News Column

Materialise Reports Second Quarter 2014 Results

August 14, 2014

LEUVEN, Belgium, 2014-08-14 12:30 CEST (GLOBE NEWSWIRE) -- Materialise NV (Nasdaq:MTLS), a leading provider of additive manufacturing software and of sophisticated 3D printing services, today announced its financial results for the second quarter ending June 30, 2014. Wilfried Vancraen, Founder and CEO, commented, "We are very excited to have completed our IPO last month and to report results for our first quarter as a public entity that demonstrate our commitment to accelerating our revenue growth rate and expanding our margins through aggressive investments. As an established enabler of 3D printing operations, offering industry-leading additive manufacturing software and sophisticated 3D printing services to medical, industrial and commercial customers worldwide, Materialise is uniquely positioned to sustain our leadership in the additive manufacturing industry as 3D technology gains ever broader market acceptance." Highlights Second Quarter 2014 -- The company completed its initial public offering, raising $89 million in net proceeds. -- Revenue increased 15.1% year over year to 19,238 kEUR -- Total software sales, including medical software sales, increased to 31% of total revenue. -- R&D increased by 930K to 18.5% of total revenue -- EBITDA was 1,065 kEUR. -- Adjusted EBITDA, excluding non-recurring IPO expenses and non-cash stock based compensation expenses, was 1,372 kEUR for a 7.1% margin. Peter Leys, Executive Chairman, stated, "We performed well in the second quarter, delivering a 20% increase in total software sales. As expected, R&D expenses were substantially higher, at 18.5% of total revenue, reflecting the heavy investments we are making this year to develop a new generation of innovative products in our medical segment. More generally, to capitalize on the vast opportunities in the 3D printing industry and our position as an industry pioneer, we are aggressively expanding our sales reach and developing new products across all our business segments, in order to drive top line growth and bolster long-term profitability." Second Quarter 2014 Results Total revenues for the second quarter of 2014 increased by 15.1% to 19,238 kEUR compared to 16,721 kEUR for the second quarter of 2013, driven by strong gains in the software and industrial production segments. EBITDA decreased from 1,635 kEUR to 1,065 kEUR reflecting a significant increase in R&D investments of 930 kEUR, and non-recurring IPO- related and non-cash stock-based compensation expenses totaling 307 kEUR. Excluding the IPO-related and non-based stock based compensation expenses, Adjusted EBITDA was 1,372 kEUR, for an Adjusted EBITDA margin of 7.1% compared to 9.8% last year. Revenues from the 3D Printing Software segment, which offers proprietary software worldwide through programs that enable and enhance the functionality of 3D printers and of 3D printing operations, increased by 27.8 % to 4,198 kEUR for the second quarter of 2014 from 3,285 kEUR for the same quarter last year. Growth was fueled by increased penetration of Asian-based OEMs and the overall market growth of industrial 3D printing. EBITDA increased from 1,350 kEUR to 1,696 kEUR while the EBITDA margin was 40.4% compared to 41.1% last year. Revenues from the Medical segment, which offers both a medical software platform and a portfolio of medical devices and clinical engineering services to our customers, slightly increased to 7,163 kEUR for the second quarter of 2014 compared to 7,127 kEUR for the same quarter last year. The modest increase was due to the conversion from perpetual to annual licenses and the maturation of the knee guide business. Sales of medical software increased 4.6% to 1,779 kEUR from 1,700 kEUR. Overall, EBITDA decreased from 1,613 kEUR to 793 kEUR and the EBITDA margin fell to 11.1% from 22.6% as slow revenue growth and continued investments in metal production and the X-ray project, among others, negatively impacted profitability. Revenues from the Industrial Production segment, which primarily offers 3D printing services to industrial and commercial customers, increased 26.5% to 7,986 kEUR for the second quarter of 2014 from 6,313 kEUR for last year's second quarter. The gain in the company's "additive manufacturing solutions", excluding its growth businesses, was largely driven by higher sales of end parts, which rose by 31%. Sales from the growth businesses (i.materialise and Rapid Fit) rose 73%. The number of printers in use increased to 115 from 109 at the end of the first quarter. EBITDA rose to 500 kEUR from 202 kEUR and the EBITDA margin improved to 6.3% from 3.2% for the same quarter of last year and was 13.9% excluding the company's growth businesses. Gross profit was 11,703 kEUR for the second quarter of 2014 compared to 10,591 kEUR for the second quarter of 2013. The gross profit margin decreased to 60.8% for the second quarter of 2014 from 63.3% for the second quarter of 2013 as a result of the slow Medical segment revenue generation. Cost of sales was 7,535 kEUR for the second quarter of 2014 compared to 6,130 kEUR for the second quarter of 2013 as a result of a higher consumption of consumables and higher payroll related charges. Selling and administrative expenses were 6,156 kEUR for the second quarter of 2014 compared to 5,330 kEUR for the second quarter of 2013. This 826 kEUR increase resulted from additional investments in sales and marketing, mainly in the 3D printing software and industrial production segments. Research and development expenses increased to 3,563 kEUR for the second quarter of 2014 from 2,633 kEUR for the prior year period, reflecting continued heavy investment with a number of active projects in various stages of development. All of the company's research and development spending is expensed and none is capitalized. Other operating income increased by 185 kEUR to 1,289 kEUR from 1,104 kEUR for the prior year period. For the three months ended June 30, 2014, 1,038 kEUR out of the 1,289 kEUR consisted of withholding tax exemptions for qualifying researchers and partial funding of R&D projects, as compared to 606 kEUR for the three months ended June 30, 2013. Net loss for the second quarter of 2014 was 223 kEUR, versus a net profit of 622 kEUR for the prior year period, a decrease of 845 kEUR. Total comprehensive income for the second quarter of 2014, which reflects exchange differences on translation of foreign operations, was a loss of 175 kEUR, a decrease of 767 kEUR versus the prior year period. At June 30, 2014, the Company had cash and equivalents of 67,431 kEUR, an increase of 54,833 kEUR since December 31, 2013, which was largely due to cash received from the company's initial public offering. Cash flow from operations in the second quarter of 2014 was 3,234 kEUR. Net shareholder's equity at June 30, 2014 was 82,427 kEUR, an increase of 64,692 kEUR since December 31, 2013. 2014 Strategic Initiatives and Guidance In the Software segment, the company plans to continue to drive OEM/distributor sales and upselling, and extend its leadership to OEMs in Asia. In the Medical segment, the company plans to grow its medical software, to increase its direct sales of customized implants for complex niche markets, to consolidate existing and engage in new partnerships with medical device companies and to continue its X-ray-based solutions project. In the Industrial Production segment, the company plans to grow its end parts' customer breadth and penetration and expand the RapidFit business through consolidation. For fiscal 2014, management expects to report consolidated revenue between 77,000 kEUR and 80,000 kEUR. Management intends to aggressively invest in research and development and sales and marketing initiatives during the second half of the year. Depending on the pace of investments, management expects consolidated Adjusted EBITDA for fiscal 2014 to be between 3,500 kEUR and 5,000 kEUR. Non IFRS Measures Materialise uses EBITDA and Adjusted EBITDA as supplemental financial measures of its operational performance. EBITDA is calculated as net income before finance costs, income taxes and depreciation and amortization. Adjusted EBITDA is determined by adding stock-based compensation expense and one-time IPO related expenses 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 income, 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. Exchange Rate This press release 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 press release were made at a rate of EUR 1.00 to USD 1.3658 the noon buying rate of the Federal Reserve Bank of New York for the euro on June 30, 2014. Webcast and Conference Call Materialise will hold a conference call and simultaneous webcast to discuss its financial results for the second quarter of 2014 today, August 14, 2014 at 8:30a.m. ET/14:30 CET. Company participants on the call will include Wilfried Vancraen, Founder and Chief Executive Officer, Peter Leys, Executive Chairman, and Frederick Merckx, 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) and passcode is #81889044. The conference call will also be broadcast live over the Internet with an accompanying slide presentation, which can be accessed via the Investor Relations tab of Materialise's website, www.materialise.com, in the News and Events section. A replay of the conference call will be available via telephone beginning approximately one hour after the call ends through Friday, August 15, 2014. U.S. participants can access the replay by dialing 855-859-2056 and international participants can dial 404-537-3406. The access code for the replay is 81889044. A webcast of the conference call and slide presentation will be archived on the company's website for one year. About Materialise With its headquarters in Leuven, Belgium, and branches worldwide, Materialise is a provider of Additive Manufacturing (AM) software solutions and sophisticated 3D printing services in a wide variety of industries, including healthcare, automotive, aerospace, art and design and consumer products. Materialise has been playing an active role in the field of AM since 1990, through its involvement in AM for industrial and medical applications; by providing biomedical and clinical solutions such as medical image processing and surgical simulations and by developing unique solutions for its customers' prototyping, production, and medical needs. Cautionary Statement on Forward-Looking Statements This press release contains forward-looking statements 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, our research and development projects, results of operations, cash needs, capital expenditures, expenses, financial condition, liquidity, prospects, growth and strategies, 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 presentation, the words "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "will", "may", "could", "might", "aim", "should" "guidance," "objectives," "optimistic," "potential," "future," "continue," "drive," "strategy," "potentially," "growth," "long-term," "goals," "sees," "seek," "develop" "possible" "new," "emerging," "opportunity," "pursue" 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 we believe there is a reasonable basis for them. However, we 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 our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations, including risk factors described under the heading "Risk Factors" in the Amendment No. 5 to our Registration Statement on Form F-1 filed with the SEC on June 23, 2014. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this press release. We are providing this information as of the date of this press release and do not undertake any obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or otherwise, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Investor Contacts: Harriet Fried/Jody Burfening LHA 212-838-3777 hfried@lhai.comMaterialise NV Consolidated income statements For the quarter For the six months ended June 30 ended June 30 ----------------------------------------------- 2014 2014 2013 2014 2013 ----------------------------------------------- (In thousands, except EPS) U.S. $ euros euros euros euros ----------------------------------------------- Revenue 26,275 19,238 16,721 37,931 32,244 Cost of Sales (10,291) (7,535) (6,130) (15,174) (12,415) ----------------------------------------------- Gross Profit 15,984 11,703 10,591 22,757 19,829 Research and development (4,866) (3,563) (2,633) (6,742) (5,148) expenses Sales and marketing expenses (8,408) (6,156) (5,330) (11,836) (10,259) General and administrative (4,092) (2,996) (2,577) (5,712) (4,695) expenses Other operating income 1,761 1,289 1,104 2,359 1,820 Other operating expenses (309) (226) (299) (338) (267) ----------------------------------------------- Operating Profit 70 51 856 488 1,280 Financial expenses (287) (210) (243) (409) (387) Financial income 46 34 51 67 72 ----------------------------------------------- Profit before taxes (171) (125) 664 146 965 Income Taxes (134) (98) (42) (287) (157) ----------------------------------------------- Net profit (loss) (305) (223) 622 (141) 808 Net profit (loss) attributable to: The owners of the parent (232) (170) 637 (55) 856 Non-controlling interest (72) (53) (15) (86) (48) EPS attributable to the owners of the parent Basic ($0.01) (0.00) 0.02 (0.00) 0.02 Diluted ($0.01) (0.00) 0.02 (0.00) 0.02 Weighted average shares outstanding Basic 41,072 41,072 37,744 39,116 37,744 Diluted 41,072 41,072 38,020 39,116 38,031 Consolidated statements of comprehensive income For the quarter For the six months ended June 30 ended June 30 ----------------------------------------------- (In thousands, except EPS) 2014 2014 2013 2014 2013 ----------------------------------------------- U.S. $ euros euros euros euros ----------------------------------------------- Net profit (loss) for the year (305) (223) 622 (141) 808 Other comprehensive income Exchange differences on 66 48 (30) 8 (57) translation of foreign operations* Other comprehensive income 66 48 (30) 8 (57) (loss), net of taxes Total comprehensive income (239) (175) 592 (133) 751 (loss) for the year, net of taxes Total comprehensive income (loss) attributable to: The owners of the parent (167) (122) 607 (47) 799 Non-controlling interest (72) (53) (15) (86) (48) *May be reclassified subsequently to profit & loss Materialise NV Consolidated statements of financial position (in thousands of euros) 06/30/2014 12/31/2013 ----------------------- Assets Current assets Inventory 2,778 3,328 Trade receivables 13,460 12,382 Held to maturity investments 10,000 0 Other current assets 2,837 3,053 Cash and cash equivalent 67,431 12,598 ----------------------- Total current assets 96,506 31,361 Non-current assets Goodwill 2,432 1,612 Intangible assets 1,750 1,439 Property, plant & equipment 23,490 20,167 Investments in joint ventures 500 0 Deferred tax assets 257 406 Other financial assets 307 253 Total non-current assets 28,736 24,327 ----------------------- Total assets 125,242 55,688 Equity and liabilities Current liabilities Loans & borrowings 5,667 4,640 Trade Payables 7,952 6,794 Tax Payables 170 43 Deferred income 8,271 6,773 Other current liabilities 6,726 5,841 ----------------------- Total current liabilities 28,786 24,091 Non-current liabilities Loans & borrowings 12,161 11,676 Deferred tax liabilities 259 212 Deferred income 1,210 1,634 Other non-current liabilities 399 340 ----------------------- Total non-current liabilities 14,029 13,862 Net equity Share capital 2,715 2,235 Share premium 76,632 12,321 Reserves 3,143 3,198 Other comprehensive income (21) (29) Equity attributable to the owners of the parent 82,469 17,725 Non-controlling interest (42) 10 ----------------------- Total equity 82,427 17,735 Total equity and liabilities 125,242 55,688 Materialise NV Consolidated cash flow statements (in thousands of euros) For the six months ended -------------------- 2014 2013 -------------------- Operating activities Net profit (loss) for the six months (141) 808 Non-cash and operating adjustments Depreciation of property, plant & equipment 1,642 1,357 Amortization of intangible assets 333 198 Share-based payment expense 174 13 Loss on disposal of property, plant & equipment 15 65 Government grants (11) (17) Movement in provisions and pensions 26 0 Movement in provision for impairment receivables 44 133 Financial income (67) (72) Financial expense 409 387 Impact of foreign currencies (62) 0 Deferred tax expense (income) 130 88 Income taxes 157 69 Other 0 (3) Working capital adjustments Increase in trade receivables and other inventories (854) (401) Decrease (increase) in inventories 571 467 Increase in trade payables and other payables 2,892 98 Interest received 2 7 Income taxes paid (30) 0 -------------------- Net cash flow from operating activities 5,230 3,197 Investing activities Purchase of property, plant & equipment (2,480) (1,077) Purchase of intangible assets (443) (240) Proceeds from the sale of property, plant & equipment, net 105 (7) Proceeds from the sale of intangibles (1) 8 Acquisition of subsidiary (1,161) 0 Investments in joint-ventures (500) 0 Investments in held to maturity investments (10,000) 0 -------------------- Net cash flow used in investing activities (14,480) (1,316) Financing activities Proceeds from loans & borrowings and convertible debt 1,625 762 Repayment of loans & borrowings (1,509) (1,748) Repayment of finance leases (464) (109) Proceeds from the exercise of warrants 0 56 Capital increase in subsidiary by non-controlling interest 0 1,001 Contribution unpaid capital non-controlling interest 28 26 Capital increase in parent company 70,484 0 Direct attributable expense capital increase (5,861) 0 Interest paid (245) (237) Other financial income (expense) 218 46 -------------------- Net cash flow from financing activities 64,276 (203) Net interest of cash and cash equivalents 55,026 1,678 Cash and cash equivalents at beginning of year 13 6,417 Exchange rate differences on cash & cash equivalents (193) (13) -------------------- Cash & cash equivalents at end of period 67,431 8,082 Materialise NV SEGMENT P & L 3D Medica Industr Total Adjustmen Consolid Printi l ial segmen ts & ated ng Product ts eliminati Softwa ion ons re ----------------------------------------------------- In thousands of For the three month period ended 30 June, 2014 Revenues 4,198 7,163 7,986 19,348 (109) 19,238 Segment EBITDA 1,696 793 500 2,989 (1,924) 1,065 ----------------------------------------------------- Segment EBITDA % 40.4% 11.1% 6.3% 15.5% 5.5% For the three month period ended 30 June, 2013 Revenues 3,285 7,127 6,313 16,725 (3) 16,721 Segment EBITDA 1,350 1,613 202 3,165 (1,529) 1,635 ----------------------------------------------------- Segment EBITDA % 41.1% 22.6% 3.2% 18.9% 9.8% 3D Medica Industr Total Adjustmen Consolid Printi l ial segmen ts & ated ng Product ts eliminati Softwa ion ons re ----------------------------------------------------- In thousands of For the six month period ended 30 June, 2014 Revenues 8,233 14,131 15,469 37,834 98 37,931 Segment EBITDA 3,403 1,740 429 5,572 (3,109) 2,463 ----------------------------------------------------- Segment EBITDA % 41.3% 12.3% 2.8% 14.7% 6.5% For the six month period ended 30 June, 2013 Revenues 6,394 13,690 12,142 32,225 20 32,244 Segment EBITDA 2,513 2,640 133 5,286 (2,450) 2,835 ----------------------------------------------------- Segment EBITDA % 39.3% 19.3% 1.1% 16.4% 8.8% Materialise NV Adjusted EBITDA Reconciliation For the quarter For the six ended June 30 months ended June 30 ------------------------------------- 2014 2014 2013 2014 2013 ------------------------------------- (In thousands) U.S. $ euros euros euros euros ------------------------------------- Net profit (loss) (305) (223) 622 (141) 808 Income taxes 134 98 42 287 157 Financial expense 287 210 243 409 387 Financial Income (46) (34) (51) (67) (72) Depreciation & amortization 1,386 1,014 779 1,975 1,555 EBITDA 1,456 1,065 1,635 2,463 2,835 Non-recurring IPO expenses 249 182 0 182 0 Non-cash stock-based compensation expenses 171 125 0 125 0 Adjusted EBITDA 1,875 1,372 1,635 2,770 2,835 Copyright 2014 OMX AB (publ).


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