MTLS - Earnings call transcript Q1 2021

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Operator

Hello, ladies and gentlemen and welcome to the Q1, 2021 Materialise Financial Results Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer sessions and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to of conference LHA. like host, to now Fried Harriet would turn over the your I Please ahead. go

Harriet Fried

the Thank you and that slide for first and and conference issued of slides, release call. webcast joining strategic, Materialise’s Peter Johan financial us today us Materialise; accompanied Officer. Fried to Relations for reviews Albrecht, please of the be To access that morning are are performance the the Chief and Vancraen, of page. also XXXX. Today’s Executive quarter for being presentation Founder earnings Leys, go Chief Financial Officer on company’s With Executive Chairman; earlier Materialise’s Investor section call The that found quarterly can operational a website. this was by

you changes cause are as today any Form the started, most could and revise may industry that forward-looking certainties recent known any as future dynamics other materially related in company’s including expectations upon and be and should Before or report management’s can that expectations. detailed disclaims and not forward-looking statements, on I’d financial found as activities, management the description statements more results could the expectations impact things. uncertainties of Any remind to business other subject XX-F, to be represent future A competitive actual those update the SEC. the statements company’s among and factors or risks statements to and or representing with and the differ filed like These company’s annual risks of any that events regarding estimates get forward-looking to company’s results estimates their including in relied subsequent change. reflect future duty day. growth Management expressed, plans, forward-looking make unknown we results of to and the from prospects, to

is introduction, like contained Peter reconciliation in on the certain call the that to and the Finally, also at turn today’s of the non-IFRS end I’d discuss call. release to measures Peter With management earnings table Leys. A over will presentation. slide

Peter Leys

you. for joining you, Thank us Harriet. today. And Hi, everyone thank

You for agenda on the can slide our three. find call

this agenda, As and context results financial who I After give Then the approach you that, market. our numbers about will earlier our summarize Johan, on highlights of give will our give pass we of walk detail, the back observations to first to first always item some to the the future When I Fried, will to questions. and remarks, for company’s will a completed the through bring. may month. that, our view near-term the that floor you After eye XXXX. prepared as strategy current we first quarter we’ve transaction more currently come I will I’ll happy we respond believe you the what you to of quarter will announced be in LinkXD about more finally, bird’s

highlights to summarizes let’s results. So, of the our four, turn slide which financial

see year continuing were a the last by COVID-XX of of first this are impacted we of like three the just XXXX, business. our signs While, recovery the quarter our to quarters pandemic, steady results of

by posted you know to million revenue as level slightly was, the first close €XX.X €XX.X First, which quarter in XXXX, the that million came crisis. of revenue of of our quarter we only this impacted the

X.X%, showed X.X% both again growth Software and respectively. of segments and Importantly, Medical our

crisis year compared before that the the same was our adjusted kicked period last realized margin Second, we EBITDA in in. margin the to XX.X% X.X%

upcoming an of the position coming manufacturing a Therefore, strengthened manufacturing detail. LinkXD up additive in solid acquisition R&D the secured of more through of execution in engines represented our and we Importantly, crisis, systems. provider future as we sight revenue, navigated our spending and we the for did of the total our XX.X% not will markets the the software Fried transaction lose of quarter, by a explain in LinkXD, leading for years additive gearing growth.

it the we be summarized could overall subsequent worthwhile remind we he Materialise. Before the and Therefore, of slides, and of you six. to strategy so, our on vision five does thought two positioning

So let’s turn five. to slide

if enables the of the used call regardless backbone and and Materialise First, the of more that solutions shelf, to We fairly horizontal that can AM for. specific sustainable. XD is used Technology cost markets or printing be technology are to more typically more the strategy. We our bring users efficient not neutral, off productive, the application be that this

have our a relatively in. customers small value but a chain of the part addressable a typically our market, broad active are As horizontal products result, only represent that

know, you two Software our products Suite. of Magics platforms software the two horizontal Mimics flagship many are Innovation As our and platform key the

that Our Magics well XD as control both, printer that XD as and Software of platform individual the facility. an entire includes functionality increases productivity automate printing solutions

with integrates mini-out] facilities printers, of end virtually and customers industrial that in projects. XD [mini-in, of it neutral; so all in [Ph] and manufacturers of is customers plastics We both well mass who parts, customization support as customers prototypes, batches metal. platform technology larger called Magics so engage the as with in called Our print print

market Software. Our by brought platform Magics Software is Materialise the to

believe general grow Materialise As accordingly. increases, will in adoption to that Software the of AM continue we

in growth opinion, Our collaboration further. in with the that detail. accelerate Fried will, of will minute explain Software more a Materialise our LinkXD in

a flagship, design, the human engineer and anatomy anatomy. its human researchers, device and users Suite, the to dental Innovation be subsequently and wide hospitals three medical on dimensions individual companies Second Mimics in the allowing cranium of cardiovascular very can customized from plan medical to visualizes only to variety medical Mimics devices, to helps to a Mimics applications surgeries to few. maxillofacial ranging name applications, may orthopedic be by XD printed. used which

our brought hospital Medical, line, market. of tools Mimics strong success including Our The top on Materialise results Materialise of in the Suite, the successful of to software the Innovation by it’s of market its Suite and Mimics planning is the the Innovation performance both Medical. bottom partially introduction

Now which more as empowers software also I’d six. of our technology. dedicated to complex we slide AM specific to use solutions, of way and call meaningful the like customized applications that XD printing the Materialise include verticals, specific mix go addition over in such, Technology, These moving of the of XD enabling are a the to support a and use tailored engineering typically solutions, services. internally to printing complex AM

these in chain. is a addressable larger involved focused, result, but are value the we of As solutions of a part the market more

couple instruments are the these CMF of the Medical the and over customized in our vertical includes quarters, guide verticals, initiatives to terms on verticals, contributed in surgical accepted and footwear particular, implants of the profitability. markets. today Our include most Each our our our brought Medical of Medical. Software the widely and and platform. both Magics These draws and in Manufacturing terms to revenue initiatives. performance makes Both of Materialise market experience of knee which in More recently, market Materialise in eyewear vertical and customized last Materialise solutions these in incubating new use started of the by good Materialise wearable Materialise gained the CMF we orthopedic

believe these variable that modest, growth. initiatives are the fairly revenues of currently long-term of While we future drivers they for each are well-chosen still

that will overall who With RSscan, at outlined. of our to in this we months, match give you the LinkXD The Magics Fried, our more major with you our excitement vertical footwear note strengthens respect the recently give In and horizontal Software over they will acquisition LinkXD the strategy fits have I’d portfolio initiatives vertical look Engimplan background, color The initiative. introduction floor perfectly our platform. I acquisition last with Fried the like Now back on that announced CMF to that announced transaction market have and if of just you to opportunity. the reach. expands the XX RSPrint

Fried Vancraen

Thank you, and afternoon, everyone. good Peter. morning Good

the applications is of XD printing software additive Peter our as to transaction cooperation the such. printing of incubate manufacturing as production. the few Materialise factory for we and I in just applications and successful XD analogy QX, and seven, we we to of the potential our LinkXD explained, just XXXX ambition fall, will to ago. significantly. slide scale use medical one of empowers, Eyewear its the and last with markets. materialize part [inaudible] also transform only to Empowering And that announced like verticals markets we meaningful the XD companies and the to that growth the weeks strategic to through a orthopedic discussed would strategy. in with, acquisition of printing believe accelerate segment grow of large continues our meaningful those XD the in of launch Materialise that Turning Manufacturing mainly announced turn the increasingly about initiatives When as Food floor results LinkXD the talk printing

cutting By additive combining operational supply environment. their with they As increasingly and complex companies complex solutions will customers they these manufacturing greater floor. both edge offers help Materialise excellence. integrated basis, an in across organizations technology, are position confronted processes that scale their distributed even better MAS printing expertise infrastructures, and be their over client operations, manufacturing software manufacturing and we help production Both with LinkXD, control XD chains scale development gain diverse, to existing and capability with

offering to entire which access subscription to accelerating based the enhancing will and offers efficiently. LinkXD our its tools to addition, manage operating with strategy, accelerate workflow evolve we Materialise cloud-based platform to customers’ control and a work and map software printing road model, cloud to a platform to In offering. our offerings, unified automation ambitious an MES access its complete Materialise believe our process Software of more software companies outlined offering XD

XD and platform both cost that intuitive allow in announced and in integrated Tuner, And regulated the Software, complete of their aerospace, applications parameters As on that benefit suite a current APIs LinkXD Software platform. other required The LinkXD, and tools including combined software process and speed e-commerce access software on mass latest suite. is competitive highly for a companies the has solution already proof up one and efficient and you platform manufacturing their of that LinkXD developed helped and to can software companies an recently expertise up accelerate customers or the the future enhance and to innovations software medical seamless and and of the provide solutions significantly further may it developed to automotive, that Process printing full Materialise based industries parts. Materialise for online cloud-based customers the remember, will printing operations mission-critical way scale of has a and platform. will combines optimization we cloud-based always needs. Materialise down build from both Magics rollout the It’s several the that XD CRM

a acquire shared in an operate print with currently we are that we which the Throughout independent decided for the from to to this, company our of excited perspective, the we of quarter. are course in our that LinkXD to people as back the industry, LinkXD this [Inaudible] Materialise. option structural kicks until year’s We the continue with And collaboration floor pass the up immediately, to discussions, fourth I we a but team will intending learned company, Johan. do exercise to

Johan Albrecht

from of below the grew brief same pre-pandemic of promising this Medical that of year’s by reflecting by growth growth of license note Please fees the you, revenues remained level the stated, of The million both with Thank X.X% higher X%, but QX. last offset sales a €XX.X quarter quarter. in year, period eight. quarter and software was Despite comparisons revenue I’ll our review our a the order and for increased since Fried. Software consolidated X% year. segments Medical our in €X.X and strong Manufacturing QX, XXXX strongly XXXX. a first period, this Software sequential still first Revenue our call positive segment of last performance results all unless by and are and begin first the for against otherwise the still for steady Deferred below this million, manufacturing. maintenance the on in slide intake level

revenue, total revenue Software from XX% first increased Manufacturing Cross our for our revenue. segment to quarter, software and Materialise this for for total XX%. XX% realized Medical products For XX% which of accounted of Materialise

which for is we €X.X and or compared initiatives numbers amounted Moving of in will implemented the slide in XXXX. our EBITDA results new we last variable Slide Consolidated increase adjusted QX digital program, of internal XX, summarizes at last of €X,XXX,XXX, medical portal first EBITDA the our productivity nine, our results of and see adjusted increase to quarter invest last expenses and effect the the This, transformation to include the systems. Software course improvement you will segment. XX% consolidated while high year. same level This remained Materialise R&D to costs, year, e-commerce million reduced continue the our to year. a and as new an of the saving ERP CRM

Revenue up also driven the increased revenue grew growth picked QX revenue high was and decreased Recurrent seasonally X.X% license €X.X at net effectively with last Here, €X.X from period increased to to and the with again. perpetual same deferred additional of year. an X.X% by EBITDA income. the fees million. XX%, royalty revenue Nonrecurring same increased revenue million. €X.X new million compared XX% level

while XX%. to EBITDA containment in measures in R&D efforts XX% cost was and a compared XX.X%. decrease fact, revenue XX.X% increased grew resulted In X%, of SG&A The margin

from QX Medical segment increased to €XX.X XXXX. from to X.X%, with slide will now up Solutions Device XX, compared revenue see growth Revenue Materialise Moving that Medical our X.X% was million, total in you and the €X.X last both segment €X.X to accounted EBITDA million for total of in direct from software partners period. revenue. sales. increased XX% million medical Adjusted sales year's XX% Revenue from

our a of XX% XX% from continued As result executing quarter all this in we first year, combined the expenses, all programs. last line improvements top of and operating lower while with increased the productivity margin EBITDA continued growth to pre-pandemic of R&D

turn XX to of Materialise an Manufacturing let's our segment. QX the for performance Now overview on slide

expenses sector in fixture manufacturing labor and ishitech of and could order X% in from the continued the Materialise intake reported signs this intake did of this footwear quarter and our affected line, variable €XXX,XXX. lines This a pre-pandemic profit the gross quarter. or the Manufacturing of our not revenue decrease was reported lower effects strongly in a particular. activities a of [ph] general QX a of positive positive of and cost sequential ACTech, since These because of elements of higher and negatively reduction in unused from representing decrease significantly growth Savings business the year. million industrial Manufacturing XXXX mitigating in €X.X included operating though resulted cost automotive We below level efforts, capacity. expenditures first still Despite fixed measures business prevent X% last QX see quarter. order revenue

year. compared Manufacturing was margin productivity the offsetting was than to of a last XX.X% the the capacity below, the to As solid result in the to XX EBITDA negative adjusted combined on the margin or result, Slide margin. of with statement revenue unused X.X% due €X.X for The €XXX,XXX Gross from grew profit increased first positive entirely was XX.X%. our the quarter. provides income a year. cost last highlights negative improvement Revenue and segment of €XXX,XXX segment, our Medical rate million effects period of lower our same

discussed to operating ongoing transformation call. increased the million the or earnings Our that entirely an of expenses due rollout X.X%, internal €X increase digital we our project QX in

the G&A X.X%. decreased million quarter, spending strategy. amounted at last in increased high line stated expenses same marketing R&D, development and €X.X sales and to expenditures as research our year's with X.X%, by Our and level

credit Because income the a million last €XXX,XXX the and compared these was €XXX,XXX under of under objectives nature the business €X.X to not for year, amount last currently period. operating on the visibility credit million these of impairment million earlier €X.X for Ditto. the we but insufficient is a million. a to the initiatives. available that as financial positive elements, included situation, facility to have result were met, Ditto was this of of a to were portion of was and €X.X extend Ditto result and Ditto that as of net outcome remaining the loan continue negative quarter's compared condition we all in operating draw to to group's defined to year's This was an €X.X decided Net cost addressing facility result

million Materialise. between an deferred of from continuing our Ditto built, accounting the in the this amounted platform of the not ditto impairment does technology compared to temporary the income of from compared our €XXX.X quarter collaboration million the at December that and loss €XXX,XXX, sheet belief In mainly to quarter loss due loss XXXX XXXX, balance to the sheet cash potential and €X.X impact first €X,XXX,XXX net expense a [Audio balance period. taxes, flows. Gap] remains strong. Cash million to positions. fourth Net Importantly positive has for XX. an perspective tax and was to amounted Income in for €XXX.X of

on million over Equity at hand. While on €X.X debt our for December million, March million the combined sales and quarter the to borrowings XXXX as contracts €XX.X million million period. position the €XX.X the to from €X.X million as to €X.X only loss term to of Total first to €X.X €X.X software million revenue hand decreased XX. million differences of of operating annual of to XX. as XXXX deferred million million amounting €XXX.X as for XX, first decreased maintenance was amounted approximately million positive conversion €XX.X related quarter compared to of million activities a result €XXX for the flow XXXX. €X.X mainly €XX.X million net Of million, short Cash one by compared other €XX.X €XX.X the and December versus

million. of effects and into agreement was price of option consisted XXXX, agreement Materialise as This The with we decreased paid $X increasing the adverse were end LinkXD quarter activities. while in equity entered Capital Inc., quarter operating million. capital a call of of €X.X call the acquire not result for exercised XXXX. and working After quarter. entered The our loan Gap] credited. call year's exercised which purchase November option against On we of to Peter price price first €X.X call financed. the $X call during into month then option [Audio will that of cash million of of working of February only expenditures million interest a amounted million quarter during option $XX.X last LinkXD the maximum equals In X, €X.X the the be positive our amount had of €X.X capital capital XXX% to quarter, working €X can be a EBITDA to EBITDA million, $XXX,XXX million purchase a million, flow

Peter Leys

Please Johan. Thank you, XX. slide turn to

give Before like remainder what try floor the bring. and questions, may of about insights to would the to opening we some XXXX

business, in COVID-XX I so and As our does our fairly ongoing the impact and to various across diverse crisis regions. segments it mentioned earlier, continues way a

expect our is Manufacturing conditional meaningful second performance for provide what guidance result, currently of rest start a want to too to at segment some of XXXX XXXX outlook quarter. recover the our both we stage. share As well in quantitative do the to expectations consolidated to the for of significantly quarter segments current our We and Medical our for bring. more our Software Today, that will and continue that may perform will this

R&D of the our but call now term This many ready weigh during questions. for are believe our in longer of EBITDA As company. we with a our the XX% will quarter growth on the currently potential we of programs line continue our up compared to accelerate in continue we XXXX, continue to quarter. open have to to remainder the to investing will which will our previous Operator, XXXX result, to benefits grow we which consolidated sequential estimate strategy, infrastructure, represent second to will remarks. In concludes internal prepared and that and the revenues may sequentially even our and offer

Operator

you. Instructions] Jason go from Please Your KeyBanc. Celino [Operator first ahead. response of Thank is

Jason Celino

in growth see medical but two Were question. manufacturing detail segments any on as and my that this that same of the software the dynamics segments? some quarter, can segment level sequential Encouraging provide other to grow you the see prevented to segment? there sequentially the Take

Fried Vancraen

medical is Well, I well. also that have our say to doing very segment

have really also with a which nature which projects QX. but results, medical performance cyclical then very strong our lot have We a of and have and cyclical also of very strong RCMS there mainly typically a positive of have software in this a a QX was to tend quarter nature, sales devices

the year. happy very which So with result, than last overall, were was quarter first we higher

said, we XXXX. had basis with year a a on two to COVID As growth compared and XX%

also So very we place. growth a are second of cyclical medical normally where surgeries are really is of quarter further because such the about the taking a positive lot CMF quarter our segment,

Jason Celino

like know And for when excellent! know Okay, decision regarding goes maybe the LinkXD, that the make you to question, you're into you in case as either or your second your my expanding with what buy portfolio, process software functionality?

Peter Leys

LinkXD, matter with extent large In to timing. the of circumstance it a given is a

we mean to road the remarks, in entire clouds. a I ambitious portfolio our our very As to bring we map explained prepared have

would on the be in at in conclusion should Probably portfolio We to that quickly or we if bring the have most strategic you not also but let's the we is if do LinkXD grab is came next three and the products, what opportunities that have to developing, say yes, very ready but be the years, to currently years and were crucial. to one the present that that a will should would at the our solutions in a developed progress the has our strong combination three looked to do embedded four to if to market. likely years to solutions themselves that markets, earlier able next two what the combined own, growth of to companies product one we the two than really be pandemic learned want do during this you and we we

combination we should to from made a to a the So the say grab sense that significant the expect timing XX next, perspective come to market a opportunities let's will us conclusion few in to that months. quite allow we XX came and

Jason Celino

Excellent! Thank you.

Peter Leys

You welcome are Jason.

Operator

Your next Street of is Troy [Operator from Jensen Lake Instructions] response Capital.

Troy Jensen

needs I'm due selective I'd coming but were sequentially, knees down-ish, that to flat on second obviously bigger healthcare summarize recovery and you and grew the has to been back. I you know thought I driver growing. just Peter, application know there a just CMF said here. questions my to that curious healthcare; are surgeries taking you expect for thanks gentlemen, Hey mean was a expecting

Peter Leys

portfolios, I been drivers I indeed CMF secondly, the those segment has applications hospital about really that find talking Troy! the and particular, the then that the attraction in of the the Suite for we medical solutions of devices been our really strong key think software care and market. in Mimics Hey more have Innovation point and Troy, earlier

I are growth. our think those drivers of really key the

Troy Jensen

plan I sector question Then down got Was I but kind for below guys look lockdowns know and for now, guess do structurally manufacturing, this quarter. the I you the know the you in each a here, a especially anything alright. this grow just Okay, but harder all assuming if due you mean, feel to you business. is business. taking it’s to there's starting footwear amount, of organically, you off probably grow I I'm like European guess service fair in

Fried Vancraen

we Troy, rise our the have has whole corona weakest overall continue sector the order – will we as – you and corona grow. variable non-organic are referring that to have the will in the positive were automotive and the support we market second that indication half that's that Europe situation, a initiatives, the automotive intake, that That's, been of increase before do to the certainly even in market. the whole in it, also the in top sector, yes, the see growth On some and already which indeed revitalization so European related also to our automotive the a is, you as a pandemic has further of you to entering the called there very as will year. with we from crisis of performance that part, the Yes hope was will in we the remember especially but we

Manufacturing that should the our segment bring the year contract. of end So by that really

Troy Jensen

then got you about about good, you about Can give other and CAD hear. the competition we're us Okay, time worried good you. if vendors we're How coming start-ups, about update entering worried just through space. guys worried equipment a we’re I back [inaudible] in, to software go

curious more if and or Just any on software. know to less you're competition concerned

Fried Vancraen

of and years been of was materialized the we a capabilities the our segment. and cloud performance and of low-end all is software making and the that quite to strongest indicated completion cloud Well, parallel like from highly based that. existence preparing the APIs [inaudible] algorithms software already internet the because we industry, have difference processing, some legacy now know XX is things we that experience It typical have way, a through like before that use new you make by just see one use of based while graphical possibilities transferring like of of card

So partnered which they of opinion on that and the from converted long-term future, our to The been really accelerated. experience has a cloud transition based Streamics in are is a road in to based, transition the was we the our to in bit solution past later XD. within customers able offer and on catch up be map, there and order cloud, full to our

Troy Jensen

size on you share but acquisition any all it spend if wrong, you that said is us? And we with if OpEx now me be or you that Could heard I right, correct just the to gets Johan. more I'm get If me information to million, LinkXD. you $XX or my for can on revenues last question going could – you anything

Johan Albrecht

you can $XX I – Troy, Is rest of say heard you saying but apologize. million, didn't again? something sentence. about the the it hear I that I

Troy Jensen

Yes, purchase so the first price the half LinkXD. was of

You heard went through it in I prepared remarks. million. a your $XX thought I

totally clarify Just you how pay could for LinkXD? much you

Johan Albrecht

then we option the million, we $X of option, which the from the million and paid of deducted in acquisition for $XX.X can November finally million Yes, the price. so equity we for full think $X

Troy Jensen

of can revenues size, anything share you OpEx guys And or then perfect. about LinkXD? Okay,

Johan Albrecht

That this we cannot moment. at disclose

Troy Jensen

manufacturing kind Alright, up understood guys. we’ll know you on hopefully congrats starting here, soon. talk of X.X Well but and it's congrats additive QX looking better and

Fried Vancraen

Thank Troy. you,

Johan Albrecht

you. Thank Troy. you, Thank

Operator

is Sandler. response next Your from Piper Ramnani Arvind of

Arvind Ramnani

A Issues] demand, broader pipeline and improved environment you see on the [Technical at position you the this when to… know question can medical talk about you segment, pent-up

Fried Vancraen

the will indeed that strengthen. anticipate pipeline we Well,

hospitals that cases As the in to before, are cases rather trauma we we hospitals. still products than not are elective in taking and cases multiple as countries the related said elective our experience of have all

all that moment In several our in Brazil a we So impacts facilities this faced patients. those really given as revenue difficulties of amount like very similar hospital that in with for COVID the Europe country that country. at are well. This flooded instance, of

So also the structural is possible medical that the in believe take-up we market.

Arvind Ramnani

model Perfect! second quarters? color if provide Can over bit is, you should provide us know kind and EBITDA, can a – question you little we you couple possible on the of more you me the next also of quantify can how for EBITDA

Johan Albrecht

the QX, from we the results we Arvind, a in believing on earnings better we than call. yes the we had we that past but that than the moment seen our have had refer we on would we results I’ll what better point call, we have earnings that just basis, at disclosed in announced in anticipate have QX and expect already – we already sequential as to is previous could that that, continue that

have can outlook we his So the anticipated already and that's QX, in on confirm we what trends that is for saying also what again, Peter in is this QX.

outlook Of sequential not basis. is further how getting is our to mentioned, as evolve, slightly course what general on COVID-XX, and will be there but we've clear circumstances in related the will of that better a visibility

Arvind Ramnani

you. thank Great,

Operator

Peter like would no at over back showing further Leys. am time. I this to to I conference turn the questions

Peter Leys

as again joining us Thank always, all investor one-on-one this you, through or with operator, meetings in for conferences for We virtual today continuing and dialogue to look call. forward thank calls. or our you you

goodbye Thank if done again for already to free you out not have you now. So Bye. please and reach feel so.

Operator

your call. now wonderful and a gentlemen, you disconnect. today's may You and day! for conference have participation Ladies concludes this Thank

Materialise (MTLS) 2 May 212021 Q1 Earnings call transcript