Form 6-K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2019

Commission File Number: 001-36515

 

 

Materialise NV

 

 

Technologielaan 15

3001 Leuven

Belgium

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  ☒                  Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):    ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):    ☐

This Form 6-K is incorporated by reference into the registrant’s Registration Statement on Form F-3 (File No. 333-213649).

 

 


Second Quarter 2019 Financial Results

Except as otherwise required by the context, references to “Materialise,” “Company,” “we,” “us” and “our” are to Materialise NV and its subsidiaries.

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.

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.

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%.

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.

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.

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.

Segment EBITDA from our Materialise Software segment decreased to 2,055 kEUR from 2,859 kEUR while the segment EBITDA margin (the segment’s EBITDA divided by the segment’s revenue) was 22.1% compared to 31.3% in the prior-year period.

Segment EBITDA from our Materialise Medical segment 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.

Segment EBITDA from our Materialise Manufacturing segment 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.

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.

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.

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.

Cautionary Statement on Forward-Looking Statements

This report 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, the timing and benefits of the Engimplan investment. When used in this report, 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 report. 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 report.

The Company is providing this information as of the date of this report and does not undertake any obligation to update any forward-looking statements contained in this report 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
Manufacturing 
       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
Manufacturing 
       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  


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MATERIALISE NV

By:

   /s/ Wilfried Vancraen

Name:    

   Wilfried Vancraen

Title:

   Chief Executive Officer

Date: August 6, 2019