Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to the Q4 2022 Materialise NV Financial Results Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Jody Burfening. Please go ahead.

Jody Burfening

thank call. joining and Materialise today Kevin, conference quarterly you, you us for for Thank on call Executive us Officer Albrecht, With the Financial of Chief Founder Chief Materialise; Executive and Peter Leys, Officer. Chairman; Johan are and Fried Vancraen,

www.materialise.com. by XXXX. webcast Materialise's that slides, To and performance access accompanied financial quarter fourth you slide for presentation the Today's call the being and a company's The and to operational are go reviews strategic, release the Relations full Web please if year site earlier so, the at page. issued be done already was haven't also found earnings that section that Investor can of today on

Before we including actual These results are risks the subject the remind regarding company's cause that get plans, unknown from expectations that expressed, to expectations could and known change. forward-looking management statements and dynamics prospects, to uncertainties things. you may and and to make other statements I'd started, materially industry forward-looking growth competitive differ like among

related to future Any not including the as as or any to relied today Management update and any of subsequent disclaims in results management's events statements represent or date. representing forward-looking estimates upon any those forward-looking and be estimates should activities reflect duty as future of statements, to their changes revise company's expectations.

description on report SEC. financial can annual be results filed uncertainties A and the the or business most other XX-F of recent and detailed the risks with impact found more future factors that company's could Form company's the in

of presentation. call. earnings and contained the will Finally, release slide A on non-IFRS end reconciliation the discuss management is today's certain measures at in the

over Peter. would now like call to Go Peter. ahead, I With to turn that, the

Peter Leys

everybody call. and on welcome to Thank you, Jody, the

the like they Slide for highlights perseverance full our thank and that fourth colleagues which have particular, Ukrainian flexibility not throughout to X, and would all year, the for results of a which new to of previous amazing was our our XXXX, employees our in shown the one. I turning and, Before year financial quarter summarizes mix

in more will of year on I and Johan revenue a to €XXX our grew Amidst XX% like would from our walk to XXXX, by numbers key you introduction, of XXXX. in turbulences this In macroeconomic our the performance detail. results million. geopolitical total QX €XXX focus million full through few

deferred more And our importantly, software From almost directly XX% the perspective, million. solid difficult our resulted that grew from this top the a is from especially revenues performance sales by or €XX line in indirectly Ukraine. in than mind circumstances war bearing to

of costs growth these for flow we million, of R&D cash weighed efforts. activities strong increased heavily and the a by margins. of almost scaling backed inflated our the operating Nevertheless, compensate not and strategy from our on labor and to course of materials energy decided with by balance positive our costs XXXX, solid a In sheet, supported stay €XX to by back

Obviously, our adjusted €XX from million XXXX. €XX.X impacted million this decreased in EBITDA which to

of expect this we the discuss more We of both will in the XXXX, to grow in detail our and will results towards robustly. was the as we this end back this we early choice, and that to that right EBITDA are first see when that when convinced XXXX adjusted revenues come our call. decision as guidance I positive

in we as as year. which forward key will our pass early you company walk XXXX, But who of all believe operational now will the form coming for profitable floor Fried, of to some and I this would Fried? achievements like to growth the through basis the going of

Fried Vancraen

heavily turn such Thank with Slide on Materialise trade, and in to Good efforts in future its the some you, afternoon as this war good to call. at investing challenges the Even consequences in XXXX. beginning morning growth our through serious listening kept segments double-digit to Peter. high expansion year. in or capacity posting Ukraine planned you consistently a the the had three R&D we sustainable world of kept we Despite of as pressure, and Please X. all inflationary

expect faster EBITDA substantially reducing while these sustained growth to result also double-digit in and climate efforts revenue We 'XX, growth even in our impact.

range major review this enabled of the LinkXD, flagship me software packages the went through Magics. Materialise in for code the platform detail. Materialise the AM, Let of more legacy full started and with acquisition MES in software of of integration cloud-based the XXXX. We base LinkXD a which makeover year including a leading the

Manufacturing also a Only X note and Materialise CO-AM manufacturing months we our with platform their QX, of which and acquisition automate the customers into year, that and In took the integrate step AM software IdentifyXD. significant lines of at enables the announced enables we demonstrated medical better. and Rapid, to

CO-AM for a system manufacturing organizations field will proven and environments. has software that has allow government secure by additive operations IdentifyXD tested is secure chains. most and the AM that distributed toolkit been to operation Its tools teams companies ensure production and supply

of at that, accelerate CO-AM to ten and the only for third-party manufacturing software applications. was integration This its but Materialise that not by develop itself, the enhance top On [ph] third-party possibility Formnext the additive platform demonstrated for also on applications XXXX. new developers of applications, also new CO-AM want to

and enterprise, 'XX. scale significantly our new open in status line resulting the software. support did bottom IdentifyXD continue with in of that activities, integration to and Despite additional workforce our CO-AM severely delivered the the we achievement talent restructuring and Ukraine, Materialise from expenses to global on The high a of impacted of the development sales inflation cloud-based teams we major teams existing Ukraine our platform incurred LinkXD development This war come extra however. in attract and to combination in operational our disrupted

healthy software of quarter. historically last decline in the the last year, Hence, EBITDA particularly

'XX CO-AM of and applications. as will of of are While due a confident this and efforts the gradual will the 'XX, 'XX is development the of result recurring CO-AM our work we scalable EBITDA, the sustainable on our continue licenses that platform to and extensive in in sales increase starting more

Manufacturing and activities Prototyping posted €XXX.X vertical in aerospace, wearables. a our with XX% certified such internal respectable systems continuously We alternative growth growing a Rapid selected million. existing combining business and profitable segments 'XX kept manufacturing that medtech, as in on Materialise reached drive reliable

Our in additive that an in opportunities. AM a have a base work is 'XX. Net This from Score with earned trust that in world to their we demonstrates for Promoter activities increasing high of application us industry. is XX also customers mark extremely a manufacturing future any It customer willing

year, the Last further required the scale applications. meaningful manufacturing to made most investments we

engine for more sources support second ACTech to We hydrogen come. such are more in sustainable traction of size facility, the we our the can and plant as systems energy new doubling the than grow in where capacities the years to

Phits new insoles a performing that insoles Materialise launched completely better has motion hit the already enables new We medical Suite in QX. for grade Materialise market. Footscan Plus The

recognized awards market Our the once SILMO efforts can to again Paris, models with introduce industry. two Oscars d'Or eyewear were be eyewear in which considered the in new Materialise of the

app fitting developed iOS [indiscernible] new at frames custom launched optical in and was stores. for Our

and of cost Finally, the for new the launch products. our more Manufacturing of completely core strength inflationary capacity of diligent in execution EBITDA prepared increased 'XX the platform its the activity. we a Despite XX% in investment plans on more in manufacturing sales Materialise new additive pressures, online in

further that 'XX. and Materialise EBITDA the made are growth Manufacturing in we’ve in from base in We confident for investments revenue solid 'XX a

increase medical also consistently at was At second And even deferred Medical maintained segment reflecting growth a revenue. level, sales to million be revenues, is of it XX%, XX%. the software poised €XXX rate thanks revenue the the Materialise annual XX% double-digit to on Materialise substantial exceed to especially the its growth in sales. the growth

The line mid the validation also addition, Materialise investment will new line become products. the operational of installation 'XX.In biggest Materialise Medical completely 'XX Medical This in production investment a involve new of U.S. in implants made for considerable and in a

light being surgical workstation-based platforms our engineering to use combine Mimics from extended of services that an of Our platforms, engine the are automation. planning benefits clinical cloud-based increased framework global the AI-based systematically with Mimics

start launch disruptive lung save did were Mimics miss Lung the our surgery cancer. patients we of to able due constraints. lobes surgeons global for with service planning to a a single of in tool nature Ukraine, new engineering war teams Enlight Despite lung clinical that capacity the the help 'XX, not At

a not for of combination slightly continued EBITDA could Medical's the compared reducing inflation, war-related prevent investment future to costs and our from we However, year. last

we continued a of out €X.X the Also investments for the we for we in foundation for continue believe for backbone make that start aggregate new staff at in to rolling solid level, of an Materialise EBITDA and XXXX. 'XX. At in growth that amount our investment million a began 'XX Medical, revenue digital the we

This plans the the completes we first advances costs still we 'XX improved in for in in related discussion our system and operations. have start the will our due will about While 'XX. of 'XX savings realizing strategic to this my rollout, transition

to Turn Slide Please X.

sustainability many choice Materialise During made on 'XX, for levels world. the by demand. this substantial AM in progress companies printing to reduced by We stock around enabling

reduce helped side. transportation customer usage de-localized. time and help reduce We production printing personalized and by our in both printing right by systems material first the Our own

Blueprint. these in standards. all Materialise or our comfort. products Materialise end to repeatable customer -- and quality increasing production to the confident enables stringent their be friendly This can are such optimization We ensuring expects. as impact companies not according that by materials the our that measuring And reduces benefits we on about we are shy our achieved and will health while way in rethink using processes further, and a software services people's solutions scale environment for while manufacturing reliable, the eco results

to more are reaching In indicates XX% of XXXX. compared well by by than reduction XXXX, our reduced sustainability our to we underway footprint target carbon of XXXX. carbon reference that our XX% we This year

Johan. to now I it pass And over

Johan Albrecht

you, revenue begin X. on our Slide of Thank consolidated a will with Fried. brief I review

note comparable in stated, year As fourth that full unless results and the of to a otherwise XXXX. quarter reminder, review about please periods

For XX% to increased revenue quarter, €XX.X million. the

Medical XX%. X%. in decreased and revenue segment Software by increased rose XX% Materialise Manufacturing Our

Materialise For quarter, Software XX%. XX% our revenue, the for total accounted for Medical XX% and Manufacturing Materialise of Materialise for

year. year, and compared revenue full represented of Software of products from grew December from the total Cross-segment underscores to Medical €XXX performance XX.X% quarter strong €XX maintenance million software or million of software revenue XX% For for segment. €X.X revenue the revenue our The the sales the to and XXXX license fees XX% full for and our increase license million. deferred

to Slide X. Moving

see year. will the our compared million to adjusted million to numbers for QX €X.XXX for You €XX.X quarter. Consolidated EBITDA fourth EBITDA amounted consolidated last

€XX margin full year. was Full to to X.X% XX.X% XXXX. in compared the EBITDA year. last compared last year was reached compared for year EBITDA Our X.X% and EBITDA million in XX.X% margin XXXX to million €XX.X

investments effect Our new in and inflation. costs labor adjusted IdentifyXD, our the and negative EBITDA from LinkXD reflected the businesses,

current the sales our Slide increased fees. license sales X Materialise results X%, and software the boosted maintenance from summarizes of QX segment. XX% by of Software growth

Over of noticed quarter the than value in license full XX%, underscoring decreased products our year, rates as renewal posted to weaknesses equipment the Non-recurring the we of markets our of clients. more this we sales. software sales

As short-term. growth in a a to with expect the reminder, sales on a we impact temporary revenue perpetual was and negative agreements subscription-based suddenly that switch cloud the

Software impacted revenue million deferred decreased revenue. X% million to was €X.X by negatively €XX.XXX and

EBITDA CO-AM from the expenditures. our new expenditures and by to the and in effect write-off amount and of teams IdentifyXD decreased million of include resulting R&D also of LinkXD was the the €X.XXX impacted sales restructuring development Materialise that the in non-recurrent and expenditures also QX a business, of accelerated by IdentifyXD, and which the consolidation negative of capitalized investments

of total will you revenue. from Medical in Medical revenue increased realized and Services. XX, Revenue see solid that XX% Devices Slide Medical to in Software growth was quarter's of our the A segment accounted XX% Software Materialise the both by and now QX. segment XX% Medical for Moving

amounted EBITDA €X.X to year. to flat Adjusted million, last compared

to inflation. combination and EBITDA regulatory Our different sales XX% and decreased mix, of factors, margin result a increased as including a of various respectable R&D still a a costs

EBITDA X.X% €XX.X this let's to of to rose The XX% which of by an to Slide was our the XX QX that with XX% turn segment. overview last ACTech grew our the €X.X Revenue growth business manufacturing, for million. was also and Materialise to Manufacturing EBITDA year. performance quarter grew Now increased digits part compared X.X% margin Adjusted million, end by XX%. for and quarter driven double

for Slide and the our XX the provides quarter income full year statement the highlights first XXXX. of

XX.X% fourth the compared year. profit to For XX.X% margin gross quarter, was last

XX% margin was full expenses executing last research XX.X% executing last -- year, year. strategy, to development compared year's quarter, the Operating and strategy this our increased our expenses to XX.X%. For compared increased

Our G&A decreased sales and X%. marketing expenditure spending increased XX%.

other income €XXX,XXX to Net €X.X was last operating compared million year.

impairment Materialise €XXX,XXX included capitalized quarter costs This expenditure to related development Software. in

of €X.XXX negative was these compared to a operating result in last As a result period. million of the €X.XXX group's elements, profit million year's

currency the million of QX, dollar-euro mainly was of profit financial and full result In positions. expense year, unrealized U.S. €X.XXX operating net intercompany the on loss €XX.X compared included million. a For reflecting and was €X.XXX a change the million, negative to €X.X exchange position

This offset the quarter interest our cash of from our interest income debt. position expense

expense Income tax income to tax income last of amounted to €XXX,XXX an year. €XXX,XXX compared

asset This XXXX tax profit the million quarter included for of the period. deferred fourth a quarter €X.XXX net loss million for to €X.X compared €XXX,XXX. a Net was of

the net share. For million, resulting a share of full or million €X.XX €X.X year, was net per in loss profit per €X.XX from €XX.X

the which please borrowings from recap cash of acquisition and strong. XXXX, balance [indiscernible] flow the €XXX of reduced Now our Slide €XXX.X on and XX balance decreased of turn highlights. sheet to fourth million, remains million December a is quarter reflecting IdentifyXD €XX and sheet to for [indiscernible] million. last XX to €XX million LinkXD Cash year, In of

operating the to Capital €XX.X for €X.X Peter? year. for amounted compared year not full and were and the €XX.X flow amounted million to million million Cash financed. for activities year the from to quarter last expenditures million €XX.X

Peter Leys

you, Thank Johan.

Let's our €XXX and sales another growth by with and Encouraged solid strong yet that businesses, to Page existing our continued will and million. financial we of post million building believe investments in more new for XXXX our in on XX% we between XXXX, €XXX than line top outlook. in revenues totaling turn the XX results

key to Manufacturing to Like order growth. Materialise Materialise that be and year, the are last Medical our in expected contributors

the to that a anticipate as expect grow, fully model, be our growth to gradual reflected the revenues Materialise but in XXXX. of switch result of subscription-based Software will also our sales sales in not a We

and that result will order. stronger Materialise which Assuming adjusted that a from inflation contributions Medical, million XX%, currently and anticipate with Materialise than will growth Manufacturing gradually sales €XX XXXX in by EBITDA, stabilizes in million XXXX, in between totaling more our continued grow Materialise in €XX positive we Software

that that note Unfortunately, [indiscernible]. cannot Ukraine effect developments, predicted, year, likely as last services will as we significant economy source our like from we results impact well and could workforce for on These in be the European have must a currently the XXXX. courageous our important developments which global the

to And on now this floor note, the like operator, I for would open questions.

Operator

[Operator Instructions] comes Lake question Street Jensen first from Capital. with Troy Our

line Your is open.

Troy Jensen

Hey, gentlemen. Congrats results. nice on the

Fried Vancraen

Thank you, Troy.

Troy Jensen

the what it end I you of guys, you I'd during up saw I what more was that of XX.X% parts, Johan's and percent of were I disclosed Manufacturing of is manufacturing one end prototypes. presentation any -- Have think guys end business guess parts I of parts guess what percent is year-over-year. percent total sales? care versus

Johan Albrecht

One Troy. second,

Let present difficulty] look in this moment of the at [indiscernible] some accurate there. numbers you give up XX% to segment Manufacturing almost manufacturing to the [Technical me revenue. represents

Troy Jensen

of manufacturing the of rest [indiscernible] XX% is business. and

Fried Vancraen

not [indiscernible] Couple of is which [indiscernible] manufacturing. Be,

Troy Jensen

we're just for gross 'XX. in Okay. All software, to note of right. growth because that on predicting Perfect. of It's [indiscernible]. also lack kind And seen obviously, good margins down then slightly just we've come of margins, again

margins like 'XX. expect looks be of that thoughts XX.X% Just stable you were at gross line? direction on Would margin gross it you on for for guys the lower? the to So

Fried Vancraen

there expect of the our should some Yes, of effects. rise due an other material combination And the Troy, again amount to that, of two inflation software. our improvement We mix indeed, will increased hand, hope yes, on show stop. we product costs of because

in will as defer the our because the recurring the yet not the there we licenses. cautious lot sales growth, remain to to in to a want of big indicated sales Peter as have that of of I fact due software Although revenue as mix, be

Troy Jensen

fourth did OpEx inflation, last you we But year. real and get ups. you in I -- increase. the that inflation of like was did here guys inflation, Got jump you. big was all a guys all there that truly Peter? material But it's a seems addressed it but job the it approach big remarks. just something good the managing where saw in me, and One on prepared last there Peter, happened just Was it question OpEx, quarter for

Peter Leys

we material the increase In quarter, costs. had a Yes. fourth in big

most I year, because fixed we they the influence contracts the had especially think at of of inflation, the the then were year we for but some prices end with of were of under expired.

Fried Vancraen

while QX, that -- in been in also then and in in already that where started have we also the on in We didn't QX. has partner new And applied [indiscernible] but cost be had -- inflation agreements, can beginning affected Troy, of QX, year, full effect the effect that the adjusted had already. QX both, the annual sales in labor in adjustments us could we some only only

So that a have. that effect we is delay

Troy Jensen

Okay.

the guys, not of OpEx this It spending. basis back should slightly think forward, sounds to just the continue kind an cut on stay we for year? going to lines going absolute investments. you're of plan try throughout then on like We're to So growing going to

of each kind sequentially quarter. it's So grow them slightly

Peter Leys

Yes. particular, Yes. in but significant increase of acquisitions of because I also mean there was and in a LinkXD. R&D, IdentifyXD the is

be another but we'll it our increasing come margin more put we that the will a to And a gradual increase -- So back. increase, increase continuous plan like revenues. XXXX, uptick coming will over not in EBITDA a much from see gradual of so stronger do

Troy Jensen

guys. Understood, Johan. right. All luck, Good

Fried Vancraen

Yes.

Operator

question comes [Operator Instructions] from Our Dilts Stifel. Noelle with next

Your open. line is

Noelle Dilts

taking question. Hi, my Thanks guys. for

just in 'XX. specifically I to software, you. how as you're I are the want And where directionally if think margins how thinking you going about talked -- then through segment there? just was good hoping we I just little I also more hi, how detail Thank about morning. walk wondering you thinking longer-term First, thinking I a just bit thinking just about all discuss we're -- cadence you're could if you maybe how bit. But to sure in could was you're about 'XX. into make a on go maybe margins this know you guess, about

Fried Vancraen

let's are where the, perpetual effectively not we within in is XXXX. item the Well, when including acquisitions that the do albeit I our Software beginning. to place, margins to the in term, again and good -- the the one of in the And licenses prices obviously, there delay return high investment do the of the that come switch individual from XXXX, to of the expect you we segment, we as expect seen longer did margins will software, first we the had as -- so significant And we become bad global software plus Again, margins However, LinkXD, because 'XX? second very past. XX, had as positive you effect the that's in agreements. of back there, to say will perpetual we've full yes? Does mean the is sell the have the price to be then we subscription-based in that XX% and -- it the starts cannot have of these growth licenses. But it's were growing. XX, margins they recognition IdentifyXD not one revenue that technical from the In back

a a effect same have we 'XX the extent. in years but in of on count snowball not that the kind We yet to come, to

Noelle Dilts

Okay.

… Sorry

Peter Leys

to XXXX for from to just also increase the margin XXXX. some Manufacturing, we see two did not margin and the to there a potential grow compared solid expect double-digit a level. margin, which for Medical Well, has other relatively that will Yes. segments, the very XXXX margin the in Medical grow in much We profile speaking, of

Noelle Dilts

sort next seeing engagement that and trended that sales Okay. Thank look level the with hoping that just And of you your sort relative year just little a more translates to on growth. the out helpful. expand very And you That's then of just how platform, into you. to you're bit seeing I could interest Thank CO-AM you're and of you. expectations? as just how was

Fried Vancraen

could the heard the of But the recently the that we could has that the, Well, yes, about end yes, scale. CO-AM in its the AM we’ve a by QuickParts, fully several activities. switched middle And providers in the really year, is to CO-AM of that world demonstrating see seeing enabling service one to in CO-AM yes, market. opinion the really talk the in that's of is all enthusiastically customers. year, let's we we biggest real and tool accepted we And say, orders of announced biggest players only of

now Secondly, the year's they I'm our time, also less organization several in of run and implementation year, on could platform. Materialise the internally that very CO-AM such our of of full start the a at after a have to achievement started proud team on the activities product X in big than we

Noelle Dilts

you. Thank helpful. Very

Operator

next from with Alexander Instructions] [Operator question Craeymeersch Our Kepler. comes

is open. Your line

Alexander Craeymeersch

Do hear me? you Yes, hello.

Peter Leys

we hear perfectly. Alexander, you

Alexander Craeymeersch

That's perfect.

I wondering -- to €XXmillion I'm but would specifically to EBITDA you of your then So for than or are make the provide to just So at somewhat, lot budgets. targets? just banking is I'm million what these run of customers been underperform the QX discussed because overperform of it's second what which for And would bit you question And the so a an -- insights on could CapEx on higher related significantly on your just what expect adjusted XXXX a you targets? reach customers -- those €XX are are be, what if already you mean, moment? rate. thinking

expanding several a XXXX, last current last CapEx Thank questions. machinery usage question. question, more, current What it I rate into but existing as as you're a the what the would taking the rate plant, usage these maybe as be have you to are or what's maybe interesting for ACTech So be budgets capacity know moment. the the but and that going of would at

Peter Leys

your Alexander, question the first take EBITDA I guidance. on will

I this will software mean, As be but the margin in of the the most third, will there to I growth of remarks, EBITDA €XX growing be to second. would the margins to medical an third but million. contributing then still we plus contribute not the see absolute XX% And of where that double-digit manufacturing hinted bounding a the yet contributor in be levels margin. rebounding, couple for numbers, will the years, a then million contribute prepared of margin will already -- three segments to €XX And to during increasing

not Now on revenue, what should to expand not on that things. us in should our would XXXX, a still find continue perform the And can definitely accelerate do over as have talent XXXX, excellent our that in are the as direction. well, to an further the positive see have not But situations we the for I that to make and could news. we R&D we If two invest excess want range two perform our company that be could not will guided. margins expanding and we do our right be If of may over EBITDA. in result managing then much possibly with we not That that because where that eventually continue so on investment a second, to margins positive our margins good find programs if impact those as will news. but impact we talent EBITDA in we

detail. thinking will didn't in I the very really can second question wonder I just moment. to your Please, down repeat much take which the need are at customers And I I just at for question, the look what you? maybe.

the into do how are So CapEx going XXXX? budgets

Johan Albrecht

think growing cloud-based we budget, but that's CapEx are cases, not want Yes. the budget our Well, that say of towards I shift in in I the our one to the most licenses. platforms consequences and OpEx of rather in

can 'XX even one That's are optimistic that number situations we are fear be the the that on in applications economic believe rise say could there the And uncertainty. difficult year So in we the are are very people where difficult still because a is much rather of see we large amount We limited. element in budget that But a the indeed, very there. circumstances. we market year. becoming has we in really of CapEx really

of your is with maybe moment. to little also during capacity, this expect to room we we very subcontracting expansion. and that XX% have short And utilization in earlier higher, machinery year, a very but the which very the year finally, why meantime, remainder high then the And the even on support in, to means extra capacity. some started increase ACTech, the at last really order have is we there the respect capacity opportunities that growth exactly existing that's question to come on on of notice. In the

Operator

not this I'm back showing at time. call like turn And questions further over to I'd you. the Thank any Peter. to

Peter Leys

all you, for you Thank operator, today. and participating the call in thank

discussions continuing of conference As at our will day. bye. you one-on-one it in we coming for dialogue in investor forward a be Good you, be always, joining, and and or any again to with all months. we wish good that look you attending Thank the we weeks

Operator

Ladies today's presentation. and this does gentlemen, conclude

day. and disconnect, now may have You a wonderful

Materialise (MTLS) 14 Feb 232022 Q4 Earnings call transcript