Materialise NV (NASDAQ:MTLS), a leading provider of additive
manufacturing and medical software and of sophisticated 3D printing
services, today announced its financial results for the third
quarter ended September 30, 2019.
Highlights – Third Quarter 2019
- Total revenue increased 8% to 50,449 kEUR for the third quarter
of 2019, mainly driven by strong performances in our Materialise
Medical and Materialise Software segments.
- Total deferred revenue from annual software sales and
maintenance contracts increased by 1,350 kEUR to 23,956 kEUR from
22,606 kEUR at the end of 2018.
- Adjusted EBITDA amounted to 8,022 kEUR for the third quarter of
2019, or an Adjusted EBITDA margin of 15.9%.
- Net profit for the third quarter of 2019 was 1,001 kEUR, or
0.02 EUR per diluted share, compared to 2,317 kEUR, or 0.04 EUR per
diluted share, for the same period last year.
Executive Chairman Peter Leys commented, “Materialise reported
another quarter of top-line growth in our three segments in spite
of a macro-economic environment that continues to be challenging.
Strong operational performances in all three segments produced a
record quarterly Adjusted EBITDA of more than 8 million euro. We
are particularly pleased with the accelerated pace of our software
sales, which were as we anticipated. We are continually working to
increase the productivity of the additive manufacturing industry
and look forward to introducing new product upgrades at next
month’s Formnext in Frankfurt.”
Third Quarter 2019 Results
Total revenue for the third quarter of 2019 increased 8.0% to
50,449 kEUR compared to 46,732 kEUR for the third quarter of 2018.
Adjusted EBITDA increased to 8,022 kEUR from 7,034 kEUR. The
Adjusted EBITDA margin (Adjusted EBITDA divided by total revenue)
for the third quarter of 2019 was 15.9% compared to 15.1% in the
third quarter of 2018.
Revenue from our Materialise Software segment increased 10.0% to
10,860 kEUR for the third quarter of 2019 from 9,874 kEUR for the
same quarter last year. Segment EBITDA increased to 3,769 kEUR from
3,384 kEUR while the segment EBITDA margin was 34.7% compared to
34.3% in the prior-year period.
Revenue from our Materialise Medical segment increased 20.8% to
15,488 kEUR for the third quarter of 2019 compared to 12,824 kEUR
for the same period in 2018. Compared to the same quarter in 2018,
revenues from medical devices and services grew 25.0%, and revenues
from our medical software grew 12.7%. Segment EBITDA was 2,795 kEUR
compared to 2,475 kEUR while the segment EBITDA margin decreased
from 19.3% to 18.0% for the third quarter of 2019. On August 6,
2019, we acquired a mix of existing and new shares, resulting in
total shareholding of 75% in Engimplan, a Brazil-based manufacturer
of orthopedic and cranio-maxillofacial (CMF) implants and
instruments. All shares were fully paid for in cash. The
acquisition increased the scope of our Materialise Medical
segment's operations and had a positive impact on our results of
operations for the third quarter of 2019.
Revenue from our Materialise Manufacturing segment increased
0.5% to 24,127 kEUR for the third quarter of 2019 from 24,012 kEUR
for the third quarter of 2018. Segment EBITDA increased to 3,862
kEUR from 3,405 kEUR while the segment EBITDA margin increased to
16.0% from 14.2% for the third quarter of 2018.
Gross profit was 29,023 kEUR, or 57.5% of total revenue, for the
third quarter of 2019 compared to 26,418 kEUR, or 56.5% of total
revenue, for the third quarter of 2018.
Research and development (“R&D”), sales and marketing
(“S&M”) and general and administrative (“G&A”) expenses
increased, in the aggregate, 11.2% to 27,439 kEUR for the third
quarter of 2019 from 24,665 kEUR for the third quarter of 2018.
Net other operating income increased to 1,332 kEUR from 571 kEUR
for the third quarter of 2018.
Operating result increased to 2,916 kEUR from 2,324 kEUR for the
same period in the prior year.
Net financial result was (966) kEUR compared to 268 kEUR for the
prior-year period. The share in loss of joint venture amounted to
(41) kEUR compared to (47) kEUR for the same period last year.
The third quarter of 2019 contained income tax expenses of (908)
kEUR, compared to (230) kEUR in the third quarter of 2018.
As a result of the above, net profit for the third quarter of
2019 was 1,001 kEUR, compared to 2,316 kEUR for the same period in
2018. Total comprehensive income for the third quarter of 2019,
which includes exchange differences on translation of foreign
operations, was 1,067 kEUR compared to 2,329 kEUR for the same
period in 2018.
At September 30, 2019, we had cash and equivalents of 131,095
kEUR compared to 115,506 kEUR at December 31, 2018. Gross debt
amounted to 131,618 kEUR (including 5,201 kEUR of lease liabilities
recognized under the new accounting standard IFRS 16, and our
drawing in July 2019 of the second tranche of 25,000 kEUR from our
35,000 kEUR credit facility with the European Investment Bank), as
compared to 106,038 kEUR at December 31, 2018. Cash flow from
operating activities for the third quarter of 2019 amounted to a
new quarterly record of 13,897 kEUR compared to 7,234 kEUR for the
same period in 2018, as a result of the combination of high EBITDA
and working capital improvements of 6,636 kEUR. Total capital
expenditures for the quarter amounted to 5,628 kEUR. This amount
included 301 kEUR of capitalized R&D expenditures from medical
programs.
Shareholders’ equity at September 30, 2019 was 139,894 kEUR
compared to 135,989 kEUR at December 31, 2018.
Note on Comparability
As a result of the implementation of the new accounting standard
IFRS 16, we have recognized additional lease assets and liabilities
in the amount of 4,998 kEUR at January 1, 2019. At the end of the
third quarter of 2019, the total commitment of lease assets and
liabilities amounted to 5,238 kEUR. Our Adjusted EBITDA for the
third quarter of 2019 was affected positively by the new standard
as a result of the rental payments decrease of 632 kEUR; however,
our operating profit was impacted by (20) kEUR as depreciation
expenses increased by 652 kEUR.
2019 Guidance
Mr. Leys noted, “Although the macro-economic environment remains
soft, our current pipeline has the potential for continued
significant growth, particularly in software sales. We are also
taking steps throughout our organization to maximize the
effectiveness of our operations. Our current targets – which we
believe are ambitious, particularly with respect to Adjusted
EBITDA, but also achievable – are to reach the lower end of the
guidance measures we originally provided for fiscal 2019, which
called for consolidated revenue of between 196,000 - 204,000 kEUR;
Adjusted EBITDA of between 29,000 - 33,000 kEUR; and an increase in
deferred revenue generated from annual licenses and maintenance of
between 2,000 - 4,000 kEUR as compared to 2018.”
Non-IFRS Measures
Materialise uses EBITDA and Adjusted EBITDA as supplemental
financial measures of its financial performance. EBITDA is
calculated as net profit plus income taxes, financial expenses
(less financial income), shares of loss in a joint venture and
depreciation and amortization. Adjusted EBITDA is determined by
adding non-cash stock-based compensation expenses and
acquisition-related expenses of business combinations to EBITDA.
Management believes these non-IFRS measures to be important
measures as they exclude the effects of items which primarily
reflect the impact of long-term investment and financing decisions,
rather than the performance of the company’s day-to-day operations.
As compared to net profit, these measures are limited in that they
do not reflect the periodic costs of certain capitalized tangible
and intangible assets used in generating revenues in the company’s
business, or the charges associated with impairments. Management
evaluates such items through other financial measures such as
capital expenditures and cash flow provided by operating
activities. The company believes that these measurements are useful
to measure a company’s ability to grow or as a valuation
measurement. The company’s calculation of EBITDA and Adjusted
EBITDA may not be comparable to similarly titled measures reported
by other companies. EBITDA and Adjusted EBITDA should not be
considered as alternatives to net profit or any other performance
measure derived in accordance with IFRS. The company’s presentation
of EBITDA and Adjusted EBITDA should not be construed to imply that
its future results will be unaffected by unusual or non-recurring
items.
Exchange Rate
This document contains translations of certain euro amounts into
U.S. dollars at specified rates solely for the convenience of
readers. Unless otherwise noted, all translations from euros to
U.S. dollars in this document were made at a rate of EUR 1.00 to
USD 1.0889, the reference rate of the European Central Bank on
September 30, 2019.
Conference Call and Webcast
Materialise will hold a conference call and simultaneous webcast
to discuss its financial results for the third quarter of 2019 on
Thursday October 31, 2019, at 8:30 a.m. ET/1:30 p.m. CET. Company
participants on the call will include Wilfried Vancraen, Founder
and Chief Executive Officer; Peter Leys, Executive Chairman; and
Johan Albrecht, Chief Financial Officer. A question-and-answer
session will follow management’s remarks.
- To access the conference call, please dial 844-469-2530 (U.S.)
or 765-507-2679 (international), passcode #3664225.
The conference call will also be broadcast live over the
Internet with an accompanying slide presentation, which can be
accessed on the company’s website at
http://investors.materialise.com. A webcast of the conference call
will be archived on the company's website for one year.
About Materialise
Materialise incorporates nearly 30 years of 3D printing
experience into a range of software solutions and 3D printing
services, which form the backbone of the 3D printing industry.
Materialise’s open and flexible solutions enable players in a wide
variety of industries, including healthcare, automotive, aerospace,
art and design, and consumer goods, to build innovative 3D printing
applications that aim to make the world a better and healthier
place. Headquartered in Belgium, with branches worldwide,
Materialise combines one of the largest groups of software
developers in the industry with one of the largest 3D printing
facilities in the world. For additional information, please visit:
www.materialise.com.
Cautionary Statement on Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, regarding, among other things, our intentions, beliefs,
assumptions, projections, outlook, analyses or current
expectations, plans, objectives, strategies and prospects, both
financial and business, including statements concerning, among
other things, current estimates of fiscal 2019 revenues, deferred
revenue from annual licenses and maintenance and Adjusted EBITDA,
results of operations, cash needs, capital expenditures, expenses,
financial condition, liquidity, prospects, growth and strategies
(including our strategic priorities for 2019), and the trends and
competition that may affect the markets, industry or us. Such
statements are subject to known and unknown uncertainties and
risks. When used in this press release, the words “estimate,”
“expect,” “anticipate,” “project,” “plan,” “intend,” “believe,”
“forecast,” “will,” “may,” “could,” “might,” “aim,” “should,” and
variations of such words or similar expressions are intended to
identify forward-looking statements. These forward-looking
statements are based upon the expectations of management under
current assumptions at the time of this press release. These
expectations, beliefs and projections are expressed in good faith
and the company believes there is a reasonable basis for them.
However, the company cannot offer any assurance that our
expectations, beliefs and projections will actually be achieved. By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events, competitive dynamics
and industry change, and depend on economic circumstances that may
or may not occur in the future or may occur on longer or shorter
timelines than anticipated. We caution you that forward-looking
statements are not guarantees of future performance and involve
known and unknown risks, uncertainties and other factors that are
in some cases beyond our control. All of the forward-looking
statements are subject to risks and uncertainties that may cause
the company's actual results to differ materially from our
expectations, including risk factors described in the company's
annual report on Form 20-F filed with the U.S. Securities and
Exchange Commission. There are a number of risks and uncertainties
that could cause the company's actual results to differ materially
from the forward-looking statements contained in this press
release.
The company is providing this information as of the date of this
press release and does not undertake any obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise, unless it
has obligations under the federal securities laws to update and
disclose material developments related to previously disclosed
information.
Consolidated income statements (Unaudited)
For the three months ended
September 30,
For the nine months ended
September 30,
In 000
2019
2019
2018
2019
2018
U.S.$
€
€
€
€
Revenue
54,934
50,449
46,732
145,968
135,707
Cost of sales
(23,331)
(21,426)
(20,314)
(64,838)
(60,546)
Gross profit
31,603
29,023
26,418
81,129
75,161
Gross profit as % of revenue
57.5%
57.5%
56.5%
55.6%
55.4%
Research and development expenses
(6,126)
(5,626)
(5,634)
(17,411)
(17,080)
Sales and marketing expenses
(14,749)
(13,545)
(11,292)
(38,797)
(33,733)
General and administrative expenses
(9,004)
(8,269)
(7,739)
(24,453)
(22,926)
Net other operating income (expenses)
1,450
1,332
571
3,959
2,961
Operating (loss) profit
3,175
2,916
2,324
4,427
4,383
Financial expenses
(1,239)
(1,138)
(1,039)
(2,647)
(3,556)
Financial income
187
172
1,308
900
2,739
Share in loss of joint venture
(44)
(41)
(47)
(245)
(291)
(Loss) profit before taxes
2,079
1,909
2,546
2,434
3,275
Income taxes
(989)
(908)
(230)
(2,037)
(773)
Net (loss) profit for the
period
1,089
1,001
2,316
397
2,502
Net (loss) profit attributable to:
The owners of the parent
1,011
929
2,316
325
2,502
Non-controlling interest
78
72
–
72
–
Earnings per share attributable to
owners of the parent
Basic
0.02
0.02
0.04
0.01
0.05
Diluted
0.02
0.02
0.04
0.01
0.05
Weighted average basic shares
outstanding
52,891
52,891
51,507
52,891
48,770
Weighted average diluted shares
outstanding
52,970
52,970
52,319
52,930
49,532
Consolidated statements of comprehensive income
(Unaudited)
For the three months ended
September 30,
For the nine months ended
September 30,
In 000
2019
2019
2018
2019
2018
U.S.$
€
€
€
€
Net profit (loss) for the
period
1,089
1,001
2,316
397
2,502
Other comprehensive income
Exchange difference on translation of
foreign operations
73
67
13
225
(29)
Other comprehensive income (loss), net of
taxes
73
67
13
225
(29)
Total comprehensive income (loss) for
the year, net of taxes
1,162
1,067
2,329
623
2,473
Total comprehensive income (loss)
attributable to:
The owners of the parent
1,173
1,077
2,329
623
2,473
Non-controlling interest
(11)
(10)
–
–
–
Consolidated statement of financial position
(Unaudited)
As of September 30,
As of December 31,
In 000
2019
2018
€
€
Assets
Non-current assets
Goodwill
23,301
17,491
Intangible assets
25,181
26,326
Property, plant & equipment
99,108
92,537
Investments in joint ventures
Deferred tax assets
489
315
Other non-current assets
10,408
7,237
Total non-current assets
158,488
143,906
Current assets
Inventories
11,916
9,986
Trade receivables
36,983
36,891
Other current assets
8,573
6,936
Cash and cash equivalents
131,095
115,506
Total current assets
188,566
169,319
Total assets
347,054
313,225
As of September 30,
As of December 31,
In 000
2019
2018
€
€
Equity and liabilities
Equity
Share capital
3,050
3,050
Share premium
136,944
136,637
Consolidated reserves
(1,517)
(1,848)
Other comprehensive income
(1,542)
(1,850)
Equity attributable to the owners of
the parent
136,935
135,989
Non-controlling interest
2,959
–
Total equity
139,894
135,989
Non-current liabilities
Loans & borrowings
116,026
92,440
Deferred tax liabilities
6,234
6,226
Deferred income
4,932
4,587
Other non-current liabilities
1,666
868
Total non-current liabilities
128,859
104,121
Current liabilities
Loans & borrowings
15,592
13,598
Trade payables
18,291
18,667
Tax payables
2,907
2,313
Deferred income
24,473
23,195
Other current liabilities
17,040
15,342
Total current liabilities
78,301
73,115
Total equity and liabilities
347,054
313,225
Consolidated statement of cash flows (Unaudited)
For the nine months ended
September 30,
in 000
2019
2018
€
€
Operating activities
Net (loss) profit for the period
398
2,502
Non-cash and operational adjustments
Depreciation of property, plant &
equipment
10,722
8,632
Amortization of intangible assets
3,360
3,902
Share-based payment expense
258
557
Loss (gain) on disposal of property, plant
& equipment
141
(148)
Movement in provisions
66
13
Movement reserve for bad debt
(135)
255
Financial income
(900)
(224)
Financial expense
2,647
1,474
Impact of foreign currencies
(432)
(433)
Share in loss of a joint venture (equity
method)
245
291
(Deferred) income taxes
2,012
773
Other
4
164
Working capital adjustment & income
tax paid
Increase in trade receivables and other
receivables
3,,593
(3,174)
Decrease (increase) in inventories
8
584
Increase in trade payables and other
payables
2,263
5,230
Income tax paid & interest
received
(1,514)
(2,133)
Net cash flow from operating
activities
22,737
18,265
For the nine months ended
September 30,
in 000
2019
2018
€
€
Investing activities
Purchase of property, plant &
equipment
(10,325)
(14,923)
Purchase of intangible assets
(1,588)
(1,181)
Proceeds from the sale of property, plant
& equipment & intangible assets (net)
(3)
1,264
Available for sale investments
(50)
Advances on capital increases
(875)
Convertible loan to third party
(2,500)
–
Investments in subsidiary, net of cash
acquired
(7,765)
–
Interest received
-
126
Net cash flow used in investing
activities
(23,066)
(14,764)
Financing activities
Proceeds from loans & borrowings
29,000
31,043
Repayment of loans & borrowings
(8,608)
(16,257)
Repayment of finance leases
(2,288)
(2,350)
Capital increase
–
60,110
Direct attributable expense of capital
increase
–
(4,103)
Interest paid
(1,713)
(1,142)
Other financial income (expense)
(451)
(182)
Net cash flow from (used in) financing
activities
15,941
67,119
Net increase of cash & cash
equivalents
15,611
70,620
Cash & cash equivalents at beginning
of the year
115,506
43,175
Exchange rate differences on cash &
cash equivalents
162
827
Cash & cash equivalents at end of
the period
131,279
114,622
Reconciliation of Net Profit (Loss) to EBITDA and Adjusted
EBITDA (Unaudited)
For the three months ended
September 30,
For the nine months ended
September 30,
In 000
2019
2018
2019
2018
€
€
€
€
Net profit (loss) for the
period
1,001
2,316
397
2,503
Income taxes
908
230
2,037
773
Financial expenses
1,138
1,039
2,647
3,556
Financial income
(172
)
(1,308
)
(900)
(2,739)
Share in loss of joint venture
41
47
245
291
Depreciation and amortization
4,904
4,519
14,082
12,534
EBITDA
7,820
6,843
18,512
16,917
Non-cash stock-based compensation expense
(1)
60
191
256
557
Acquisition-related expenses of business
combinations (2)
140
–
140
–
ADJUSTED EBITDA
8,022
7,034
18,908
17,474
(1)
Non-cash stock-based compensation expenses
represent the cost of equity-settled and cash-settled share-based
payments to employees.
(2)
Acquisition-related expenses of business
combinations represent expenses incurred in connection with the
Engimplan acquisition.
Segment P&L
(Unaudited)
In 000
Materialise Software
Materialise Medical
Materialise Manu- facturing
Total segments
Unallocated (1)(2)
Consoli- dated
€
€
€
€
€
€
For the three months ended September
30, 2019
Revenues
10,860
15,488
24,127
50,474
(26)
50,449
Segment EBITDA
3,769
2,795
3,862
10,426
(2,404)
8,022
Segment EBITDA %
34.7%
18.0%
16.0%
20.7%
15.9%
For the three months ended September
30, 2018
Revenues
9,874
12,824
24,012
46,710
22
46,732
Segment EBITDA
3,384
2,475
3,405
9,264
(2,230)
7,034
Segment EBITDA %
34.3%
19.3%
14.2%
19.8%
15.1%
In 000
Materialise Software
Materialise Medical
Materialise Manu- facturing
Total segments
Unallocated (1)(2)
Consoli- dated
€
€
€
€
€
€
For the nine months ended September 30,
2019
Revenues
29,529
43,600
72,861
145,990
(22)
145,968
Segment EBITDA
8,785
7,306
10,393
26,484
(7,576)
18,908
Segment EBITDA %
29.8%
16.8%
14.3%
18.1%
13.0%
For the nine months ended September 30,
2018
Revenues
27,331
37,170
71,031
135,532
175
135,707
Segment EBITDA
8,568
6,659
8,802
24,028
(6,554)
17,474
Segment EBITDA %
31.3%
17.9%
12.4%
17.7%
12.9%
(1)
Unallocated Revenues consist of occasional
one-off sales in our core competencies not allocated to any of our
segments.
(2)
Unallocated segment EBITDA consists of
corporate research and development, corporate headquarter costs and
other operating income (expense), and the added non-cash
stock-based compensation expenses and acquisition related expenses
of business combinations that are included in Adjusted EBITDA.
Reconciliation of Net Profit (Loss) to Segment EBITDA
(Unaudited)
For the three months ended
September 30,
For the nine months ended
September 30,
In 000
2019
2018
2019
2018
€
€
€
€
Net profit (loss) for the
period
1,001
2,316
397
2,502
Income taxes
908
230
2,037
773
Financial cost
1,138
1,0439
2,647
3,556
Financial income
(172)
(1,308)
(900)
(2,739)
Share in loss of joint venture
41
47
245
291
Operating profit
2,916
2,324
4,427
4,383
Depreciation and amortization
4,904
4,519
14,082
12,534
Corporate research and development
497
483
1,510
1,469
Corporate headquarter costs
2,978
2,437
8,753
7,514
Other operating income (expense)
(726)
(499)
(1,833)
(1,872)
Segment EBITDA
10,426
9,264
26,484
24,028
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005222/en/
Investor Relations Harriet Fried LHA 212.838.3777
hfried@lhai.com
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