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 second
quarter ended June 30, 2019.
Highlights – Second Quarter 2019
- Total revenue increased 7.4% to 48,404 kEUR for the second
quarter of 2019 from 45,076 kEUR for the second quarter of
2018.
- Total deferred revenue from annual software sales and
maintenance contracts increased by 2,218 kEUR to 24,824 kEUR from
22,606 kEUR at the end of 2018.
- Adjusted EBITDA amounted to 5,059 kEUR for the second quarter
of 2019, or an Adjusted EBITDA margin of 10.5%.
- Net loss for the second quarter of 2019 was (297) kEUR, or
(0.01) EUR per diluted share, compared to 369 kEUR, or 0.01 EUR per
diluted share, for the same period last year.
Executive Chairman Peter Leys commented, “In spite of a
macro-economic environment that continues to be challenging,
Materialise reported another quarter of top-line growth. This was
mainly driven by Materialise Medical, which continued to perform
strongly with solid revenue growth and EBITDA performance, and also
by Materialise Manufacturing, which realized a double-digit EBITDA
margin and grew its revenues for the third consecutive quarter.
This quarter, the contribution by Materialise Software to our
revenue growth and Adjusted EBITDA margin was below our
expectations as a number of sales were pushed out to the second
half of the year. Our outlook for 2019 remains within our previous
guidance range, with our results now including expected
contributions from our August acquisition of a 75% stake in
Engimplan. This investment, which will enable us to introduce the
benefits of Materialise’s patient-specific 3D printing implants and
expertise to the fast-growing Brazil market, is part of our
strategy to accelerate our growing presence in the additive
manufacturing ecosystem through carefully selected acquisitions and
partnerships.”
Second Quarter 2019 Results
Total revenue for the second quarter of 2019 increased 7.4% to
48,404 kEUR compared to 45,076 kEUR for the second quarter of 2018.
Adjusted EBITDA decreased to 5,059 kEUR from 5,219 kEUR. The
Adjusted EBITDA margin (Adjusted EBITDA divided by total revenue)
for the second quarter of 2019 was 10.5% compared to 11.6% in the
second quarter of 2018.
Revenue from our Materialise Software segment increased 2.1% to
9,320 kEUR for the second quarter of 2019 from 9,131 kEUR for the
same quarter last year. Segment EBITDA decreased to 2,055 kEUR from
2,859 kEUR while the segment EBITDA margin was 22.1% compared to
31.3% in the prior-year period.
Revenue from our Materialise Medical segment increased 17.3% to
14,546 kEUR for the second quarter of 2019 compared to 12,400 kEUR
for the same period in 2018. Compared to the same quarter in 2018,
revenues from medical devices and services grew 12.8%, and revenues
from our medical software grew 28.0%. Segment EBITDA was 2,738 kEUR
compared to 2,124 kEUR while the segment EBITDA margin increased
from 17.1% to 18.8% for the second quarter of 2019.
Revenue from our Materialise Manufacturing segment increased
5.0% to 24,550 kEUR for the second quarter of 2019 from 23,387 kEUR
for the second quarter of 2018. Segment EBITDA increased to 2,835
kEUR from 2,264 kEUR while the segment EBITDA margin increased to
11.5% from 9.7% for the second quarter of 2018.
Gross profit was 26,527 kEUR, or 54.8% of total revenue, for the
second quarter of 2019 compared to 24,788 kEUR, or 55.0% of total
revenue, for the second quarter of 2018.
Research and development (“R&D”), sales and marketing
(“S&M”) and general and administrative (“G&A”) expenses
increased, in the aggregate, 8.4% to 27,861 kEUR for the second
quarter of 2019 from 25,699 kEUR for the second quarter of
2018.
Net other operating income decreased to 1,370 kEUR from 1,840
kEUR for the second quarter of 2018.
Operating result decreased to 36 kEUR from 928 kEUR for the same
period in the prior year.
Net financial result was (190) kEUR compared to (376) kEUR for
the prior-year period. The share in loss of joint venture amounted
to (82) kEUR compared to (141) kEUR for the same period last
year.
The second quarter of 2019 contained income tax expenses of (61)
kEUR, compared to (42) kEUR in the second quarter of 2018.
As a result of the above, net loss for the second quarter of
2019 was (297) kEUR, compared to 369 kEUR for the same period in
2018. Total comprehensive income for the second quarter of 2019,
which includes exchange differences on translation of foreign
operations, was (727) kEUR compared to a gain of 422 kEUR for the
same period in 2018.
At June 30, 2019, we had cash and equivalents of 108,865 kEUR
compared to 115,506 kEUR at December 31, 2018. Gross debt amounted
to 107,698 kEUR (including 5,050 kEUR lease liabilities from the
new accounting standard IFRS 16), as compared to 106,037 kEUR at
December 31, 2018. Cash flow from operating activities for the
second quarter of 2019 was 4,759 kEUR compared to 4,831 kEUR for
the same period in 2018. Total capital expenditures for the quarter
amounted to 3,052 kEUR. This amount includes 366 kEUR of
capitalized R&D expenditures from medical programs.
Net shareholders’ equity at June 30, 2019 was 135,781 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
second quarter of 2019, the total commitment of lease assets and
liabilities amounted to 5,050 kEUR. Our Adjusted EBITDA for the
second quarter of 2019 was affected positively by the new standard
as a result of the rental payments decrease of 644 kEUR; however,
our operating profit was impacted by only 52 kEUR as depreciation
expenses increased by 593 kEUR.
Subsequent Events
On July 31, 2019 Materialise agreed to acquire a controlling
stake in Engimplan Holdings Ltda., a Brazil-based manufacturer of
orthopedic and cranio-maxillofacial (CMF) implants and instruments.
The expertise and in-house infrastructure of Engimplan are
complementary to our existing medical devices business and will
position us to expand our market position in Brazil while further
building on the existing business of Engimplan. Materialise will
acquire a mix of existing and new shares bringing its total
shareholding to 75%, with the founding shareholders retaining the
remaining 25%. All shares will be fully paid for in cash at the
closing, which is expected to take place during the week of August
5, 2019 .
On July 1, 2019, we drew the second tranche of 25,000 kEUR from
our 35,000 kEUR credit facility with the European Investment Bank.
This tranche has an interest rate of 2.719% and principal repayment
dates between 2022 and 2027.
2019 Guidance
The Company’s outlook for fiscal 2019 remains within our
previous guidance range, and management continues to expect to
report consolidated revenue between 196,000 - 204,000 kEUR,
Adjusted EBITDA 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. We expect a
stronger financial performance during the second half of 2019, in
part because of the expected revenue and EBITDA contribution from
our pending acquisition of a 75% stake in Engimplan. We do expect
Adjusted EBITDA for 2019 to be closer to the lower end of the
range.
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 1.1380, the reference rate of the European Central Bank on June
30, 2019.
Conference Call and Webcast
Materialise will hold a conference call and simultaneous webcast
to discuss its financial results for the second quarter of 2019 on
Tuesday, August 6, 2019, at 8:30 a.m. ET/2:30 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 #6466129.
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,
the timing, benefits and impact on our fiscal 2019 results of the
Engimplan investment, 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
June 30,
For the six
months ended
June 30,
In 000
2019
2019
2018
2019
2018
U.S.$
€
€
€
€
Revenue
55,084
48,404
45,076
95,519
88,975
Cost of sales
(24,896)
(21,877)
(20,288)
(43,413)
(40,232)
Gross profit
30,188
26,527
24,788
52,106
48,743
Gross profit as % of revenue
54,8%
54,8%
55,0%
54,6%
54.8%
Research and development expenses
(6,941)
(6,100)
(5,831)
(11,786)
(11,446)
Sales and marketing expenses
(14,991)
(13,173)
(11,843)
(25,252)
(22,441)
General and administrative expenses
(9,773)
(8,588)
(8,026)
(16,184)
(15,187)
Net other operating income (expenses)
1,559
1,370
1,840
2,627
2,390
Operating (loss) profit
40
36
928
1,511
2,059
Financial expenses
(356)
(313)
(404)
(1,509)
(2,516)
Financial income
140
123
29
728
1,431
Share in loss of joint venture
(93)
(82)
(141)
(205)
(244)
(Loss) profit before taxes
(268)
(236)
411
524
729
Income taxes
(69)
(61)
(42)
(1,126)
(543)
Net (loss) profit for the
period
(338)
(297)
369
(601)
186
Net (loss) profit attributable to:
The owners of the parent
(338)
(297)
369
(601)
186
Non-controlling interest
–
–
–
–
–
Earnings per share attributable to
owners of the parent
Basic
(0.01)
(0.01)
0.01
(0.01)
0.00
Diluted
(0.01)
(0.01)
0.01
(0.01)
0.00
Weighted average basic shares
outstanding
52,891
52,891
47,428
52,891
47,428
Weighted average diluted shares
outstanding
52,891
52,891
47,428
52,891
47,428
Consolidated statements of
comprehensive income (Unaudited)
For the three months
ended
June 30,
For the six
months ended
June 30,
In 000
2019
2019
2018
2019
2018
U.S.$
€
€
€
€
Net profit (loss) for the
period
(338)
(297)
369
(602)
186
Other comprehensive income
Exchange difference on translation of
foreign operations
(489)
(430)
53
157
(42)
Other comprehensive income (loss), net of
taxes
(489)
(430)
53
157
(42)
Total comprehensive income (loss) for
the year, net of taxes
(827)
(727)
422
(445)
144
Total comprehensive income (loss)
attributable to:
The owners of the parent
(827)
(727)
422
(445)
144
Non-controlling interest
–
–
–
–
–
Consolidated statement of financial
position (Unaudited)
As of June
30,
As of
December
31,
In 000
2019
2018
€
€
Assets
Non-current assets
Goodwill
17,491
17,491
Intangible assets
25,828
26,326
Property, plant & equipment
97,159
92,537
Investments in joint ventures
Deferred tax assets
260
315
Other non-current assets
10,080
7,237
Total non-current assets
150,819
143,906
Current assets
Inventories
10,031
9,986
Trade receivables
40,073
36,891
Other current assets
7,746
6,936
Cash and cash equivalents
108,865
115,506
Total current assets
166,715
169,319
Total assets
317,534
313,225
As of June
30,
As of
December
31,
In 000
2019
2018
€
€
Equity and liabilities
Equity
Share capital
3,050
3,050
Share premium
136,869
136,637
Consolidated reserves
(2,447)
(1,848)
Other comprehensive income
(1,692)
(1,850)
Equity attributable to the owners of
the parent
135,781
135,989
Non-controlling interest
–
–
Total equity
135,781
135,989
Non-current liabilities
Loans & borrowings
91,884
92,440
Deferred tax liabilities
5,979
6,226
Deferred income
5,282
4,587
Other non-current liabilities
886
868
Total non-current liabilities
104,031
104,121
Current liabilities
Loans & borrowings
15,814
13,598
Trade payables
17,902
18,667
Tax payables
2,358
2,313
Deferred income
24,776
23,195
Other current liabilities
16,873
15,342
Total current liabilities
77,722
73,115
Total equity and liabilities
317,534
313,225
Consolidated statement of cash flows
(Unaudited)
For the six months ended June
30,
in 000
2019
2018
€
€
Operating activities
Net (loss) profit for the period
(602)
186
Non-cash and operational adjustments
Depreciation of property, plant &
equipment
6,950
5,517
Amortization of intangible assets
2,229
2,498
Share-based payment expense
197
366
Loss (gain) on disposal of property, plant
& equipment
134
(90)
Movement in provisions
20
-
Movement reserve for bad debt
(116)
68
Financial income
(171)
(58)
Financial expense
1,232
1,032
Impact of foreign currencies
(288)
111
Share in loss of a joint venture (equity
method)
205
244
(Deferred) income taxes
1,126
543
Other
(196)
(164)
Working capital adjustment & income
tax paid
Increase in trade receivables and other
receivables
(4,466)
(4,147)
Decrease (increase) in inventories
(43)
774
Increase in trade payables and other
payables
3,737
5,230
Income tax paid
(1,108)
(1,555)
Net cash flow from operating
activities
8,840
11,031
For the six months ended June
30,
in 000
2019
2018
€
€
Investing activities
Purchase of property, plant &
equipment
(4,827)
(8,588)
Purchase of intangible assets
(1,457)
(583)
Proceeds from the sale of property, plant
& equipment & intangible assets (net)
(3)
436
Convertible loan to third party
(2,500)
–
Investments in joint-ventures
–
–
Interest received
–
(2)
Net cash flow used in investing
activities
(8,787)
(8,737)
Financing activities
Proceeds from loans & borrowings
3,000
18,770
Repayment of loans & borrowings
(5,818)
(14,074)
Repayment of finance leases
(2,765)
(1,366)
Capital increase
–
207
Interest paid
(934)
(814)
Other financial income (expense)
(292)
(130)
Net cash flow from (used in) financing
activities
(6,809)
2,593
Net increase of cash & cash
equivalents
(6,756)
4,887
Cash & cash equivalents at beginning
of the year
115,506
43,175
Exchange rate differences on cash &
cash equivalents
115
657
Cash & cash equivalents at end of
the year
108,865
48,719
Reconciliation of Net Profit (Loss) to
EBITDA and Adjusted EBITDA (Unaudited)
For the three months
ended June 30,
For the six months
ended June 30,
In 000
2019
2018
2019
2018
€
€
€
€
Net profit (loss) for the
period
(297)
369
(601)
186
Income taxes
61
42
1,126
543
Financial expenses
313
404
1,509
2,516
Financial income
(123
)
(29
)
(728)
(1,431)
Share in loss of joint venture
82
141
205
244
Depreciation and amortization
4,649
4,009
9,178
8,538
EBITDA
4,685
4.940
10,691
10,074
Non-cash stock-based compensation expense
(1)
(374)
(276
)
(196)
(366)
Acquisition-related expenses business
combinations
–
–
–
–
ADJUSTED EBITDA
5,059
5,216
10,888
10,440
(1)
Non-cash stock-based compensation expenses
represent the cost of equity-settled and cash-settled share-based
payments to employees.
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 June 30,
2019
Revenues
9,320
14,546
24,550
48,415
(11)
48,404
Segment EBITDA
2,055
2,738
2,835
7,629
(2,571)
5,059
Segment EBITDA %
22.1%
18.8%
11.5%
15.8%
For the three months ended June 30,
2018
Revenues
9,131
12,400
23,387
44,918
158
45,076
Segment EBITDA
2,859
2,124
2,264
7,247
(2,031)
5,216
Segment EBITDA %
31.3%
17.1%
9.7%
16.1%
In 000
Materialise
Software
Materialise
Medical
Materialise
Manu- facturing
Total
segments
Unallocated
(1)(2)
Consoli-
Dated
€
€
€
€
€
€
For the six months ended June 30,
2019
Revenues
18,670
28,112
48,734
95,515
4
95,519
Segment EBITDA
5,016
4,511
6,530
16,058
(5,170)
10,888
Segment EBITDA %
22.1%
16.0%
13.4%
16.8%
For the six months ended June 30,
2018
Revenues
17,457
24,346
47,019
88,822
153
88,975
Segment EBITDA
5,183
4,184
5,397
14,764
(4,324)
10,440
Segment EBITDA %
29.7%
17.2%
11.5%
16.6%
(1)
Unallocated Revenues consist of occasional one-off sales in our
core competencies not allocated to any of our segments. Unallocated
Segment EBITDA consists of corporate research and development,
corporate headquarter costs and other operating income (expense).
(2)
Unallocated Segment EBITDA consists of the added non-cash
stock-based compensation expenses that are included in Adjusted
EBITDA.
Reconciliation of Net Profit (Loss) to
Segment EBITDA (Unaudited)
For the three months
ended June 30,
For the six months
ended June 30,
In 000
2019
2018
2019
2018
€
€
€
€
Net profit (loss) for the
period
(297)
369
(601)
186
Income taxes
61
42
1,126
543
Financial cost
313
404
1,509
2,516
Financial income
(123)
(29)
(728)
(1,431)
Share in loss of joint venture
82
141
205
244
Operating profit
36
928
1,511
2,059
Depreciation and amortization
4,649
4,009
9,178
8,015
Corporate research and development
502
527
1,014
1,044
Corporate headquarter costs
3,108
3,235
5,777
5,700
Other operating income (expense)
(501)
(1,001)
(1,107)
(1,373)
Segment EBITDA
7,629
7,247
16,058
14,764
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005094/en/
Investor Relations: Harriet Fried LHA
212.838.3777 hfried@lhai.com
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