Materialise (MTLS) 28 Oct 222022 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the Q3 2022 Materialise 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 Harriet Fried of LHA. Please go ahead.

us Materialise’s joining conference for you today quarterly for call. Thank Johan Fried on Peter and and Officer. the us Vancraen, Leys, Chief call Chairman; Materialise; With of are Founder Financial Officer Chief Executive Albrecht, Executive call that Materialise’s the presentation third Today’s a of XXXX. performance and reviews webcast accompanied strategic, are by and slide operational quarter financial for being section To go to please access done of company’s already the so, the slides, not if website. Investor you Relations have the found issued The page. today earlier on earnings be that also release press can

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

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

Thank and joining us today. for Harriet you, everyone thank you

#X. on agenda as for always, Slide can this the find, You call

our I our come quarter. more agenda, financial the who stage numbers successes go our back And on After some in past summarying of the to the item first the I through you walk third will will we I the months quarter floor have observations very prepared about And of Fried, set year remarks. finally, some Then last pass bring. through by a that, initiatives. of give As detail. our and the our recent completed will business highlights will may Johan for currently you believe then we few what will quick results to

always, will to take be to respond happy As we and your questions.

license So, let’s quarter results. compared Also, representing a XXXX, the #X, by performances Slide strong to third fees and financial growth segment. from period. XX% highlights the which of of which year’s year, last the maintenance compared our million €XX.X to in sales In increased recorded of Medical turn revenue million almost €X.X deferred we end to last further revenues, summarizes was driven our of of

impacted by Software costs. Our revenue our €X.X amounted investment, also, our year particular, €X.X in was by expenses, both higher to last to EBITDA ratio compared adjusted CO-AM million quarter and continued but the inflation-related particular, in in million for Solutions,

like share $X.XX. with Fried? quarter floor per And this, pass would the earnings Our for the Fried. were I to to now

long-term wearables. to growth a and aerospace, and a QX vertical netting, listening in to profitable we rapid early manufacturing such and combination of Materialise Atmos. consistently climate, our are In segments our It about a are communicate about with activities growth we of is in In production prototyping doing per that of beyond the for double-digit XX% last good activity base shown is consistently year. selected additive €XXX uncertain mature on market the morning Manufacturing eVTOL new to Good in been the production. or this the we beginning is million systems Materialise QX the in Peter. survivor Lyft afternoon talked year’s aircraft XXXX, growing is certified a consistently. in would series all a of invest we of so current we proven this opportunities recent future in In plane building year call. you, of exceed Materialise a indicated relation and components economic longstanding company, business those, Slide have This Aerospace, in growth customer for we that as Even scalable and XX on in call, is At posted regular Airbus. to drones the manufacturing. our aerial sustainable we contribution going Thank alternative X. of you investing result and this future. on currently boasting project drive can the reliable A

of acquisition for second call, ACTech. a QX our During plant announced the we

foot major complete settings portfolio academic partner newly RSprint complete care in scientific this foot the consistently on of Materialise partnerships device Motion. double-digit medical suite personalized launched true scan multiple insoles device medical Materialise increasing the on Motion. specific medical business, collaboration feet the based year medical is and current result cater in research outcome for we increasing and the we on This the integrating we is software device to rate are product a promising. pathologies. In are after segment. Inflation illustrated business. investments numbers. segment Simultaneously, a very raising This new a direct is of institutes of ever-increasing certified in quarter, the for XD new medical the new and years with sales and And of and a hospitals. now for into X. looks line printed both are formed scan our Materialise is auto of but the on The Phits in software Plus that is software OEM the This companies sales number a longer device business in the growth also is upgrade our our CE term a insoles Medical in one CMS Slide Materialise medical-grade for and growing both maintaining device presence point the RSscan

over This has and complete of phase automations. year. September. hospitals those in up toolkit tools with secured customer implementing secure the a companies world of a the in configuring government to use well new the is study surgical initial by Multiple to accelerate acquired That CO-AM workstation-based medical our offering been The that Mimics device organizations AM and OEMs IdentifyXD It’s that from Rapid at listed industry. is most team engineering Mimics has compatible being extensive Suite for and of planning and The extended with to of in allows is that artificial to with more is this clinical sites. build dedicated therapies companies CO-AM Our are planning field that the of that experience companies of solutions clinical to variety IdentifyXD can proud are software Those software of more increasing advise our above, all increasing to need proprietary the platform their we medical on prefer combination be with IdentifyXD at the Mimics the of trust, the CO-AM. proven manufacturing benefits the solutions customers a new of immediately supply the multiple will a a and intelligence-based the production and R&D IdentifyXD cybersecurity tested of platforms CO-AM will and phase new systems. CO-AM. chains. suppliers we the operational Additive develop and develop tools at scale use of out-of-the-box as own combine environment for launched secure each Enlight set platform. Formnext cater allow we from joining why approach. version earlier phases. need Manufacturing devices for own as software our also those companies platform. us lines. certified the important Even we systematically planning distributed, And rollout currently in operations, that are partnerships applications announce the global privacy large machine cloud-based services It with successful Platform smaller phase of obvious with is This

We see you to are we looking as you, forward there Johan. to announce and those in for Thank hope X at your weeks you over well. Formnext to and attention

– increase third million. ‘XX, quarter of that unless Thank you, took of XXXX for consolidated our €XX.X all to the Fried. in on segment the comparisons call X. are was otherwise Software Revenue X%. I segments. a in begin apologize. place note against revenue increased The our XX% I Please stated, in brief with The in Slide growth all three – growth this results will review our

Medical increased grew revenue in XX%. XX% by segment Our and manufacturing

maintenance Importantly, performance our fees increased million the software year, up deferred strong Medical to compared sales last underscoring revenues the end further segment. further and within of from software license €X.X

our products Software XX%. quarter Cross-segment Medical for for our XX% revenue, for of For Materialise total the third software and XXXX, revenue. of manufacturing from Materialise Materialise of XX% total accounted represented revenue XX%

and the our Adjusted LinkXD third negative investments see for from adjusted the our businesses, the results X, inflation. to X EBITDA for the XXXX. compared period the new last EBITDA EBITDA segment. consolidated was IdentifyXD, you reflected €XXX,XXX Slide Materialise Slide year. costs of labor numbers quarter to Moving Software same of adjusted will and €X,XXX,XXX effect Consolidated summarizes our in

sales supported sales from from deferred non-recurring from and X.X% by revenue decreased revenue. XX% by €X,XXX,XXX, to Revenue XX%. Software usage of licenses increased renewed

to will platform significant As on feedback we’ve time and it take mentioned convert our growth. QX into in applications call, earnings the our sales some CO-AM received positive

and only we nature introduction We the because cloud expect solutions see offer. this time required to because of midterm the the of in of the growth

CO-AM through as of of in and licenses has the and cloud quarter, September compared In also include as fact, the pricing expenditures to boost our our EBITDA or The IdentifyXD, result XXX%. services. third the which negative as typical the model we revenue but then EBITDA margin growth increased a efforts growing a by in sales was investments new business, In impact segment’s accelerated €XXX,XXX. beginning, X.X% renewed R&D weighed growth on of of temporary recognition €XXX,XXX

to now Moving XX. Slide

Devices growing with software XX% double-digit that increase see at of of continued will XX%. pace of Materialise a solid Medical revenue You Medical XX% and Solutions from

in deferred Adjusted partly Software XX%, to of sales to amounted terms year. last grew €X,XXX,XXX revenue compared EBITDA €X,XXX,XXX even recognition.

various Our as a margin XX.X% decreased result EBITDA to of effects.

significantly. in portion increased of revenue our sales implants of medical complex First, from devices the

business Second, results annual in before price we impacted third, continue we increases. work the new investing sustain to talent and our the for and R&D people growth And in our inflation lines. effects adjust marketing of our in and could sales and

XX.X% to to performance for million, our on Now in let’s Materialise by the and automotive segment. driven XX grew by turn €XX lines QX business Slide the overview of Revenue manufacturing the Manufacturing core market, particular. an

for Solid order months. the also in looks intake revenue promising few next

for business experiencing profit together with revenue. X.X% quarter of higher QX margin effects affect €X, margin lines, Adjusted subcontracting more third IVR the to EBITDA year. last contribute programs year. XX% require are cost the businesses rates inflation, EBITDA last Our ongoing total shortages €X,XXX,XXX growth in segment’s amounted investment XX.X% the for income compared quarter. the to our highlights will new statement and quarterly fluctuating XX and significantly Gross of Motion, XXX,XXX compared provides profits. our the and growth temporary to are was these Slide segment’s time labor in and an to and to the of of Meanwhile,

Our operating businesses, since expenses including or in million LinkXD invested also to growth significantly September our €XX.X and We XX.X% IdentifyXD. million. €X.X increased

Our increased marketing XX%. expenditures growth Sales and was G&A XX%, R&D XX%. and up rose in

and war inflation on weighed talent also As explained sections, in the our previous for costs. the

gains to As for profit a mainly operating income net €X,XXX,XXX. factors, Net Euro for a million, and position or reflecting on strong €X.XX to negative the per compared was financial the share of €XXX,XXX €X,XXX,XXX, group’s currency U.S. compared these included exchange profit positions. was dollar QX €X,XXX,XXX. the of quarter intercompany Net of result €X.X was result €X,XXX,XXX

the Bank highlights. to quarter flow for Now for purchase Slide sheet million of please compared cash position further our XXXX position a of remained our drawing the capital [indiscernible] expansion the that decreased with balance XXXX. operating and €X.X fixed between were was sheet provides ACTech recap to amounted to credit support quarter, Germany. of After the business Capital close for amounted a a Cash a the XXXX €X.X at agreement our cash quarter the future. agreement KBC facility million. total Also, million capital to €XX.X million. of the XXXX, while balance €XX third entered end of expenditures €XXX.X further borrowings line next of reimbursements into this not in of At X.X we full activities strengthen Cash million expenditures million flow This of will quarter and €X.X rates this and for years to during with turn XX financed. and the from third the Peter? included building quarter, to third interest strong. in

Thank you, Johan.

our remarks, expect post year full to XX% least would questions, September increase prepared our €XX words, IdentifyXD X, and revenues the we other in year, Before just concludes earlier adjusted we not like confirm as opening our this have In consolidation between compared the expect million. entire EBITDA to at for of year. we of that and operator. provided last I XXXX, guidance impact the financial that by floor numbers for the million This will to to €XX a year

So, questions. Question-and-Answer call open we Session are now to the ready to

Instructions] Capital. ahead. from you. question comes Stephan Lake go Jacob Please first [Operator from Our Thank Street

broad Hey, taking across questions. results. Congrats that single or from thank industry? on a the you just healthcare is the strength customer my great Maybe primarily at was medical side, for software that the looking

segments. absolutely to want multiple enology cardiovascular broader like craniomaxillofacial segments medical I it’s covering orthopedics, a growth industry, and say

that Okay. And that have are the software lengthening early given you sales started we’re on to environment any see just entering. indications cycles

the As yes, we side, our on weaker side. the happening investments on numbers industrial not do show, see, medical but

wages to around or the Okay. to the on pass And what been all? And you on increased have customers kind your just of subcontractor at doing prices you of kind maybe costs. materials guys kind of of been any inflationary able Have that?

Well, a a happening. absolutely on But the so. really or some not monthly our so. instance, doing regular of rather activities, basis. rapid we in can on are daily levels, say, we for Well, our adjust short-term I prototyping, price for It’s that’s basis, would

instance, bigger all medical in typically once adjusted a for year. contracts, contracts, year big However, for of happen price normally indexes. only are include of indexation they And a we the clauses that very the function once

I that Okay, question was offline. of will helpful. Thanks. my take rest

you. Thank Okay.

Thank you.

Dilts next Stifel. Noelle Our from question with comes

Hi. my the questions results. Thanks and on good taking for perhaps

you energy of just could on how just into potentially First, thinking concern just more your thinking risks about are the us thinking Europe. how are in ‘XX, are resilient and a those risks you are of what was in how you Thanks. on with give out out I you and about that are in happen hoping resilient you maybe comment Can some you obviously, as lot some looking some a of you weaker there, even where think economy? – around about be might business less will thoughts

and seeing chain will to that, we more like would we manufacturing. are in turn I show resilience believe supply difficult say because a economy, we increasing that evidence to more additive people more

grow year we also or years. recession, be to to we going to the printing XD fundamental there from. is we be believe benefit or the have still we in first – may able will while That’s the that So, the additive industry manufacturing believe coming

offset a we not prices, to in Secondly, the that moderate has the will to been the a big Materialise energy it electricity sustainability. as attaching increasing years contracts market renewable totally which of also value shifted consequence, to be will already dynamics. have help previous impact the future in it us And overall

people that? Could you labor finding Okay. front the Thanks. Great. just just comment – of you And and front. then How are in the terms need expand helpful. retaining talent on seeing you on are That’s what could that very upon you folks. you the on

past In you the the U.S., for source and but centers Eastern is we Europe, are from actually Western America, We an in something both source Kuala something competence also there And including here is not have only to centers, our we talent Yes. in in we the we East, very moving are our also Germany looking and and pool Spain also But – are do – talent also we the talent and in know, in across actively finding but been globe. have doing benefiting we talent the in as Kyiv. hire south can America really we in have increasing in Europe, but HQ, have Colombia. like people and the and Kyiv in like important we now that we Europe, Lumpur. important East talent countries that Noelle, to talent the continue countries like. also at in what South North we in what centers and the

where albeit broad the already think global can and source now So, new we people on issue that places a of it’s coming difficult present where pressure remains the broad of could the going talent remuneration, still this to this there tackle it to pool even and have in talk have we the actively by can with pool, it that we – probably recruits. that market that the is having are explained actually workforce, We on reach for and earlier, be we land as market by obviously, and we quarters. there have,

very Appreciate it. Thanks Okay. much.

Sure.

Please Our comes next Instructions] ahead. of Alexander Craeymeersch Kepler Cheuvreux. question [Operator from go

wage Kepler. just and I on on then out the granularity to investment Hello. IdentifyXD. in impact wondering I the because give question LinkXD second these that what some Yes. difficult contracts. also exactly a was Software raw is effects. the higher the costs split from And just was us medical was especially wondering the from you segment the inflation the of more and could mat just and then if Alexander

of timing adjusted the wage So, year, does remember exactly adjust a contract correctly, that you I have you next just what’s you large what I Belgium. if inflation or was wage it year. And in also bulk because the timing? wondering say the a it once

So, it that I to indexed will guess inflation. be there

Just that, with start that. wondering I will

to go – Alex, the to they – sure clauses the that they then let one typically me place of medical take will year. contracts, large the your first and and back answer we question first, indication end will understood. we also The at on make fully the second just take the

So, inflated been in with contracts other we recover partners. that way, have not will index. this contracts device and in large the straightforward increased able fully standard a coming medical to something our these very year, soon. to larger been words, referring Belgian be In costs our dropped in that have The is very

allow impact of With will respect recover you also question, am including note that may the asking quite much remuneration indication the unique your to So, not as and all to parts to on increased sure were your of Belgium, extent is remuneration us automatic a costs, inflated very a costs Alexander, may are costs. have IdentifXD first of of. I an which – bit correct? that of the feature you we – aware are a but question, I inflated of Is have result that in taken what LinkXD

Yes.

your went LinkXD, approximately. investments that the to like much have to How to went with up also is marketing [ph] you an much expense related basically, Then $X that is I have related with that So, you increase due etcetera. R&D wondering was higher just up million of $X million. how inflation?

how X%, So, there this mean exactly? is, wondering a just but the am around would split. of XX% much is I or course, if know be I I wage

compared – calculated customers. cost at inflation It’s that number. half variance in not could is to last the quarter, Half the of due you give of the year’s the of of higher the the immediately because But difference is to you you certain look rest see hard to be to increase if and EBITDA. investment an that exact

bit specifically give us on then And IdentifyXD and maybe you Okay. LinkXD of could granularity? a

I what that’s But saying. effectively am

the is difference between QX EBITDA vast and the in half due QX difference The ‘XX to ‘XX, investments and So, the IdentifyXD. of of the LinkXD majority…

perfect. That’s Alright. just final question. one then And Okay.

to year. – ago, an EBITDA confident that the segment the level, have of Are weakness still you would go to I XX% you is next seen or will that high to have just you environment? still that take recently. you mentioned were couple inflationary reach on end that question, this calls XX% in that a bit do the maintainable margin back So, a a in you Yes, remember we we of of Software by that

are LinkXD Alexander which said just response, Software in of IdentifyXD I the new my segment. previous a that businesses investing refer as are lot to we the and have part that

on this the So, mentioned it time. bit from also large as more will will little take short-term, immediately in prepared all the business. the remarks, I It new not profits a come

for That’s you Alright. all Thank me. Okay. that. for

you, Alexander. Thank

further you. for Thank management am would now of closing to to End I questions. it I Q&A seeing turn no like remarks. back

for and one-on-one meetings Thank seeing We you And obviously investor some you thank all with again, call of forward our or on you, all operator. you virtual to joining of to the at continuing or through through us conferences look today. dialogue Formnext calls.

So, you if you again questions, out. free please for have goodbye and to feel reach Thank now. any

Goodbye.

Bye.

Thank you concludes for the today’s This your participation conference. in program.

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