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 ended
June 30, 2017.
Highlights – Second Quarter 2017
- Total revenue increased 21.8% from the
second quarter of 2016 to 33,612 kEUR, with increases in all
three business segments.
- Adjusted EBITDA increased 164% from
1,034 kEUR for the second quarter of 2016 to
2,732 kEUR.
- Total deferred revenue from annual
software sales and maintenance contracts amounted to
17,206 kEUR at the end of the second quarter of 2017 compared
16,799 kEUR at the end of the fourth quarter of 2016.
Executive Chairman Peter Leys commented, “Materialise turned in
another sound quarter, delivering strong revenue growth in all our
segments, particularly Manufacturing, where, driven by a surge in
end part manufacturing, revenue rose 32.5%. Reflecting the pick-up
in the demand environment for 3D printing this year, revenue from
our Software segment increased 19.0%, while Medical rose almost 10%
on the strength of solid software revenues. Despite start-up
activities associated with the opening of our new manufacturing
facilities in Leuven and Poland, our Adjusted EBITDA margin more
than doubled. We look forward to completing the facilities’
start-up process during the third quarter and to gradually
realizing scale effects and efficiency gains thereafter.”
Second Quarter 2017 Results
Total revenue for the second quarter of 2017 increased 21.8% to
33,612 kEUR compared to 27,597 kEUR for the second
quarter of 2016, with gains in all three of our segments,
particularly Materialise Manufacturing. Adjusted EBITDA increased
to 2,732 kEUR from 1,034 kEUR as a result of the
combination of continued revenue growth (21.8%) and a significantly
lower increase in operational expenses (9.0%) as compared to the
second quarter of 2016. The Adjusted EBITDA margin (Adjusted EBITDA
divided by total revenue) in the second quarter of 2017 was 8.1%
compared to 3.7% for the second quarter of 2016.
Revenue from our Materialise Software segment, which offers a
proprietary software backbone that enables and enhances the
functionality of 3D printers and 3D printing operations worldwide,
increased 19.0% to 8,305 kEUR for the second quarter of 2017
from 6,981 kEUR for the same quarter last year. Recurrent
revenues from annual and renewed licenses and maintenance fees grew
25.2% from the same period in the prior year. Segment EBITDA rose
to 2,952 kEUR from 1,602 kEUR while the segment EBITDA
margin was 35.5% compared to 22.9% for the prior-year period.
Revenue from our Materialise Medical segment, which offers a
unique platform consisting of medical planning and design software,
clinical engineering services and patient specific devices,
increased 9.7% to 10,646 kEUR for the second quarter of 2017
compared to 9,706 kEUR for the same period in 2016. Compared
to the same quarter in 2016, revenue from our medical software grew
15.5%, and revenue from medical devices and services grew 6.6%.
Segment EBITDA was 758 kEUR compared to 14 kEUR while the
segment EBITDA margin increased to 7.1% from 0.1% for the second
quarter of 2016.
Revenue from our Materialise Manufacturing segment, which offers
an integrated suite of 3D printing and engineering services to
industrial and commercial customers, increased 32.5% to
14,455 kEUR for the second quarter of 2017 from
10,907 kEUR for the second quarter of 2016. End part
manufacturing revenues increased 89.7% compared to the same quarter
in 2016. Segment EBITDA rose to 1,241 kEUR from 430 kEUR
while the segment EBITDA margin increased to 8.6% from 3.9% for the
same quarter in 2016.
Gross profit was 19,388 kEUR, or 57.7% of total revenue,
for the second quarter of 2017 compared to 16,253 kEUR, or
58.9% of total revenue, for the second quarter of 2016.
Research and development (“R&D”), sales and marketing
(“S&M”) and general and administrative (“G&A”) expenses
increased, in the aggregate, 9.0% to 20,911 kEUR for the
second quarter of 2017 from 19,182 kEUR for the second quarter
of 2016. R&D expenses increased from 4,760 kEUR to
5,131 kEUR while S&M expenses increased from
9,533 kEUR to 10,009 kEUR. G&A expenses increased
from 4,889 kEUR to 5,771 kEUR.
Net other operating income decreased by 550 kEUR to
1,228 kEUR compared to 1,778 kEUR for the second quarter
of 2016. Net other operating income consists primarily of
withholding tax exemptions for qualifying researchers, development
grants, partial funding of R&D projects and currency exchange
results on purchase and sales transactions.
Operating loss improved to (295) kEUR from
(1,151) kEUR for the same period prior year. This improvement
was the result of a combination of an increase in gross profit of
19.3% and an increase of only 9.0% in R&D, S&M and G&A
expenses, partially offset by a slight decrease of 550 kEUR of
net other operating income compared to the same quarter in
2016.
Net financial result was (427) kEUR compared to
207 kEUR for the prior-year period, reflecting variances in
the currency exchange rates, primarily on the portion of the
company’s IPO proceeds held in U.S. dollars versus the euro.
Net loss for the second quarter of 2017 was (955) kEUR
compared to net loss of (436) kEUR for the same period in
2016. The 2016 period contained income tax income of 639 kEUR
primarily from deferred taxes compared to an expense of
(191) kEUR in the 2017 period. This variance of
(830) kEUR in income tax and the decrease in the net financial
result of 634 kEUR, which were offset in part by a decrease of
89 kEUR in the share in the loss of a joint venture and the
improvement of the operating loss by 856 kEUR, explain the
increase of the net loss by (519) kEUR for the second quarter of
2017. Total comprehensive loss for the second quarter of 2017,
which includes exchange differences on translation of foreign
operations, was (1,403) kEUR compared to (911) kEUR for
the same period in 2016.
At June 30, 2017, we had cash and equivalents of
53,832 kEUR compared to 55,912 kEUR at December 31, 2016.
Cash flow from operating activities in the first six months of 2017
was 5,188 kEUR compared to 5,781 kEUR for the same period
in 2016, mainly due to working capital evolution.
Net shareholders’ equity at June 30, 2017 was 77,419 kEUR
compared to 79,033 kEUR at December 31, 2016.
2017 Guidance
In its year-end 2016 and first-quarter 2017 earnings
announcements, Materialise stated that it expects to report
consolidated revenue between 128,000 - 134,000 kEUR and Adjusted
EBITDA between 10,500 – 13,500 kEUR in 2017. Based on the company’s
first-half 2017 results, management now expects revenue and
Adjusted EBITDA to be at the high end of these ranges. Management
continues to expect the amount of deferred revenue generated in
2017 from annual licenses and maintenance to increase by an amount
between 4,000 - 5,000 kEUR as compared to 2016.
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 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 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 1.1412, the reference rate of the European Central Bank on
June 30, 2017.
Conference Call and Webcast
Materialise will hold a conference call and simultaneous webcast
to discuss its financial results for the second quarter of 2017
today, August 8, 2017, at 8:30 a.m. ET/14:30 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 #45016167. 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 and slide presentation 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 Materialise seeks to 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 2017 revenues, deferred
revenue from annual licenses and maintenance and Adjusted EBITDA,
completion of start-up activities associated with our new
manufacturing facilities, 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 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 on May 1, 2017. 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 statement
(Unaudited)
For the six
For the three months
months ended 30
ended 30 June
June (in thousands, except per share amounts)
2017
2017 2016 2017
2016 U.S.$ € € € €
Revenue 38,358 33,612 27,597 65,533 54,264 Cost of sales (16,232)
(14,224) (11,344) (27,668) (22,049)
Gross profit
22,126 19,388 16,253 37,865
32,215 Gross profit as % of revenue 57.7% 57.7% 58.9% 57.8%
59.4% Research and development expenses (5,855) (5,131)
(4,760) (9,723) (9,132) Sales and marketing expenses (11,422)
(10,009) (9,533) (19,617) (18,348) General and administrative
expenses (6,586) (5,771) (4,889) (11,150) (9,939) Net other
operating income (expenses) 1,401 1,228 1,778 2,246 3,064
Operating (loss) profit (336) (295)
(1,151) (379) (2,140) Financial
expenses (1,503) (1,317) (609) (2,236) (1,506) Financial income
1,016 890 816 1,667 979 Share in loss of joint venture (48) (42)
(131) (431) (299)
(Loss) profit before taxes (871)
(764) (1,075) (1,379) (2,966)
Income taxes (218) (191) 639 (392) (621)
Net (loss) profit of
the period (1,089) (955) (436)
(1,771) (3,587) Net (loss) profit attributable to:
The owners of the parent (1,089) (955) (436) (1,771) (3,587)
Non-controlling interest − − − − −
Earnings per share
attributable to ordinary owners of the parent Basic (0.02)
(0.02) (0.01) (0.04) (0.08) Diluted (0.02) (0.02) (0.01) (0.04)
(0.08) Weighted average basic shares outstanding 47,325
47,325 47,325 47,325 47,325 Weighted average diluted shares
outstanding 47,325 47,325 47,325 47,325 47,325
Consolidated statements of
comprehensive income (Unaudited)
For the six
For the three months
months ended 30 ended 30 June June (in
thousands)
2017 2017 2016
2017 2016 U.S.$ € €
€ € Net profit (loss) for the period
(1,089) (955) (436) (1,771)
(3,587) Other comprehensive income Exchange difference on
translation of foreign operations (511) (448)
(475) (326)
(1,439) Other comprehensive income (loss), net of taxes (511) (448)
(475) (326) (1,439)
Total comprehensive income (loss) for the
year, net of taxes (1,600) (1,403) (911)
(2,097) (5,026) Total comprehensive income (loss)
attributable to: The owners of the parent (1,600) (1,403) (911)
(2,097) (5,026) Non-controlling interest − − − − −
Consolidated statement of financial
position (Unaudited)
As of June 30
As of December 31
(in thousands)
2017 2016 € €
Assets
Non-current assets
Goodwill 8,771 8,860 Intangible assets 9,385 9,765 Property, plant
& equipment 58,327 45,063 Investments in joint ventures 69 −
Deferred tax assets 246 336 Other non-current assets 2,485 2,154
Total non-current assets 79,283 66,178
Current assets
Inventories 8,356 7,870 Trade receivables 29,383 27,479 Held to
maturity investments − − Other current assets 6,121 4,481 Cash and
cash equivalents 53,832 55,912
Total current assets
97,692 95,742 Total assets 176,975
161,920 As of June 30
As of December 31
(in thousands)
2017 2016 € € Equity
and liabilities Equity Share capital 2,729 2,729 Share
premium 79,497 79,019 Consolidated reserves (3,369) (1,603) Other
comprehensive income (1,438) (1,112)
Equity attributable to the
owners of the parent 77,419 79,033 Non-controlling interest − −
Total equity 77,419 79,033
Non-current liabilities
Loans & borrowings 40,146 28,267 Deferred tax liabilities 1,078
1,325 Deferred income 2,869 3,588 Other non-current liabilities
2,122 1,873
Total non-current liabilities 46,215
35,053
Current liabilities
Loans & borrowings 6,587 5,539 Trade payables 16,009 13,400 Tax
payables 748 926 Deferred income 20,164 17,822 Other current
liabilities 9,833 10,147
Total current liabilities
53,341 47,834 Total equity and liabilities
176,975 161,920
Consolidated statement of cash flows
(Unaudited)
For the six months ended June 30 (in
thousands)
2017 2016 € €
Operating activities Net (loss) profit of the period (1,771)
(3,587) Non-cash and operational adjustments Depreciation of
property, plant & equipment 3,954 3,012 Amortization of
intangible assets 1,269 938 Share-based payment expense 700 360
Loss (gain) on disposal of property, plant & equipment 28 (62)
Fair value contingent liabilities − 54 Movement in provisions 14 −
Movement reserve for bad debt 139 111 Financial income (318) (87)
Financial expense 585 483 Impact of foreign currencies 302 131
Share in loss of a joint venture (equity method) 431 299 Deferred
tax expense (income) (150) (159) Income taxes 542 781 Other (58)
(40)
Working capital adjustment & income tax paid
Increase in trade receivables and other receivables (3,580) 1,654
Decrease (increase) in inventories (509) (5) Increase in trade
payables and other payables 4,207 2,442 Income tax paid (597) (544)
Net cash flow from operating activities 5,188
5,781 For the six months ended June
30 (in thousands)
2017 2016 €
€ Investing activities Purchase of property, plant
& equipment (15,770) (5,831) Purchase of intangible assets
(1,027) (526) Proceeds from the sale of property, plant &
equipment (net) 104 708 Proceeds from the sale of intangible assets
(net) − 19 Acquisition of subsidiary − − Investments in
joint-ventures (500) − Interest received 241 6
Net cash flow used in investing
activities
(16,952) (5,624)
Financing activities
Proceeds from loans & borrowings 14,203 2,812 Repayment of
loans & borrowings (1,634) (1,346) Repayment of finance leases
(1,405) (843) Interest paid (302) (328) Other financial income
(expense) (154) (32)
Net cash flow from (used in) financing
activities 10,708 263 Net increase of
cash & cash equivalents (1,056) 420 Cash
& cash equivalents at beginning of the year 55,912 50,726
Exchange rate differences on cash & cash equivalents (1,024)
158
Cash & cash equivalents at end of the year
53,832 51,304
Reconciliation of Net Profit (Loss) to
EBITDA and Adjusted EBITDA (Unaudited)
For the three For the six months ended
30 months ended 30 June June (in
thousands)
2017 2016 2017
2016 € € € € Net
profit (loss) for the period (955) (436)
(1,771) (3,587) Income taxes 191 (639) 392 621
Finance expenses 1,317 609 2,236 1,506 Finance income (890) (816)
(1,667) (979) Share in loss of joint venture 42 131 431 299
Depreciation and amortization 2,656 2,040 5,224 3,950
EBITDA 2,361 889 4,845 1,810
Non-cash stock-based compensation expense (1) 371 145 700
359
ADJUSTED EBITDA 2,732 1,034
5,545 2,169
(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 thousands)
MaterialiseSoftware
MaterialiseMedical
MaterialiseManufact-uring Total
segments Unallocated Consoli-dated
€ € € € € € For
the six months ended June 30, 2017 Revenues 16,880 20,578
27,862 65,320 213 65,533 Segment EBITDA 5,945 1,072 2,563 9,580
(4,735) 4,845
Segment EBITDA %
35.2% 5.2% 9.2% 14.7% 7.4%
For the six months ended June
30, 2016 Revenues 14,412 18,312 21,513 54,237 27 54,264 Segment
EBITDA 4,367 (516) 687 4,538 (2,728) 1,810
Segment EBITDA %
30.3% -2.8% 3.2% 8.4% 3.3%
(in thousands)
MaterialiseSoftware
MaterialiseMedical
MaterialiseManufact-uring Total
segments Unallocated Consoli-dated
€ € € € € € For
the three months ended June 30, 2017 Revenues 8,305 10,646
14,455 33,406 206 33,612 Segment EBITDA 2,952 758 1,241 4,951
(2,590) 2,361
Segment EBITDA %
35.5% 7.1% 8.6% 14.8% 7.0%
For the three months ended
June 30, 2016 Revenues 6,981 9,706 10,907 27,594 3 27,597
Segment EBITDA 1,602 14 430 2,046 (1,157) 889
Segment EBITDA %
22.9% 0.1% 3.9% 7.4% 3.2%
Reconciliation of Net Profit (Loss) to
Segment EBITDA (Unaudited)
For the three months For the six months
ended 30 June ended 30 June (in thousands)
2017 2016 2017 2016
€ € € € Net profit (loss) for
the period (955) (436) (1,771)
(3,587) Income taxes 191 (639) 392 621 Finance cost 1,317
609 2,236 1,506 Finance income (890) (816) (1,667) (979) Share in
loss of joint venture 42 131 431 299
Operating profit
(295) (1,151) (379) (2,140)
Depreciation and amortization 2,656 2,040 5,224 3,950 Corporate
research and development 516 392 1,025 959 Corporate headquarter
costs 2,464 1,801 4,537 3,539 Other operating income (expense)
(390) (1,036) (827) (1,770)
Segment EBITDA
4,951 2,046 9,580 4,538
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Investors:LHAHarriet Fried/Jody
Burfening212-838-3777hfried@lhai.com
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