
Yes. Of course. Thanks, Meddah. Adrian, good to hear from you. So yes, in terms of the personnel expenses, you can assume that the majority of this one-off figure was related to some significant payments that we had in terms of severance, the majority of the total number. Now in terms of looking forward and how we would see that in Q2, as I mentioned earlier, we've already actioned the company holiday, which, of course, was exactly that, so it wouldn't impact. And we continue to look at different options based on the actual situation that we see in the market. Now in terms of the margin, the majority of the machines that we shipped in Q1 were of a build-to-order nature rather than a significant use of existing machines on stock. So it is, of course, nice to see a positive evolution in the margin there, and we continue to work on that with negotiations with suppliers and with how we manage our supplier base as well. So this was primarily build-to-order machines.
Adrian, yes, just to add. So we are still in constant discussions with our -- in the first half, and so those conversations are still ongoing.
All right. So maybe nevertheless, let's put some rough ballpark figures to it. So you had actually personnel expenses in Q4, when my math is correct, it was like EUR 6.6 million or, let's say, EUR 7-ish million. I mean is that the underlying number that would have been adequate for first quarter, i.e., the extra amount that you booked is somewhere in the ballpark range of, whatever, EUR 2.5 million to EUR 3 million? Is that, first of all, correct to assume? And the second thing is, do you think that it is possible actually to bring that level of personnel expenses per quarter down to whatever kind of level, EUR 5 million-ish, so that you really get some benefits from the existing programs out there and save you some costs? And also with respect to the other operating expenses, they've been at 5 -- EUR 4.5 million. Is there a significant reduction potential already underway to bring it down by, whatever, 40% or something? Is that what you're targeting at for the next 1 to 2 quarters or something?
Yes. So Adrian, in terms of the personnel expenses, when we look at it in terms of the Q1 2020 numbers, we've got an increase of EUR 1.5 million there and, as I stated, the majority of which would be considered one-off payments. Now as we move forward, of course, we continue to assess the situation, but I can't give you a direct number as to exactly what potential benefits we'll see within Q2 and Q3.
Right. And you said the machines that you sold were more build-to-order. Two questions around it. Well, first of all -- I mean it would be nice to see you, on the other hand -- nevertheless, it looks a bit unsustainable that you continue throughout the year with a high gross margin as you showed in that very quarter of more than 55%. I mean, clearly, it's highly dependent on mix. But on the other hand, I saw that the majority again was SLM 280s that you obviously sold. So that's a bit surprising. And is it correct to assume that you probably not run through the year with that high level of gross margin, first of all? And secondly, given that, I mean, you obviously are buying a lot of components in the market, particular energy sources, lasers, et cetera, et cetera. Is there -- actually, do you exhibit some bottlenecks on the supply chain currently? Or what's the situation around that?
Yes. I mean in terms of the margin for the year, of course, it's difficult to give guidance. I will say we continue to work day-by-day on product cost and see positive evolution there. Now in terms of supply chain issues, I think, as I mentioned earlier, we've been relatively unaffected. Like I said, we took a decision on certain long-lead items and certain items where we saw a potential for supply chain volatility and took some additional stock there. Right now, in terms of the local supply chain, I would actually be tempted to say it's quite the opposite. We're seeing available capacity in our supply chain network, and we are able to utilize that as needed for our production work and also for our R&D projects as well. It's -- in general, from a supply chain perspective, we're not encountering too many significant problems.
Adrian, feel free to call us if you need more details, and we can walk you through -- look at the numbers much more closely if you like.
[Operator Instructions] Mr. Pehl has another question.
Actually, on the new tool, I mean I saw that you had something in the presentation, I missed the introduction, the first 1 or 2 slides. But nevertheless, I mean, just maybe it's a repetition for you, but could you give me some idea on the milestones? I mean pretty much the R&D work should continue or at least you can probably quickly catch up with that to some degree. Are you, in general, on track? What is the -- you're probably already melting some metal in the machine, and how does that work? What do you think about the quality of the products that you get out? On the build speed, where do we stand with that one?
Yes. Let me take that, Adrian. So essentially, we have seen 0 impact to the R&D project for the NextGen. We kept the staff during the company holiday. Progress remains exactly in line with our plan. Now in terms of milestones, of course, there are many engineering milestones that we pace through during the development, all of which are progressing well, and we are not seeing any short stoppage whatsoever. Main milestone is that we present the machine, in an operational state, as a machine that is producing products at the Formnext trade fair in November. That remains entirely on track, and it's entirely unaffected by any COVID-19 issues that we've seen over the first quarter and into the second quarter.
And there are now no further questions, I hand back to the speakers for the conclusion.
Okay. Thanks, everyone. I appreciate you being with us today. Obviously, it's a difficult time with coronavirus globally. Again, the leadership team is well equipped to manage the situation, and we are ready to transition to our next phase of growing the company and take our position, as I stated earlier. And with that, I hope, may you all stay safe and look forward to meet you either sometime soon when the travel restrictions are lifted or talk to you by phone soon. And with that, I'll leave you in good health, and have a good day.