Materialise Reports First Quarter 2019 Results

LEUVEN, Belgium—(BUSINESS WIRE)—April 30, 2019 — 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  

Press contacts

Investor Relations

LHA

Harriet Fried,
212-838-3777
hfried@lhai.com

 

Source: Materialise NV

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