Materialise (MTLS) 27 Apr 232023 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the Q1 2023 Materialise NV Financial Results Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.

to Fried conference of like speaker to now Harriet today, LHA. would hand over the your I Please go ahead.

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

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

to prospects, cause that among to statements, things. their forward-looking any date. results should events are from estimates or update Management competitive statements reflect be changes the Before that regarding the known any uncertainties expectations I’d dynamics forward-looking and you expressed, and statements to including company’s forward-looking statements risks to get as of those activities management of industry future represent or other Any growth company’s change. could make started, management’s plans, related and and unknown expectations. as upon relied to actual duty not materially estimates today including subject as the representing to future and results like remind disclaims subsequent differ revise These forward-looking expectations may we and any in

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

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

to Peter. like call I’d over please, ahead turn Peter Leys. introduction, Go the that With to

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

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

near-term financial first Fried, the I will Subsequently, will change that you quarter I our in our we’ve As some current back contexts adding Q&A our this completed our When discuss and always, to our you of who bring. announced results for agenda, innovation be is detail. and give to to as highlights robust remarks, finally, about prepared will of the continuous applications growth. then more creating give how After that, questions. the through will a I And first Johan after more first some brief the floor happy to and earlier on about future will come view have item respond quarter numbers on briefly the value CFO observations will what will we’ll Fried pass today. walk we summarize Johan the year, session, you

growth cost because inflation, at So of number Materialise let’s €XX and X%. of highlights increased XX% increased a adjusted well XX% also increase than at turn which and scaling of EBITDA Mainly Materialise more containment revenue to Materialise because boosted to by top-line to uptake revenue management our growth but in of effects, almost XX% impact of Software with almost the year. our measures, first summarizes than a our million. XX% solid this revenue more contributed also of extremely million the X, €XX.X Materialise revenues consolidated Total of because results. quarter of the to performed certain the by Slide Medical Manufacturing. a disciplined financial

quarter, certain the to the contributed the efforts EBITDA exceptional last temporary slowdown year’s our quarter of during to growth. by adjusted period grew compared While the during R&D projects first XX% also

to like this Fried. Fried? with I would now And introduction, the pass to floor

all to growth afternoon through good We or morning Materialise activities. very that Good the the demonstrate its listening can of of to you clearly XXXX believe robust QX call. this Peter. generate results you, Thank

As turn Peter numbers range numbers indicated, growth growth. the we those outstanding, in profitable into to our from segment good and

quarter you XXXX, Sometimes in robust but fourth some we advantage faced the take some also growth to headwinds, of as tailwinds. of positions

inflationary Solid management revenue, our half also but yielded of recurring contracts profitability second of weight in XXXX. made our on increases the

year, price adjustments that this contracts same tailwinds the in provided a As one was allowed few it for starting elements this quarter. of

They AM consistent performance in the applications know-how all, hard their generated was healthier customers to using better growth of a world. create Above people. meaningful to work day and every of robust the collective support by our bring our

demonstrated If we there the verticals, generated that Medical this growth. was segment, our it one quarter, segment in potential device medical most is our growth robust especially

patients baseline a While quarter, than needing for there systems conditions, number including this already more solid robustness a a of a good of market we experienced surgery. combination of are especially take could of we advantage elective huge growth as decade favorable the our

technical flexibility our high deal competing customers Thanks faced directed regulatory time, or of orders. could solutions same peak of handle facilities. robustness the the solutions additional and we with the number which our our At some a of people, to to issues, and loads

We longer-term expect preferring continue surgeries number a and high solutions we hope future. keep several to the our that of surgeons XXXX, in elective will in

XD the our announced planning the is Exactech advantage takes for collaborations phase. expanded a project also intelligence This shoulder personalized device with and we medical new in partnership implant companies a printed of Glenius. with that artificial QX, During

approaching our aMace oncology of track for that cases a to dose revisions, results is already XX a on scientifically of implant are deviations. is market. shoulders complex Glenius the outcome longer trauma congenital severe very years five similar or Glenius and very solution The exceptional that for hips proven for robust years a solution cases, record has

XXXX, absorb of several that Turning to year’s take our last bring. acquisitions the of In development related synergetic advantage Slide QX X. the to reorganization teams costs segment could to software effects

line. bottom on XXXX, segments QX effect of the In the we positive saw actions these

work we have calls. phase platform CO-AM prior fits are in More portfolio beyond discussed now on gradually that we renewed importantly, the and product can that a

We anchor software. in to Materialise integration are just an a MagicsXX printing position in pre-press MagicsXX Chicago at even has into few leading launching CO-AM Rapid in days. deeper XD

as the intended production to application CO-AM our we also manufacturing lines, a their customers on However, are CO-AM. empower is new to additive entire launching platform control

identify enables for from and Materialise they is manufacturers introduce control quality analyzing Control. parts Process called and are images. such process gathered as XD instance printing sent This Users By It to to process. data printing before quality XD using the correlating data layer inspection. XD post-processing can defective during the

platform, use partnership and with of being is makes to open use extensive Solutions. Sigma mastering tool Materialise in Phase manufacturing the cost. Those manufacturing Process the a at of total tasks nature the launched Additive and to for XD help account Demonstrating process our of parts XX% of the XX% intelligence additive CO-AM the of customers. Control artificial the

driven in now Robust our good Manufacturing Moving standard was the segment by Slide activity. performance activity very in growth as services segment manufacturing services both X. to and ACTech

I’ve a and mentioned new In for act. for demand components sustainable systems past driving engine transport strong calls,

for has prepare we As demand the plant been to rising, production. are our continuing new

expect open We it XXXX. to in

small production growth in seeing series we manufacturers. activity, at aiming certified are parallel, good equipment our In

Sartorius. the production. work confidential, and we of disclose for manufacturer life work While Sartorius company the bioreactors is are for is of most pharmaceutical the this we some a to science are doing of able industry

many few requirements conditions. Those years. of and series, several produced unique numbers for XX,XXXs are components of even past over parts. of them used include traceability. Sartorius the has small in composed biocompatibility components Many for are Materialise some Critical those sterile

control AM a working is environment obvious that affects process that company a strong people’s certified in lives. is of with must for It a millions

is growth XXXX. deliver our such robust believe continue a on for innovation illustrate, can we based difficult examples R&D We innovation. as as these As in constant even this we year efforts, sustainably

the indicated robustness in governance Materialise partner R&D of has first a that the reported in company. ensure I to staff is not following for services place want to R&D ensure this we our our have the robust quarter continue Peter increase all in before, to growth as reliable as Today, systems the years. But that extra customers. And highlight importance enough XXXX, to also a alone XX% want we of a again be in

the department governance our maintain. of software all to require systems values safe and according governance to ensure and XXXXX ISO auditors to external management products. effective ensures ISO medical and us variety of Materialise the for quality customers internal audit that according Our that devices XXXX. to deliver audits systems pass teams We and

and with collaboration XXXX our the Part For industry, aerospace certification. have received EASA we XXG ISO

for DMV manufacturer parts approved XXXX, addition castings is iron And and vehicles. for certified to toproduce EN In offshore ships XXXXX for products. is railroad ACTech a ISO

environmental Our headquartersACTech management XXXXX facilities to reflecting certified, are ambitions sustainable. work our andPolish ISO

XXXX GDPR that with the that providing of according Europe, ISO to and to the our safe. security. better is HIPAA Accountability European the an known government line being the information close framework AM in Union customers General and Health Data Regulation or within in from to is provides according Our We U.S. Medical in technology environment all Insurance is assurance and segment reliable systems with those as of XXXXX Act, Materialise work on Portability consistently Protection certified

Over to you, Johan.

positive revenue this call that €XX.X three in first I X. of grew comparisons to by revenue. segments of €X.X our effect Please unless with deferred the on quarter in XX.X% Thank you, results in review Slide and are million XXXX. our begin the excluded stated, a note consolidated Revenue brief otherwise Fried. million all for against all of total

solid Our manufacturing Cross from strong combination increases. Software realized represented of XX% rose grew segment total and outstanding of growth through software leap. revenue revenue XX%, products by made in revenue. result was Medical a Materialise XX% and our an The a segments price X%. volume

you improved We EBITDA can investing benefited million. in adjusted and development. scaling by grew from €XX,XXX effects while gains research XX% X, Slide and On that continued to efficiency we see

the results Software Materialise of XX Slide summarizes segment. our

€X,XXX,XXX to to revenue, Non-recurring X.X%. revenue the Recurring Here, increased subscription of including effect grew grew EBITDA X.X% was CO-AM revenue compared €X,XXX,XXX. X.X%. fees €XX,XXX,XXX.

to now Slide XX. Moving

grew all was sales. top strong and will supported by revenue by of our revenue You line revenue that sales. Medical’s device leap performances very direct almost business XX.X%, by software in XX% driven that solutions XX% further a lines see boosted by grew Materialise medical partner The from from

Adjusted to €X,XXX,XXX. EBITDA amounted

increased margin to EBITDA of Our price combination top increases. a line scaling effects XX.X% through and

ACTech for boosted line QX XX%. the turn of of our overview increased grew business €XX.X that to segment. to Revenue XX% million Materialise by Slide let’s XX Manufacturing an performance Now our

manufacturing solutions core also of a grew solutions that business while by XX%, end XX%, Our prototyping part growth X%. grew driven solid well performed revenue lines with manufacturing

EBITDA growth revenue represented capacity our The for new XX.X% Adjusted €X.X the in an our factory we which million, robust expenditure EBITDA Eyewear subcontracting preparing converted operational business are compared our and in was revenue Motion XXX,XXX. higher of and line XX.X%. from in our to of of of continued – ACTech increase business adverse effects Including new into an investments lines.

our Gross Slide first the statement to XX the highlights income XX.X% from provides XX.X%. of for quarter. grew margin profit

Our through €XX.X our operating in invested expenses businesses, significantly which increased to million. XX.X%. increased R&D, or €X.X million, growth We especially X.X%

Sales G&A and whose operating of first phases expenses and included our year. marketing of during internal increased X.X%. digital impact transformation quarter went the project, first live increased the These the X.X%, also

result million of positive compared a in to operating XX,XXX elements, €X was these As the period. group’s result year’s last

QX XXXX net compared for in period. to loss was increased last the to income the of for QX financial Net for profit €XXX,XXX €X,XXX,XXX year. a to compared quarter Net €XXX,XXX XXX,XXX

strong. balance Now, remains first Cash please XXXX. December to quarter flow highlights. the million recap of million to the for million XX, of €XXX XX on Slide At the cash compared and of amounted €XXX.X XXXX, turn balance our end compared to to €XXX.X sheet sheet

XXXX Total of activities €XX XX.X operating the million. flat from million was Cash to first for from year. last million as deferred flow increased €X.X of revenue million quarter XX.X

not cash increased amounted of quarter’s million, million This working of operating €X.X XXX,XXX. flow finest Capital Peter? for components our to the ever statement [ph]. capital €XX.X expenditures income consisted while quarter

global €XXX the million you, In to year. we EBITDA million entire fourth and in Based uncertain closer said strong our to €XX first quarter bearing we of also And between believe call between will range, report for continuing come €XXX our €XXX February, Johan. million €XX consolidated revenue million. mind expected Thank our the and adjusted performance, now on environment, an million. i.e. revenue in that we macroeconomic top our initially XXXX guided but quarter the

and improvements, will certain also first EBITDA XXXX we recognize results. of quarter to that do to Now, upwards our be we million. strong now contributed structural while in mind, revised growth that between our attribute Bearing that most million tailwinds our expect our guidance €XX and EBITDA €XX we XXXX

And with remarks. like to our this, I conclude prepared would

questions. kindly floor to So operator, please if open you the could

Craeymeersch Alexander Our Instructions] [Operator first comes the you. line Thank Kepler Cheuvreux. of from from question

Your line is now open.

Hi, good afternoon.

us results. so, ACTech on on investments going then the the and the than are And And as could there nice remind on was are line works much maybe is if much wondering, slower the congratulations I line you set maybe going facility it is to be expected recovery bit made? the facility? the bottom new So of these just how how when manufacturing going appears that in to top and segment contribute anticipated? the a how

second that And we issues. to we what to just final see you be, cost other is I then end Medical be at repeat over And final, solutions? does. OpEx could you we then Materialise that if Because can now all wage was and segment, technical them know mentioned expect related would the surgeons moving? control? question it see the under OpEx on rise good as you think question how solutions the the the the the why your But inflations a very prefer of it can And

So only repeat I Could to that only think technical not it’s issues. Hello? – you please?

on a Yes. plant ACTech we equipment question, posed I but propose to long new be expensive will indicated this the has purchased you that delay little be hand, we questions we approximately will three that months. XX delivery reconstructed distribute a them taking that with bit. we mainly Starting Yes. there year and your need yes, have one

which get total already €XX of investment we the over order So we of some This XXXX. magnitude multiple fully the did hope to in last of operational as beginning is million of year. years in in spread

have we growing because waiting little activities. expenses causes that ACTech to certain on Johan then a already we a output related results of activities approximately, which OpEx five this of to in means this bottom subcontracting internally bit yes, will the that moment, our yes, are our to I to double rapidly it then this production years to due process the over pass steps and that of And the yes, of the decline the both subcontract, fact externally believe At the discuss manufacturing we period line [ph]. to is are And that question.

Yes.

– are that also that in the in our revised also have be QX for with that will also such year mentioned the of of managing agreements countries according that now so will positive. line continue. is positive costs already top under in active, also and We we Fried way that the we It anticipate that contracts we as could the adoption decreasing is it’s adopted place in it it. be had see organization middle the takes we The that effect, will an in control Again, assume Belgium it that in beginning of increases a we is also also as quality that increase but products the can in – Also, quarter’s the are we clients are it the that of effect inflation. year. the salary doing prepared but also in in our slightly of results. by continue positive that on fact now, to vendors, in further decreasing we are where to kept inflation our adjusted that the so. inflation beginning our our hedging that is As our annual year, cost effect the And we long-term looks the where control the weigh because inflation see we next as can of

Okay.

So I lost Alexander.

do in why prefer to parts, surgeons the may. I break question answer Medical, regarding if question Your I that solutions? two our up question

three. first quarter personalized let developments successful our are In in First and year. me to then name in extremely many the related I of Medical reasons, solutions general, of but for general more this the think,

sit or We to and together and innovate innovation. bring into the constantly our into innovation with products. customer processes try our First,

the unique Second, referred combination this on on the including fairly quality other and between hand that reliability robust innovation the to Fried one earlier. hand

would to of the And I say, customers. products specific with that third, needs in in the which, but can reliability products clinical top remain time, quality. touch the mean, I tune engineers, time, potential touch further further see constantly come to innovative, products our and Our surgeons because boosts their are the the the personal fine right, in, the surgeons first

general. success the our of in hence So product lines

– Now, to. which by issues, learned that meant some sort business We happened companies to regulatory temporarily it’s Fried handled the or the least those at Materialise. competitors now our QX tailwinds referred has typically competitors, in of technical that what had of that was that directed some of device medical either also

issues of level these are the our Now, temporary. competitors at

they’ve likely course, to components success So, I of may their access But, Materialise and these now to mean, typical go story. those back are surgeons the of had most back probably go supplier. three to

obviously so hope to the, way these is or that stick our I surgeons And expectation our working. may of mean, of some our

working. not way of they stick all However, our to will

So your with hence the medical the Alexander. the next the got continued hope also three There three questions. more to answers our three on prudent that somewhat go, clear view growth respect year. to you quarters you I devices of for

follow on mean, the And from a you. stickiness the mentioned, in can we some has Thank maybe up And surgeons’ question. happened expect, as as surgeons’ small you I this past? the perspective? already

okay. is as been on repeat But I want devices secondly, those for we robust medical that a decade year-after-year indicated absolutely. Yes the growth already to nearly discussing. appearing And I yes, have

I reported previous in devices average on think on growth we those years. XX% above medical or

that baseline and this Yes. that’s Peter well in XX% So tailwinds growth. Yes. quarter did growth. made was better kind discussing much we these of When the particular has even that the with

big years a to strong trend had will is our be in to that but growth personalization believe continue the robust and industry present, come. baseline combination we medical in the that is and favor, is – the So as in we the

And again, congratulations. Thank Okay. you.

Thank you.

Ramirez next [Operator line Garnier Gregory & Bryan the question from ahead. you. of Instructions] Thank Company. Our Please comes of All go right.

Gregory. Hey

back thank base for afternoon, Good just you it’s base, just base coming software we QX QX, the wondering because – sustainable. cost had low. Hi. and could taking in XXXX. It’s was my cost back question. you basically cost when look this at in the we be the what I to Yes, come And division pretty how extent

may margin. have of come back software one-off if the I be to the back well, XXXX remember late just of was – end may margin the in the division. come improvement items. some division, if goal And to there remember software the we pretty by of XX% to base Do I be basically some the There well, are to

QX does see, in Because in have XX% bit minus improvement? in XXXX to looks amazing. plus the situation So going order a yes, narrowly XX% unexpected QX from XXXX

let’s on were it over call Yes. LinkXD some and during related call, XXXX, and we yes, in – the top had had needed Gregory, yes, Materialise Well, we teams of our that we struggling yes, the software. to software because costs some teams. to quick connection between software, QX IdentifyXD was double had of previous some do reorganization we as entire indicated the in the yes, that yes, And the our Software,

have to can new way. this into make during software, right people real delayed of said because in you the that remarks integration because have projects Now, are take Peter that we a a we because work mode we gradually in we shift team but reorganization, with also of we and sure have that we and some advantage all bit some right do the are the finding troubles more his tailwind unfortunately we

good So yes, bottom hand, line. – it’s our on And and that’s one unfortunate. for

little to quarters have order to and hand, will are pipeline. currently the as the in next more in we fast we projects a execute the concerned other try bit as in On our generate costs we possible

very much. Okay. you All Thank right. Good.

Gregory. you, Thank

questions. would right. not we turn other now back All All go I ahead. you. Johan Since right. have do like to Albrecht. Mr. Please the conference Thank any to

of company shared years. of to now every an Materialise and last has quarters together a Dear positive you leave alongside, growth to I I and commented amazing the May. Materialise But the wild take followed one together privilege. end for lot the fans, ride. Materialise the and in we’ve a of I just decided each time, today, the moment at past the gratitude other. the Working many the that terms I and a results and on eight express each want and over so eight to colleagues I’m we’ve as to my passionate years, been journey the past accomplished of could incredibly talented profitability been honor proud trends present as It’s in a for

both that all adventure, XD Materialise short and an exploring shape I’m growth for a further listed as to you opportunities keep and break, company. be and After to Thank very a you. your printing achieve NASDAQ and my personally best in wish care Take touch. evolve convinced further professionally. excellent long-term I leading is profitable next I’ll in continued new the success,

during years are we CFO. as eight and built Johan, many contributions these reporting valuable the strong for control made systems. grateful very you financial SOX-compliant you have Johan,

materialize financial the enhanced have our to You growth. measures of our achieve place have and in help profitable tools position, long-term you put goal and

you miss colleague. a but CFO, our appreciated will as We also highly as

have important will I’m people even appreciate data dull, professionalisms this that in combined humor and but a your financial contacts digestible. certainly they sure also with very with you, fine multiple some call makes

transition multinational a environments, Financial Koen corporations smooth as holding. the of brings CFO, of Koen a Officer. than XX, new May from as new in more to leadership large Materialise ranging ensure financial We will Berges family experience will XX years various to leading join Chief a business Berges in

significant your service done He for have what financial for has deep accept you to for Materialise companies, thanks, see But to and strategies look opportunities area in you We and Materialise Materialise. for appreciation contributions. our again, infrastructure much. initiative. OEM Thank IT forward all with his our Johan very welcome an in role including growth him played a key years, building where many

Thank you.

for to colleagues look many your partners. Koen established so working have also and to, also simultaneously internally, colleagues, the very Thank alluded would Johan, like for and including also myself with many your relationship very echo to you, that Materialise for Johan. together so pleasant Berges. I success with valuable to best you your Fried but wish contributions time you the very thank Fried journey forward Materialise with continuing I the Fried’s confidence with as kind I the with and you with Materialise, post external together words professional and

And with like would that, I our for conclude to today. session

week with Next be Fried our and present at of Rapid software Chicago, together Brigitte Bart. in the heads will divisions, medical and

If us yet you to to a arrange best meeting we feel did reach please Thank out then either you with will do to requests. not for free our any so goodbye accommodate one them, and and of do to now. your utmost

Goodbye.

Goodbye.

Thank participating. concludes you This conference call. Thank you. for today’s

may disconnect. You now