LEUVEN, Belgium — (BUSINESS WIRE) — April 30, 2020 — Materialise NV (NASDAQ: MTLS), a leading provider of additive manufacturing and medical software and of sophisticated 3D printing services, today announced its financial results for the first quarter ended March 31, 2020.
Highlights – First Quarter 2020
- Total revenue decreased 1.8% to 46,245 kEUR for the first quarter of 2020 compared to the 2019 period, despite continued revenue growth in our Materialise Software and Materialise Medical segments of 5.0% and 15.3%, respectively.
- Total deferred revenues from annual software sales and maintenance fees increased 2,037 kEUR to 29,703 kEUR compared to December 31, 2019.
- Adjusted EBITDA decreased 38.2% to 3,603 kEUR for the first quarter of 2020 compared to the 2019 period.
- Net loss for the first quarter of 2020 was (2,853) kEUR, or (0.05) EUR per diluted share, compared to (304) kEUR, or (0.01) EUR per diluted share, for the 2019 period.
- Total cash was 127,135 kEUR at the end of the quarter; net cash was 2,433 kEUR, an increase of 1,474 kEUR compared to December 31, 2019.
Executive Chairman Peter Leys commented, “Fiscal 2020 began with unexpected challenges for businesses worldwide as a result of the COVID-19 virus. Materialise still performed relatively well during the first quarter as sales began to be negatively impacted only towards the end of the quarter. With the subsequent spread of the COVID-19 crisis and the increased disruption to the global economy and normal business operations, we expect the pandemic’s impact to be much more pronounced during at least the second quarter of 2020. Fortunately, our balance sheet remains strong with total cash of 127,135 kEUR and short-term debt of only 17,193 kEUR as of March 31, 2020.
“Our current view is that, after the crisis, market interest in 3D printing, in general, and in meaningful applications for 3D printing, in particular, should pick up relatively quickly, including as a result of the many 3D printed solutions that have addressed new market needs so expeditiously during the crisis. We believe Materialise will be uniquely positioned to capture some of these opportunities. Accordingly, while we have implemented a variety of health, safety and cost-saving measures, our focus is on maintaining, as much as reasonably possible, our strategic investments in the majority of the research and business development projects currently in process throughout our three segments. Supported by our strong balance sheet, this focus should position us well to further expand our existing business and take advantage of new growth opportunities when current conditions improve.”
First Quarter 2020 Results
Total revenue for the first quarter of 2020 decreased 1.8% to 46,245 kEUR compared to 47,115 kEUR for the first quarter of 2019. Adjusted EBITDA decreased to 3,603 kEUR from 5,827 kEUR. The Adjusted EBITDA margin (Adjusted EBITDA divided by total revenue) for the first quarter of 2020 was 7.8% compared to 12.4% for the first quarter of 2019.
Revenue from our Materialise Software segment increased 5.0% to 9,821 kEUR for the first quarter of 2020 from 9,350 kEUR for the same quarter last year. Segment EBITDA decreased to 2,645 kEUR from 2,961 kEUR while the segment EBITDA margin was 26.9% compared to 31.7% for the prior-year period.
Revenue from our Materialise Medical segment increased 15.3% to 15,645 kEUR for the first quarter of 2020 compared to 13,566 kEUR for the same period in 2019. Compared to the first quarter of 2019, revenues from medical devices and services grew 18.2% and revenues from our medical software grew 9.8%. Segment EBITDA increased to 2,455 kEUR compared to 1,773 kEUR while the segment EBITDA margin was 15.7% compared to 13.1% for the first quarter of 2019.
Revenue from our Materialise Manufacturing segment decreased 13.9% to 20,815 kEUR for the first quarter of 2020 from 24,184 kEUR for the first quarter of 2019. Segment EBITDA decreased to 1,118 kEUR from 3,695 kEUR while the segment EBITDA margin was 5.4% compared to 15.3% for the first quarter of 2019.
Gross profit was 24,632 kEUR, or 53.3% of total revenue, for the first quarter of 2020 compared to 25,579 kEUR, or 54.3% of total revenue, for the first quarter of 2019.
Research and development (“R&D”), sales and marketing (“S&M”) and general and administrative (“G&A”) expenses increased, in the aggregate, 3.9% to 26,351 kEUR for the first quarter of 2020 from 25,361 kEUR for the first quarter of 2019.
Net other operating income was 683 kEUR compared to 1,258 kEUR for the first quarter of 2019.
Operating result decreased to (1,037) kEUR from 1,476 kEUR for the first quarter of 2019.
Net financial result was (1,321) kEUR compared to (592) kEUR for the first quarter of 2019. The share in loss of joint venture amounted to (39) kEUR compared to (123) kEUR for the same period in 2019.
The first quarter of 2020 contained income tax expenses of (457) kEUR, compared to (1,065) kEUR in the first quarter of 2019.
As a result of the above, net loss for the first quarter of 2020 was (2,853) kEUR, compared to (304) kEUR for the same period in 2019. Total comprehensive income for the first quarter of 2020, which includes exchange differences on translation of foreign operations, was (6,996) kEUR compared to 284 kEUR for the 2019 period.
At March 31, 2020, we had cash and equivalents of 127,135 kEUR compared to 128,897 kEUR at December 31, 2019. Gross debt amounted to 124,702 kEUR, compared to 127,939 kEUR at December 31, 2019. As a result, our net cash position increased 1,474 kEUR during the first quarter of 2020.
Cash flow from operating activities for the first quarter of 2020 was 7,273 kEUR compared to 4,081 kEUR for the same period in 2019. Total capital expenditures for the first quarter of 2020 amounted to 3,053 kEUR.
Net shareholders’ equity at March 31, 2020 was 135,679 kEUR compared to 142,675 kEUR at December 31, 2019.
Mr. Leys concluded, “In this time of unprecedented uncertainty, we are withdrawing the financial guidance we provided on March 4, 2020. As noted earlier, we currently expect the negative impact of the COVID-19 crisis on our business to increase significantly throughout the second quarter of 2020. While we anticipate today that business should gradually pick up in the second half of the year, our visibility on the timing and speed of the recovery of the global economy in general and of our business in particular is currently too limited to provide meaningful financial guidance at this time. As our overall goal is to limit the impact of the COVID-19 crisis and the associated cost-saving measures we take on our long-term plans, in particular on our ongoing research and business development programs, we do expect the short-term impact of the crisis on our Adjusted EBITDA will be even more significant than on our sales.”
Materialise uses EBITDA and Adjusted EBITDA as supplemental financial measures of its financial performance. EBITDA is calculated as net profit plus income taxes, financial expenses (less financial income), shares of loss in a joint venture and depreciation and amortization. Adjusted EBITDA is determined by adding non-cash stock-based compensation expenses and acquisition-related expenses of business combinations to EBITDA. Management believes these non-IFRS measures to be important measures as they exclude the effects of items which primarily reflect the impact of long-term investment and financing decisions, rather than the performance of the company’s day-to-day operations. As compared to net profit, these measures are limited in that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company’s business, or the charges associated with impairments. Management evaluates such items through other financial measures such as capital expenditures and cash flow provided by operating activities. The company believes that these measurements are useful to measure a company’s ability to grow or as a valuation measurement. The company’s calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA should not be considered as alternatives to net profit or any other performance measure derived in accordance with IFRS. The company’s presentation of EBITDA and Adjusted EBITDA should not be construed to imply that its future results will be unaffected by unusual or non-recurring items.