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Materialise Reports Second Quarter 2015 Results
LEUVEN,
Highlights – Second Quarter 2015
- Total revenue increased 28.8% from the second quarter of 2014 to 24,772 kEUR.
- 3D printing software sales increased 44.8% from the second quarter of 2014.
- Significant increases in S&M (up 3,464 kEUR from the second quarter of 2014) and R&D (up 808 kEUR from the second quarter of 2014).
Executive Chairman
Second Quarter 2015 Results
Total revenue for the second quarter of 2015 increased by 28.8% to 24,772 kEUR compared to 19,238 kEUR for the second quarter of 2014, driven by continued strong gains in our 3D Printing Software segment and Industrial Production segments and double-digit growth in our Medical segment. Excluding revenue from OrthoView, which we acquired in
Revenues from the 3D Printing Software segment, which offers proprietary software worldwide through programs that enable and enhance the functionality of 3D printers and 3D printing operations, increased by 44.8% to 6,078 kEUR for the second quarter of 2015 from 4,198 kEUR for the same quarter last year. Growth was fueled by our expanded product portfolio, which now includes our build processors, accelerated growth in revenue generated with original equipment manufacturers ("OEMs") and a significant increase in new license sales across all regions, particularly in
Revenues from the Medical segment, which offers both a medical software platform and a portfolio of medical devices and clinical engineering services, increased by 16.1% to 8,315 kEUR for the second quarter of 2015 compared to 7,163 kEUR for the same period in 2014. Excluding the impact of the OrthoView acquisition, organic revenue was essentially flat compared to the second quarter of 2014 (-0.5%).These results continue to reflect the maturation of the knee guide business. Sales of medical software increased 84.4% to 3,280 kEUR from 1,779 kEUR, mainly due to the inclusion of OrthoView license revenue. Organically (excluding OrthoView), revenue from medical software licenses increased 17.8%.Annual licenses now represent 49.3% of new license sales (excluding OrthoView) as compared to 23.1% in last year's period.Revenues from the direct sale of guides and implants increased by 28.3% from the prior-year period and represented 13.3% of total medical revenues in the second quarter.Segment EBITDA decreased from 793 kEUR to a loss of (342) kEUR and the segment EBITDA margin fell to (4.1)% from 11.1% due to significant investments in S&M and R&D expenses, up 29.2% compared to the second quarter of 2014 and which included the company's investments in metal printing and X-ray guide technology, among others.
Revenues from the Industrial Production segment, which primarily offers 3D printing services to industrial and commercial customers, increased 30.0% to 10,379 kEUR for the second quarter of 2015 from 7,986 kEUR for the second quarter of 2014. Growth in the quarter was in part driven by higher sales of end parts, which rose 40.3% in the second quarter of 2015 from the same period in the prior year.Segment EBITDA decreased to a loss of (147) kEUR from a gain of 500 kEUR and the segment EBITDA margin decreased to (1.4)% from 6.3% for the same quarter of the prior year.Excluding the company's growth businesses, i.materialise and RapidFit, the segment EBITDA margin for the second quarter was 8.4% as compared to 13.9% the same quarter of the prior year.
Gross profit was 14,327 kEUR for the second quarter of 2015 compared to 11,703 kEUR for the second quarter of 2014. The gross profit margin decreased to 57.8% for the second quarter of 2015 from 60.8% for the second quarter of the prior year. This decrease was largely due to a substantial increase in depreciation expense associated with the company's purchase of 19 new printers over the past four quarters.
R&D expenses increased by 22.7% to 4,371 kEUR for the second quarter of 2015 from 3,563 kEUR for the same period in the prior year, reflecting continued investment with a number of active projects in various stages of development, including in particular in the 3D Printing Software and Medical businesses. All of the company's R&D spending was expensed and none was capitalized.
S&M and general and administrative expenses were 13,367 kEUR for the second quarter of 2015 compared to 9,152 kEUR for the second quarter of 2014, an increase of 46.1%.This 4,215 kEUR increase was partially related to the inclusion of OrthoView, and partially reflects the substantial increase in number of new employees in the sales and marketing organization of all three segments.
Other operating income increased by 1,173 kEUR to 2,462 kEUR in the second quarter of 2015 from 1,289 kEUR in the same period of the prior year. Other operating income consists of withholding tax exemptions for qualifying researchers, partial funding of R&D projects and foreign exchange gains on purchase and sales transactions.
Other operating expenses consist essentially of exchange losses on purchase and sales transactions.
Financial expenses increased significantly versus the same period in 2014 from 210 kEUR in the second quarter of 2014 to 1,286 kEUR in the second quarter of 2015 due to a foreign exchange loss on the portion of the company's initial public offering proceeds held in U.S. dollars.
Net loss for the second quarter of 2015 was (3,013) kEUR, compared to a net loss of (223) kEUR for the same period in the prior year. Total comprehensive loss for the second quarter of 2015, which reflects exchange differences on translation of foreign operations,was (2,850) kEUR compared to total comprehensive loss of (175) kEUR for the same period in the prior year.
At
Net shareholders' equity at
2015 Guidance
As detailed in prior quarterly press releases, in fiscal 2015 Materialise is investing heavily in a variety of R&D and S&M initiatives intended to strengthen the company's market leadership and take advantage of high-growth opportunities in the rapidly evolving 3D printing market.Management continues to expect consolidated revenue for fiscal 2015 to be between 99,000 kEUR and 101,000 kEUR and consolidated Adjusted EBITDA to be between 4,000 kEUR and 5,000 kEUR.
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 non-recurring 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 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
Webcast and Conference Call
Materialise will hold a conference call and simultaneous webcast to discuss its financial results for the second quarter of 2015 today,
To access the conference call, please dial 844-469-2530 (U.S.) or 765-507-2679 (international), passcode #78920609. 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 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 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 2015 revenues and Adjusted EBITDA, investments in R&D and S&M initiatives, 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
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.
| Materialise NV | |||||
| Consolidated income statements (Unaudited) | |||||
| For the six months | |||||
| For the three months ended June 30, | ended June 30, | ||||
| 2015 | 2015 | 2014 | 2015 | 2014 | |
| (In thousands, except EPS) | U.S. $ | euros | euros | euros | euros |
| Revenue | 27,717 | 24,772 | 19,238 | 48,120 | 37,931 |
| Cost of Sales | (11,687) | (10,445) | (7,535) | (20,326) | (15,174) |
| Gross Profit | 16,030 | 14,327 | 11,703 | 27,794 | 22,757 |
| Research and development expenses | (4,891) | (4,371) | (3,563) | (8,878) | (6,742) |
| Sales and marketing expenses | (10,764) | (9,620) | (6,156) | (18,835) | (11,836) |
| General and administrative expenses | (4,193) | (3,747) | (2,996) | (7,322) | (5,712) |
| Other operating income | 2,755 | 2,462 | 1,289 | 4,370 | 2,359 |
| Other operating expenses | (1,105) | (988) | (226) | (1,116) | (338) |
| Operating (Loss) Profit | (2,168) | (1,937) | 51 | (3,987) | 488 |
| Financial expenses | (1,439) | (1,286) | (210) | (1,735) | (409) |
| Financial income | 389 | 348 | 34 | 2,269 | 67 |
| Share in loss of a joint venture | (70) | (63) | -- | (123) | -- |
| Profit (Loss) before taxes | (3,288) | (2,938) | (125) | (3,576) | 146 |
| Income Taxes (benefit) | (84) | (75) | (98) | (325) | (287) |
| Net profit (loss) | (3,372) | (3,013) | (223) | (3,901) | (141) |
| Net profit (loss) attributable to: | |||||
| The owners of the parent | (3,372) | (3,013) | (170) | (3,848) | (55) |
| Non-controlling interest | -- | -- | (53) | (53) | (86) |
| EPS attributable to the owners of the parent | |||||
| Basic | (0.07) | (0.06) | (0.01) | (0.08) | 0.00 |
| Diluted | (0.07) | (0.06) | (0.01) | (0.08) | 0.00 |
| Weighted average basic shares outstanding | 47,227 | 47,227 | 41,072 | 47,199 | 39,116 |
| Weighted average fully diluted shares outstanding | 47,227 | 47,227 | 41,072 | 47,199 | 39,116 |
| Consolidated statements of comprehensive income (Unaudited) | ||||||||||
| For the six months | ||||||||||
| For the three months ended June 30, | ended June 30, | |||||||||
| (In thousands) | 2015 | 2015 | 2014 | 2015 | 2014 | |||||
| U.S. $ | euros | euros | euros | euros | ||||||
| Net profit (loss) for the year | (3,372) | (3,013) | (223) | (3,901) | (141) | |||||
| Other comprehensive income | ||||||||||
| Exchange differences on translation of foreign operations | 182 | 163 | 48 | 1,476 | 8 | |||||
| Other comprehensive income (loss), net of taxes | 182 | 163 | 48 | 1,476 | 8 | |||||
| Total comprehensive income (loss) for the year, net of taxes | (3,190) | (2,850) | (175) | (2,425) | (133) | |||||
| Total comprehensive income (loss) attributable to: | ||||||||||
| The owners of the parent | (3,190) | (2,850) | (122) | (2,372) | (47) | |||||
| Non-controlling interest | -- | -- | (53) | (53) | (86) | |||||
| Materialise NV | ||
| Consolidated statements of financial position (Unaudited) | ||
| (in thousands of euros) | ||
| As of | As of | |
| June 30, | December 31, | |
| 2015 | 2014 | |
| Assets | ||
| Current assets | ||
| Inventory | 4,595 | 3,660 |
| Trade receivables | 19,917 | 18,370 |
| Other current assets | 3,745 | 3,540 |
| Held to maturity investments | -- | 10,000 |
| Cash and cash equivalent | 52,699 | 51,019 |
| Total current assets | 80,956 | 86,589 |
| Non-current assets | ||
| Goodwill | 9,896 | 7,714 |
| Intangible assets | 8,369 | 7,727 |
| Property, plant & equipment | 34,966 | 30,212 |
| Investments in joint ventures | 796 | 419 |
| Deferred tax assets | 205 | 232 |
| Other financial assets | 361 | 328 |
| Total non-current assets | 54,593 | 46,632 |
| Total assets | 135,549 | 133,221 |
| Equity and liabilities | ||
| Current liabilities | ||
| Loans & borrowings | 3,383 | 5,499 |
| Trade Payables | 10,247 | 7,205 |
| Tax Payables | 178 | 128 |
| Deferred income | 14,500 | 11,652 |
| Other current liabilities | 8,873 | 8,657 |
| Total current liabilities | 37,181 | 33,141 |
| Non-current liabilities | ||
| Loans & borrowings | 13,358 | 11,848 |
| Deferred tax liabilities | 1,342 | 1,329 |
| Deferred income | 297 | 767 |
| Other non-current liabilities | 1,011 | 969 |
| Total non-current liabilities | 16,008 | 14,913 |
| Net equity | ||
| Share capital | 2,724 | 2,788 |
| Share premium | 77,704 | 76,650 |
| Consolidated reserves | 359 | 5,764 |
| Other comprehensive income (loss) | 1,573 | 97 |
| Equity attributable to the owners of the parent | 82,360 | 85,299 |
| Non-controlling interest | -- | (132) |
| Total equity | 82,360 | 85,167 |
| Total equity and liabilities | 135,549 | 133,221 |
| Materialise NV | ||
| Consolidated cash flow statements (Unaudited) | ||
| (in thousands of euros) | For the six months ended | |
| 2015 | 2014 | |
| Operating activities | ||
| Net profit (loss) for the year | (3,901) | (141) |
| Non-cash and operating adjustments | ||
| Depreciation of property, plant & equipment | 2,373 | 1,642 |
| Amortization of intangible assets | 678 | 333 |
| Share-based payment expense | 472 | 174 |
| Loss (gain) on disposal of property, plant & equipment | (54) | 15 |
| Government grants | -- | (11) |
| Movement in provisions and allowance for bad debt | 101 | 70 |
| Financial income | (211) | (67) |
| Financial expense | 498 | 409 |
| Impact of foreign currencies | (1,153) | (62) |
| Share of loss in a joint venture | 123 | -- |
| Deferred tax expense (income) | (81) | 130 |
| Income taxes | 406 | 157 |
| Other | (4) | -- |
| Working capital adjustments | ||
| Increase in trade receivables and other receivables | (1,943) | (854) |
| Decrease (increase) in inventories | (879) | 571 |
| Increase in trade payables and other payables | 5,274 | 2,892 |
| Income taxes paid | (338) | (30) |
| Net cash flow from operating activities | 1,361 | 5,228 |
| Investing activities | ||
| Purchase of property, plant & equipment | (3,558) | (2,480) |
| Purchase of intangible assets | (674) | (443) |
| Proceeds from the sale of property, plant & equipment, net | 139 | 105 |
| Proceeds from the sale of intangibles | (1) | |
| Acquisition of subsidiaries | (1,602) | (1,161) |
| Investments in joint-ventures | (500) | (500) |
| Investments in held to maturity investments | -- | (10,000) |
| Proceeds from held to maturity investments | 10,000 | |
| Interest received | 7 | 2 |
| Net cash flow used in investing activities | 3,812 | (14,478) |
| Financing activities | ||
| Proceeds from loans & borrowings and convertible debt | 319 | 1,625 |
| Repayment of loans & borrowings | (3,410) | (1,509) |
| Repayment of finance leases | (731) | (464) |
| Purchase of non-controlling interest | (1,377) | -- |
| Contribution unpaid capital non-controlling interest | -- | 28 |
| Capital increase in parent company | 580 | 70,484 |
| Direct attributable expense capital increase | -- | (5,861) |
| Interest paid | (252) | (245) |
| Other financial income / (expense) | 14 | 218 |
| Net cash flow from financing activities | (4,857) | 64,276 |
| Net increase of cash and cash equivalents | 316 | 55,026 |
| Cash and cash equivalents at beginning of year | 51,019 | 12,598 |
| Exchange rate differences on cash & cash equivalents | 1,364 | (193) |
| Cash & cash equivalents at end of year | 52,699 | 67,431 |
| Materialise NV | ||||||
| Segment P&L (Unaudited) | ||||||
| (In thousands of euros, except percentages) | 3D Printing | Industrial | Total | Adjustments & | ||
| Software | Medical | Production | Segments | Eliminations | Consolidated | |
| For the three month period ended June 30, 2015 | ||||||
| Revenues | 6,078 | 8,315 | 10,379 | 24,772 | -- | 24,772 |
| Segment EBITDA | 2,015 | (342) | (147) | 1,526 | (1,957) | (431) |
| Segment EBITDA % | 33.2% | (4.1%) | (1.4%) | 6.2% | (1.7%) | |
| For the three month period ended June 30, 2014 | ||||||
| Revenues | 4,198 | 7,163 | 7,986 | 19,347 | (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% | |
| (In thousands of euros, except percentages) | 3D Printing | Industrial | Total | Adjustments & | ||
| Software | Medical | Production | Segments | Eliminations | Consolidated | |
| For the six month period ended June 30, 2015 | ||||||
| Revenues | 12,194 | 16,163 | 19,763 | 48,120 | -- | 48,120 |
| Segment EBITDA | 4,230 | (1,088) | (187) | 2,955 | (3,894) | (939) |
| Segment EBITDA % | 34.7% | (6.7%) | (0.9%) | 6.1% | (2.0%) | |
| For the six month period ended June 30, 2014 | ||||||
| Revenues | 8,233 | 14,131 | 15,469 | 37,834 | 98 | 37,931 |
| Segment EBITDA | 3,404 | 1,740 | 429 | 5,572 | (3,109) | 2,463 |
| Segment EBITDA % | 41.3% | 12.3% | 2.8% | 14.7% | 6.5% | |
| 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 thousands of euros) | 2015 | 2014 | 2015 | 2014 |
| Net (loss)/profit | (3,013) | (223) | (3,901) | (141) |
| Income taxes | 75 | 98 | 325 | 287 |
| Financial expenses | 1,286 | 210 | 1,735 | 409 |
| Financial income | (348) | (34) | (2,269) | (67) |
| Share in loss of a joint venture | 63 | 0 | 123 | 0 |
| Depreciation & amortization | 1,506 | 1,014 | 3,048 | 1,975 |
| EBITDA | (431) | 1,065 | (939) | 2,463 |
| Non-recurring IPO Expenses (1) | 0 | 182 | 0 | 182 |
| Non-cash stock-based compensation expenses (2) | 252 | 125 | 472 | 125 |
| Adjusted EBITDA | (179) | 1,372 | (467) | 2,770 |
| (1) Non-recurring IPO expenses represent fees and costs incurred in connection with the company's initial public offering. | ||||
| (2) Non-cash stock-based compensation expenses represent the cost of equity-settled and cash-settled share-based payments to employees. | ||||
CONTACT: Investor Contacts:
Harriet Fried /Jody Burfening
LHA
212-838-3777
hfried@lhai.com
