UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of October 2019

Commission File Number: 001-36515

 

 

Materialise NV

 

 

Technologielaan 15

3001 Leuven

Belgium

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   ☒             Form 40-F   ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

This Form 6-K is incorporated by reference into the registrant’s Registration Statement on Form F-3 (File No. 333-213649).

 

 

 


Third Quarter 2019 Financial Results

Except as otherwise required by the context, references to “Materialise,” “Company,” “we,” “us” and “our” are to Materialise NV and its subsidiaries.

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.

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.

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%. 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.

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.

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.

Segment EBITDA from our Materialise Software segment increased to 3,769 kEUR from 3,384 kEUR while the segment EBITDA margin (the segment’s EBITDA divided by the segment’s revenue) was 34.7% compared to 34.3% in the prior-year period.

Segment EBITDA from our Materialise Medical segment 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.

Segment EBITDA from our Materialise Manufacturing segment 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.

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.

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.

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.

Cautionary Statement on Forward-Looking Statements

This report 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. When used in this report, 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 report. 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 report.

The Company is providing this information as of the date of this report and does not undertake any obligation to update any forward-looking statements contained in this report 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  


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MATERIALISE NV
By:          /s/ Wilfried Vancraen
Name:     Wilfried Vancraen
Title:     Chief Executive Officer

Date: October 31, 2019

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