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Materialise Reports Second Quarter 2014 Results
LEUVEN,
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.
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
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
Net shareholder's equity at
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
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
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,
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
About Materialise
With its headquarters in Leuven,
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
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:
LHA
212-838-3777
hfried@lhai.com
| Materialise NV | ||||||
| Consolidated income statements | ||||||
|
For the quarter ended June 30 |
For the six months 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 expenses | (4,866) | (3,563) | (2,633) | (6,742) | (5,148) | |
| Sales and marketing expenses | (8,408) | (6,156) | (5,330) | (11,836) | (10,259) | |
| General and administrative expenses | (4,092) | (2,996) | (2,577) | (5,712) | (4,695) | |
| 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 ended June 30 |
For the six months 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 translation of foreign operations* | 66 | 48 | (30) | 8 | (57) | |
| Other comprehensive income (loss), net of taxes | 66 | 48 | (30) | 8 | (57) | |
| Total comprehensive income (loss) for the year, net of taxes | (239) | (175) | 592 | (133) | 751 | |
| 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 Printing Software |
Medical |
Industrial Production |
Total segments |
Adjustments & eliminations |
Consolidated |
|
| 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 Printing Software |
Medical |
Industrial Production |
Total segments |
Adjustments & eliminations |
Consolidated |
|
| 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 ended June 30 |
For the six 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 |