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Materialise Reports Third Quarter 2014 Results
LEUVEN,
Highlights – Third Quarter 2014
- Revenue increased 16.9% year over year to 19,833 kEUR
- 3D Printing software sales increased 29%
- Total software sales were 31% of total revenue
- R&D increased by 1,145 KEUR to 18.5% of total revenue
- Adjusted EBITDA, excluding non-cash stock based compensation expenses, was 2,055 kEUR for a 10.4% margin
"Our second quarter as a public company was another very active and successful period for Materialise," said Executive Chairman
Third Quarter 2014 Results
Total revenues for the third quarter of 2014 increased by 16.9% to 19,833 kEUR compared to 16,973 kEUR for the third quarter of 2013, driven by strong gains in the software and industrial production segments. Adjusted EBITDA, excluding stock-based compensation expenses, decreased from 2,460 kEUR to 2,055 kEUR reflecting ongoing investments in both research and development and sales and marketing. The adjusted EBITDA margin in the third quarter was 10.4% compared to 14.5% 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 3D printing operations, increased by 29.0% to 4,438 kEUR for the third quarter of 2014 from 3,441 kEUR for the same quarter last year. Growth was fueled by a significant increase in new license sales across all regions, showing an accelerated growth in revenue generated with OEMs. EBITDA increased from 1,345 kEUR to 1,518 kEUR while the EBITDA margin declined to 34.2% from 39.1% last year due to significant investments in S&M and R&D expenses, which collectively increased 46% year-over-year, in line with our announced strategy.
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, increased by 3.8% to 7,090 kEUR for the third quarter of 2014 compared to 6,833 kEUR for the same quarter last year. Near-term growth was constrained by the conversion from perpetual to annual licenses and the maturation of the knee guide business. Sales of medical software decreased 2% to 1,748 kEUR from 1,791 kEUR due to the license conversion, as evidenced by the fact that the share of annual licenses increased to 29% of new license sales from 7% last year. Revenues from the direct sale of guides and implants increased by 53% from the previous year. EBITDA decreased from 1,213 kEUR to 677 kEUR and the EBITDA margin fell to 9.5% from 17.8% due to significant investments in R&D projects (up 50% versus Q3 of last year) including the investments in metal printing and X-ray guide technology, among others, which are directly impacting profitability.
Revenues from the Industrial Production segment, which primarily offers 3D printing services to industrial and commercial customers, increased 22.1% to 8,190 kEUR for the third quarter of 2014 from 6,708 kEUR for last year's third quarter. Growth in the quarter was largely driven by higher sales of the company's early-stage growth businesses (i.materialise and RapidFit), which collectively increased their revenue by 84%. Sales of end parts rose 37% in the 2014 third quarter from the prior-year period. EBITDA rose to 753 kEUR from 600 kEUR and the EBITDA margin improved to 9.2% from 8.9% for last year's quarter. Excluding the growth businesses, the Q3 2014 EBITDA margin was 18.8% versus 16.3% the prior year.
Gross profit was 12,154 kEUR for the third quarter of 2014 compared to 10,691 kEUR for the 2013 quarter. The gross profit margin decreased to 61.3% for the third quarter of 2014 from 63.0% for the prior-year period. This decrease was largely due to the relatively high increase in revenue provided by RapidFit and i.materialise and some of our complex surgery product lines (Mobelife and OBL), which do not yet provide corresponding contributions to our margins.
Selling and marketing expenses were 6,382 kEUR for the third quarter of 2014 compared to 5,417 kEUR for the third quarter of 2013. This 965 kEUR increase resulted from additional investments, mainly in the 3D printing software and industrial production segments.
Research and development expenses increased by 45% to 3,672 kEUR for the third quarter of 2014 from 2,527 kEUR for the prior-year period, reflecting continued heavy investment with a number of active projects in various stages of development, including metal printing and X-ray. All of the company's research and development spending is expensed and none is capitalized.
Other operating income increased by 271 kEUR to 1,464 kEUR from 1,193 kEUR for the prior-year period. For the three months ended
Net profit for the third quarter of 2014 was 2,559 kEUR, versus 1,380 kEUR for the prior-year period, an increase of 1,179 kEUR or 85%. Total comprehensive income for the third quarter of 2014, which reflects exchange differences on translation of foreign operations, was 2,830 kEUR, an increase of 1,471 kEUR versus the prior-year period.
At
Net shareholder's equity at
2014 Guidance
For fiscal 2014, management expects to report consolidated revenue between 79,000 kEUR and 81,000 kEUR. Management intends to continue investing aggressively invest in research and development and sales and marketing initiatives. Depending on the pace of investments, management expects consolidated Adjusted EBITDA for fiscal 2014 to be between 5,000 kEUR and 6,000 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 third quarter of 2014 today,
To access the conference call, please dial 844-469-2530 (U.S.) or 765-507-2679 (international) and passcode is #20109601. 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 Sept. 30 |
For the nine months ended September 30 |
||||
| 2014 | 2014 | 2013 | 2014 | 2013 | |
| (In thousands, except EPS) | U.S. $ | euros | euros | euros | euros |
| Revenue | 24,956 | 19,833 | 16,973 | 57,764 | 49,217 |
| Cost of Sales | (9,662) | (7,679) | (6,282) | (22,853) | (18,697) |
| Gross Profit | 15,294 | 12,154 | 10,691 | 34,911 | 30,520 |
| Research and development expenses | (4,620) | (3,672) | (2,527) | (10,414) | (7,675) |
| Sales and marketing expenses | (8,030) | (6,382) | (5,417) | (18,218) | (15,676) |
| General and administrative expenses | (3,470) | (2,758) | (2,350) | (8,470) | (7,045) |
| Other operating income | 1,842 | 1,464 | 1,193 | 3,823 | 3,013 |
| Other operating expenses | (79) | (63) | 88 | (401) | (179) |
| Operating Profit | 937 | 743 | 1,678 | 1,231 | 2,958 |
| Financial expenses | (518) | (412) | (221) | (821) | (608) |
| Financial income | 3,015 | 2,396 | 40 | 2,463 | 112 |
| Share in profit of joint venture | (35) | (28) | -- | (28) | -- |
| Profit before taxes | 3,399 | 2,699 | 1,497 | 2,845 | 2,462 |
| Income Taxes | (176) | (140) | (117) | (427) | (274) |
| Net profit (loss) | 3,223 | 2,559 | 1,380 | 2,418 | 2,188 |
| Net profit (loss) attributable to: | |||||
| The owners of the parent | 3,275 | 2,601 | 1,412 | 2,546 | 2,268 |
| Non-controlling interest | (53) | (42) | (32) | (128) | (80) |
| EPS attributable to the owners of the parent | |||||
| Basic | 0.07 | 0.06 | 0.04 | 0.06 | 0.06 |
| Diluted | 0.07 | 0.05 | 0.04 | 0.06 | 0.06 |
| Weighted average shares outstanding | |||||
| Basic | 47,072 | 47,072 | 37,781 | 41,088 | 37,758 |
| Diluted | 49,142 | 49,142 | 38,057 | 42,602 | 38,034 |
| Consolidated statements of comprehensive income | |||||
|
For the quarter ended Sept. 30 |
For the nine months ended September 30 |
||||
| (In thousands, except EPS) | 2014 | 2014 | 2013 | 2014 | 2013 |
| U.S. $ | euros | euros | euros | euros | |
| Net profit (loss) for the year | 3,223 | 2,559 | 1,380 | 2,418 | 2,188 |
| Other comprehensive income | |||||
| Exchange differences on translation of foreign operations* | 288 | 229 | (53) | 237 | (110) |
| Other comprehensive income (loss), net of taxes | 288 | 229 | (53) | 237 | (110) |
| Total comprehensive income (loss) for the year, net of taxes | 3,511 | 2,788 | 1,327 | 2,655 | 2,078 |
| Total comprehensive income (loss) attributable to: | |||||
| The owners of the parent | 3,564 | 2,830 | 1,359 | 2,783 | 2,158 |
| Non-controlling interest | (53) | (42) | (32) | (128) | (80) |
| *May be reclassified subsequently to profit & loss | |||||
| Materialise NV | ||
| Consolidated statements of financial position | ||
| (in thousands of euros) | ||
| 09/30/2014 | 12/31/2013 | |
| Assets | ||
| Current assets | ||
| Inventory | 3,471 | 3,328 |
| Trade receivables | 14,087 | 12,382 |
| Other current assets | 3,801 | 3,053 |
| Cash and cash equivalent | 75,044 | 12,598 |
| Total current assets | 96,403 | 31,361 |
| Non-current assets | ||
| Goodwill | 2,432 | 1,612 |
| Intangible assets | 1,728 | 1,439 |
| Property, plant & equipment | 26,107 | 20,167 |
| Investments in joint ventures | 472 | -- |
| Deferred tax assets | 216 | 406 |
| Other financial assets | 324 | 253 |
| Total non-current assets | 31,279 | 24,327 |
| Total assets | 127,682 | 55,688 |
| Equity and liabilities | ||
| Current liabilities | ||
| Loans & borrowings | 5,380 | 4,640 |
| Trade Payables | 7,253 | 6,794 |
| Tax Payables | 218 | 43 |
| Deferred income | 8,629 | 6,773 |
| Other current liabilities | 7,439 | 5,841 |
| Total current liabilities | 28,919 | 24,091 |
| Non-current liabilities | ||
| Loans & borrowings | 11,863 | 11,676 |
| Deferred tax liabilities | 227 | 212 |
| Deferred income | 990 | 1,634 |
| Other non-current liabilities | 399 | 340 |
| Total non-current liabilities | 13,479 | 13,862 |
| Net equity | ||
| Share capital | 2,715 | 2,235 |
| Share premium | 76,691 | 12,321 |
| Consolidated reserves | 5,748 | 3,198 |
| Other comprehensive income | 208 | (29) |
| Equity attributable to the owners of the parent | 85,362 | 17,725 |
| Non-controlling interest | (78) | 10 |
| Total equity | 85,284 | 17,735 |
| Total equity and liabilities | 127,682 | 55,688 |
| Materialise NV | |||
| Consolidated cash flow statements | |||
| (in thousands of euros) | For the nine months ended | ||
| 2014 | 2013 | ||
| Operating activities | |||
| Net profit (loss) for the nine months | 2,418 | 2,188 | |
| Non-cash and operating adjustments | |||
| Depreciation of property, plant & equipment | 2,534 | 2,035 | |
| Amortization of intangible assets | 497 | 302 | |
| Share-based payment expense | 464 | 17 | |
| Loss (gain) on disposal of property, plant & equipment | 15 | 61 | |
| Movement in provisions and allowance for bad debt | (16) | 52 | |
| Movement in provision for impairment receivables | 105 | 227 | |
| Financial income | (98) | (112) | |
| Financial expense | 342 | 538 | |
| Impact of foreign currencies | (1,886) | 70 | |
| Share of loss (profit) of an associate or JV (equity method) | 28 | -- | |
| Deferred tax expense (income) | 161 | 79 | |
| Income taxes | 266 | 195 | |
| Other | 33 | 29 | |
| Working capital adjustments | |||
| Increase in trade receivables and other receivables | (2,523) | (1,264) | |
| Decrease (increase) in inventories | (122) | (180) | |
| Increase in trade payables and other payables | 3,127 | 2,040 | |
| Interest received | 4 | 10 | |
| Income taxes paid | (91) | -- | |
| Net cash flow from operating activities | 5,258 | 6,287 | |
| Investing activities | |||
| Purchase of property, plant & equipment | (5,828) | (1,403) | |
| Purchase of intangible assets | (582) | (363) | |
| Proceeds from the sale of property, plant & equipment, net | 137 | -- | |
| Proceeds from the sale of intangibles | -- | 8 | |
| Acquisition of subsidiary | (1,161) | (365) | |
| Investments in joint-ventures | (500) | -- | |
| Net cash flow used in investing activities | (7,934) | (2,123) | |
| Financing activities | |||
| Proceeds from loans & borrowings and convertible debt | 1,911 | 1,566 | |
| Repayment of loans & borrowings | (2,273) | (2,985) | |
| Repayment of finance leases | (608) | (472) | |
| Proceeds from the exercise of warrants | -- | 56 | |
| Contribution unpaid capital non-controlling interest | 34 | 51 | |
| Capital increase in subsidiary by non-controlling interest | -- | 1,001 | |
| Capital increase in parent company | 70,484 | -- | |
| Direct attributable expense capital increase | (6,046) | -- | |
| Interest paid | (373) | (351) | |
| Other financial income (expense) | (221) | (227) | |
| Net cash flow from financing activities | 62,908 | (1,361) | |
| Net increase of cash and cash equivalents | 60,232 | 2,803 | |
| Cash and cash equivalents at beginning of year | 12,598 | 6,417 | |
| Exchange rate differences on cash & cash equivalents | 2,214 | 79 | |
| Cash & cash equivalents at end of period | 75,044 | 9,299 | |
| Materialise NV | ||||||
| SEGMENT P&L | ||||||
| (In thousands of euros) | 3D Printing | Industrial | Total | Adjustments & | ||
| Software | Medical | Production | segments | eliminations | Consolidated | |
| For the three month period ended 30 September, 2014 | ||||||
| Revenues | 4,438 | 7,090 | 8,190 | 19,718 | 115 | 19,833 |
| Segment EBITDA | 1,518 | 677 | 753 | 2,948 | (1,175) | 1,773 |
| Segment EBITDA % | 34.2% | 9.5% | 9.2% | 15.0% | 8.9% | |
| For the three month period ended 30 September, 2013 | ||||||
| Revenues | 3,441 | 6,833 | 6,708 | 16,982 | (9) | 16,973 |
| Segment EBITDA | 1,345 | 1213 | 600 | 3,158 | (698) | 2,460 |
| Segment EBITDA % | 39.1% | 17.8% | 8.9% | 18.6% | 14.5% | |
| (In thousands of euros) | 3D Printing | Industrial | Total | Adjustments & | ||
| Software | Medical | Production | segments | eliminations | Consolidated | |
| For the nine month period ended 30 September, 2014 | ||||||
| Revenues | 12,671 | 21,221 | 23,659 | 57,552 | 213 | 57,764 |
| Segment EBITDA | 4,921 | 2,416 | 1,182 | 8,520 | (4,284) | 4,236 |
| Segment EBITDA % | 38.8% | 11.4% | 5.0% | 14.8% | 7.3% | |
| For the nine month period ended 30 September, 2013 | ||||||
| Revenues | 9,835 | 20,522 | 18,850 | 49,207 | 10 | 49,217 |
| Segment EBITDA | 3,858 | 3,853 | 733 | 8,444 | (3,149) | 5,295 |
| Segment EBITDA % | 39.2% | 18.8% | 3.9% | 17.2% | 10.8% | |
| Materialise NV | ||||
| Adjusted EBITDA Reconciliation | ||||
|
For the quarter ended September 30 |
For the nine months ended September 30 |
|||
| (in thousands of euros) | 2014 | 2013 | 2014 | 2013 |
| Net profit/(loss) | 2,559 | 1,380 | 2,418 | 2,188 |
| Income taxes | 140 | 117 | 427 | 274 |
| Financial expense | 412 | 221 | 821 | 608 |
| Financial income | (2,395) | (40) | (2,462) | (112) |
| Depreciation & amortization | 1,057 | 782 | 3,032 | 2,337 |
| EBITDA | 1,773 | 2,460 | 4,236 | 5,295 |
| Non-recurring IPO Expenses | 0 | 0 | 182 | 0 |
| Non-cash stock-based compensation expenses | 282 | 0 | 407 | 0 |
| Adjusted EBITDA | 2,055 | 2,460 | 4,825 | 5,295 |
