Materialise Reports First Quarter 2019 Results

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    LEUVEN, Belgium–(BUSINESS WIRE)–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 first quarter
    ended March 31, 2019.

    Highlights – First Quarter 2019

    • Total revenue increased 7.3% to 47,115 kEUR for the first quarter of
      2019 from 43,899 kEUR for the first quarter of 2018.
    • Total deferred revenue from annual software sales and maintenance
      contracts increased by 2,305 kEUR to 24,911 kEUR from 22,606 kEUR at
      the end of 2018.
    • Adjusted EBITDA increased 12% from the first quarter of 2018 to 5,829
      kEUR for the first quarter of 2019.
    • Net loss for the first quarter of 2019 was (304) kEUR, or (0.01) EUR
      per diluted share, compared to (183) kEUR, or 0.00 EUR per diluted
      share, over the same period last year.

    Executive Chairman Peter Leys commented, “In the year’s opening quarter,
    all three of our segments performed well. Materialise Software and
    Materialise Medical, which continue to invest in both sales and
    marketing and research and development, combined healthy double-digit
    revenue growth rates with solid double-digit EBITDA margins. In spite of
    the continuing macro-economic uncertainties, in particular in the
    automotive sector, Materialise Manufacturing also realized growth, both
    in terms of revenue and, more significantly, in terms of EBITDA. We
    believe we are on track to meet our financial guidance for 2019.”

    First Quarter 2019 Results

    Total revenue for the first quarter of 2019 increased 7.3% to 47,115
    kEUR compared to 43,899 kEUR for the first quarter of 2018. Adjusted
    EBITDA increased to 5,829 kEUR from 5,224 kEUR. The Adjusted EBITDA
    margin (Adjusted EBITDA divided by total revenue) in the first quarter
    of 2019 was 12.4% compared to 11.9% in the first quarter of 2018.

    Revenue from our Materialise Software segment increased 12.3% to
    9,350 kEUR for the first quarter of 2019 from 8,326 kEUR for the same
    quarter last year. Segment EBITDA increased to 2,961 kEUR from 2,324
    kEUR while the segment EBITDA margin (the segment’s EBITDA divided by
    the segment’s revenue) was 31.7% compared to 27.9% in the prior-year
    period.

    Revenue from our Materialise Medical segment increased 13.6% to 13,566
    kEUR for the first quarter of 2019 compared to 11,946 kEUR for the same
    period in 2018. Compared to the same quarter in 2018, revenues from
    medical devices and services grew 15.8%, and revenues from our medical
    software grew 9.4%. Segment EBITDA was 1,773 kEUR compared to 2,060 kEUR
    while the segment EBITDA margin decreased to 13.1% from 17.2% in the
    first quarter of 2018.

    Revenue from our Materialise Manufacturing segment increased 2.3% to
    24,184 kEUR for the first quarter of 2019 from 23,632 kEUR for the first
    quarter of 2018. Segment EBITDA increased to 3,695 kEUR from 3,133 kEUR
    while the segment EBITDA margin increased to 15.3% from 13.3% for the
    same quarter in 2018.

    Gross profit was 25,579 kEUR, or 54.3% of total revenue, for the first
    quarter of 2019 compared to 23,955 kEUR, or 54.6% of total revenue, for
    the first quarter of 2018.

    Research and development (“R&D”), sales and marketing (“S&M”) and
    general and administrative (“G&A”) expenses increased, in the aggregate,
    8.5% to 25,361 kEUR for the first quarter of 2019 from 23,374 kEUR for
    the first quarter of 2018.

    Net other operating income increased by 709 kEUR to 1,258 kEUR compared
    to 549 kEUR for the first quarter of 2018.

    Operating result increased 30.6% to 1,476 kEUR from 1,130 kEUR for the
    same period in the prior year.

    Net financial result was (592) kEUR compared to (710) kEUR for the
    prior-year period. The share in loss of joint venture amounted to (123)
    kEUR from (103) kEUR for the same period last year.

    The first quarter of 2019 contained income tax expenses of (1,065) kEUR,
    compared to (500) kEUR in the first quarter of 2018. The decrease of 565
    kEUR primarily reflects the change in deferred taxes from an income of
    320 kEUR as at March 31, 2018 to an expense of 290 kEUR as at March 31,
    2019.

    As a result of the above, net loss for the first quarter of 2019 was
    (304) kEUR, compared to (183) kEUR for the same period in 2018. Total
    comprehensive income for the first quarter of 2019, which includes
    exchange differences on translation of foreign operations, was 284 kEUR
    compared to a loss of (278) kEUR for the same period in 2018.

    At March 31, 2019, we had cash and equivalents of 111,052 kEUR compared
    to 115,506 kEUR at December 31, 2018. Cash flow from operating
    activities for the first quarter of 2019 was 4,081 kEUR compared to
    6,200 kEUR in 2018. As a result of the implementation of the new
    accounting standard IFRS 16, we have recognized additional lease assets
    and liabilities for an amount of 4,998 kEUR at January 1, 2019. Our
    Adjusted EBITDA for the first quarter of 2019 was affected positively by
    this new standard from the rental payments decrease of 596 kEUR, but our
    operating profit was not impacted as the depreciation expenses increased
    by the same amount.

    Net shareholders’ equity at March 31, 2019 was 136,377 kEUR compared to
    135,989 kEUR at December 31, 2018.

    2019 Guidance

    As detailed in the company’s year-end fiscal 2018 earnings announcement,
    in fiscal 2019, management expects to report consolidated revenue
    between 196,000 – 204,000 kEUR and Adjusted EBITDA between 29,000 –
    33,000 kEUR. Management also expects the amount of deferred revenue the
    company generates from annual licenses and maintenance in 2019 to
    increase by an amount between 2,000 – 4,000 kEUR as compared to 2018.
    Reflecting the usual seasonality of the company’s business, Materialise
    expects its financial performance to be weighted towards the second half
    of 2019.

    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 1.1235, the reference
    rate of the European Central Bank on March 29, 2019.

    Conference Call and Webcast

    Materialise will hold a conference call and simultaneous webcast to
    discuss its financial results for the first quarter of 2019 on Tuesday,
    April 30, 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 #4573367. 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 more than 25 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
    March 31,

         

    For the three months ended
    March 31,

    In 000 2019     2019     2018 2019     2018
    U.S.$
     
    Revenue   52,934   47,115   43,899   47,115   43,899
    Cost of sales (24,195 ) (21,536 ) (19,944 ) (21,536 ) (19,944 )
    Gross profit 28,739 25,579 23,955 25,579 23,955
    Gross profit as % of revenue 54,3 % 54,3 % 54.6 % 54,3 % 54.6 %
     
    Research and development expenses (6,388 ) (5,686 ) (5,615 ) (5,686 ) (5,615 )
    Sales and marketing expenses (13,571 ) (12,079 ) (10,599 ) (12,079 ) (10,599 )
    General and administrative expenses (8,534 ) (7,596 ) (7,160 ) (7,596 ) (7,160 )
    Net other operating income (expenses) 1,412 1,258 549 1,258 549
    Operating (loss) profit 1,658 1,476 1,130 1,476 1,130
     
    Financial expenses (1,344 ) (1,196 ) (1,550 ) (1,196 ) (1,550 )
    Financial income 679 604 840 604 840
    Share in loss of joint venture (139 ) (123 ) (103 ) (123 ) (103 )
    (Loss) profit before taxes 854 761 317 761 317
     
    Income taxes (1,196 ) (1,065 ) (500 ) (1,065 ) (500 )
    Net (loss) profit for the period (342 ) (304 ) (183 ) (304 ) (183 )
    Net (loss) profit attributable to:
    The owners of the parent (342 ) (304 ) (183 ) (304 ) (183 )
    Non-controlling interest
     
    Earnings per share attributable to owners of the parent
    Basic (0.01 ) (0.01 ) 0.00 (0.01 ) 0.00
    Diluted (0.01 ) (0.01 ) 0.00 (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
    March 31,

         

    For the three months ended
    March 31,

    In 000 2019     2019     2018 2019     2018
    U.S.$
     
    Net profit (loss) for the period   (342 )   (304 )   (183 )   (304 )   (183 )
    Other comprehensive income
    Exchange difference on translation of foreign operations 661 588 (95 ) 588 (95 )
    Other comprehensive income (loss), net of taxes 661 588 (95 ) 588 (95 )
    Total comprehensive income (loss) for the year, net of taxes 319 284 (278 ) 284 (278 )
    Total comprehensive income (loss) attributable to:
    The owners of the parent 319 284 (278 ) 284 (278 )
    Non-controlling interest
     

    Consolidated statement of financial position (Unaudited)

     

    As of
    March 31,

       

    As of
    December 31,

    In 000

    2019

    2018

    Assets    
     
    Non-current assets
    Goodwill 17,680 17,491
    Intangible assets 26,189 26,326
    Property, plant & equipment 97,120 92,537
    Investments in joint ventures
    Deferred tax assets 257 315
    Other non-current assets 9,388 7,237
    Total non-current assets 150,634 143,906
     
    Current assets
    Inventories 11,203 9,986
    Trade receivables 39,397 36,891
    Other current assets 7,172 6,936
    Cash and cash equivalents 111,052 115,506
    Total current assets 168,824 169,319
    Total assets 319,458 313,225
     
     

    As of
    March 31,

       

    As of
    December 31,

    In 000 2019 2018
    Equity and liabilities    
    Equity
    Share capital 3,050 3,050
    Share premium 136,741 136,637
    Consolidated reserves (2,152 ) (1,848 )
    Other comprehensive income (1,262 ) (1,850 )
    Equity attributable to the owners of the parent

    136,377

    135,989
    Non-controlling interest
    Total equity 136,377 135,989
     
    Non-current liabilities
    Loans & borrowings 93,638 92,440
    Deferred tax liabilities 6,484 6,226
    Deferred income 4,813 4,587
    Other non-current liabilities 585 868
    Total non-current liabilities 105,520 104,121
     
    Current liabilities
    Loans & borrowings 15,517 13,598
    Trade payables 17,128 18,667
    Tax payables 2,730 2,313
    Deferred income 26,476 23,195
    Other current liabilities 15,710 15,342
     
    Total current liabilities 77,561 73,115
    Total equity and liabilities 319,458 313,225
     

    Consolidated statement of cash flows (Unaudited)

     
     

    For the three months ended
    March 31,

    in 000 2019   2018
    Operating activities
    Net (loss) profit for the period (304 ) (183 )
    Non-cash and operational adjustments
    Depreciation of property, plant & equipment 3,429 2,700
    Amortization of intangible assets 1,101 1,305
    Share-based payment expense (177 ) 89
    Loss (gain) on disposal of property, plant & equipment 51
    Movement in provisions 14 (16 )
    Movement reserve for bad debt (136 ) 84
    Financial income (60 ) (667 )
    Financial expense 583 1,067
    Impact of foreign currencies 83 310
    Share in loss of a joint venture (equity method) 124 103
    (Deferred) income taxes 1,065 501
    Other 35 (88 )
    Working capital adjustment & income tax paid
    Increase in trade receivables and other receivables (2,393 ) (4,372 )
    Decrease (increase) in inventories (1,200 ) 1,147
    Increase in trade payables and other payables 2,251 5,027
    Income tax paid (385 ) (807 )
    Net cash flow from operating activities 4,081 6,200
     
     

    For the three months ended
    March 31,

    in 000 2019   2018
    Investing activities
    Purchase of property, plant & equipment (2,657 ) (4,275 )
    Purchase of intangible assets (575 ) (324 )
    Proceeds from the sale of property, plant & equipment & intangible
    assets (net)
    20
    Convertible loan to third party (2,500 )
    Investments in joint-ventures
    Interest received 53 14
    Net cash flow used in investing activities (5,679 ) (4,565 )
     
    Financing activities
    Proceeds from loans & borrowings 1,500 12,413
    Repayment of loans & borrowings (2,543 ) (11,388 )
    Repayment of finance leases (1,399 ) (760 )
    Capital increase 207
    Interest paid (503 ) (404 )
    Other financial income (expense) (110 ) 5
    Net cash flow from (used in) financing activities (3,055 ) 73
     
    Net increase of cash & cash equivalents (4,653 ) 1,708
    Cash & cash equivalents at beginning of the year 115,506 43,175
    Exchange rate differences on cash & cash equivalents 199 (186 )
    Cash & cash equivalents at end of the year 111,052 44,697
     

    Reconciliation of Net Profit (Loss) to EBITDA and Adjusted
    EBITDA (Unaudited)

     
     

    For the three months
    ended March 31,

         

    For the three months
    ended March 31,

    In 000 2019   2018 2019   2018
     
    Net profit (loss) for the period   (304 )   (183 )   (304 )   (183 )
     
    Income taxes 1,065 500 1,065 500
    Financial expenses 1,196 1,550 1,196 1,550
    Financial income (604 ) (840 ) (604 ) (840 )
    Share in loss of joint venture 123 103 123 103
    Depreciation and amortization 4,530 4,006 4,530 4,006
     
    EBITDA 6,006 5,136 6,006 5,136
     
    Non-cash stock-based compensation expense (1) (177 ) 88 (177 ) 88
    Acquisition-related expenses business combinations
     
    ADJUSTED EBITDA 5,829 5,224 5,829 5,224

    (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

    Manufact-

    uring

      Total

    segments

      Unallocated

    (1)

      Consoli-

    dated

    For the three months ended March 31, 2019
    Revenues 9,350 13,566 24,184 47,100 15 47,115
    Segment EBITDA 2,961 1,773 3,695 8,429 (2,423) 6,006
     
    Segment EBITDA % 31.7% 13.1% 15.3% 17.9% 12.7%
     
    For the three months ended March 31, 2018
    Revenues 8,326 11,946 23,632 43,904 (5) 43,899
    Segment EBITDA 2,324 2,060 3,133 7,517 (2,381) 5,136
     
    Segment EBITDA % 27.9% 17.2% 13.3% 17.1% 11.7%

    (1) Unallocated Revenues consist of occasional one-off sales by 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).

     

    Reconciliation of Net Profit (Loss) to Segment EBITDA
    (Unaudited)

     
     

    For the three months
    ended March 31,

         

    For the three months
    ended March 31,

    In 000 2019   2018 2019   2018
     
    Net profit (loss) for the period   (304 )   (183 )   (304 )   (183 )
    Income taxes 1,065 500 1,065 500
    Financial cost 1,196 1,550 1,196 1,550
    Financial income (604 ) (840 ) (604 ) (840 )
    Share in loss of joint venture 123 103 123 103
     
    Operating profit 1,476 1,130 1,476 1,130
     
    Depreciation and amortization 4,530 4,006 4,530 4,006
    Corporate research and development 464 490 464 490
    Corporate headquarter costs 2,565 2,263 2,565 2,263
    Other operating income (expense) (606 ) (372 ) (606 ) (372 )
     
    Segment EBITDA 8,429 7,517 8,429 7,517

    Contacts

    Investor Relations
    Harriet Fried
    LHA
    212.838.3777
    [email protected]