LEUVEN, Belgium — (BUSINESS WIRE) — July 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 second quarter ended June 30, 2020.
Highlights – Second Quarter 2020
- Total revenue decreased 21.3% to 38,117 kEUR for the second quarter of 2020 compared to the 2019 period.
- Total deferred revenues from annual software sales and maintenance fees were 28,240 kEUR compared to 27,667 kEUR at December 31, 2019.
- Adjusted EBITDA decreased 33.1% to 3,382 kEUR for the second quarter of 2020 compared to the 2019 period.
- Net loss for the second quarter of 2020 was (1,932) kEUR, or (0.04) EUR per diluted share, compared to (297) kEUR, or (0.01) EUR per diluted share, for the 2019 period.
- Total cash was 125,454 kEUR at the end of the quarter; net cash was 3,905 kEUR, an increase of 2,947 kEUR compared to December 31, 2019.
Executive Chairman Peter Leys commented, “In the second quarter, our business suffered materially from the COVID-19 pandemic, with revenues decreasing more than 21% compared to last year’s period. We were able to realize cost savings in both sales and marketing and general administrative expense at a higher percentage rate than the revenue decline but maintained our strategically important research and development programs. These programs will position us to leverage interest in additive manufacturing, which is increasing in part due to the many 3D printed solutions that have addressed new market needs so expeditiously during the pandemic. Our balance sheet remains strong, with total cash of 125,454 kEUR and short-term debt of only 17,827 kEUR as of June 30, 2020. While our R&D programs and financial strength give us a solid platform from which to expand our existing business and take advantage of new growth opportunities when conditions improve, we draw equal confidence from the many examples of resilience, creativity and discipline that our workforce has shown worldwide throughout this difficult period.”
Second Quarter 2020 Results
Total revenue for the second quarter of 2020 decreased 21.3% to 38,117 kEUR compared to 48,404 kEUR for the second quarter of 2019. Adjusted EBITDA decreased to 3,382 kEUR from 5,059 kEUR. The Adjusted EBITDA margin (Adjusted EBITDA divided by total revenue) for the second quarter of 2020 was 8.9% compared to 10.5% for the second quarter of 2019.
Revenue from our Materialise Software segment increased 2.4% to 9,540 kEUR for the second quarter of 2020 from 9,320 kEUR for the same quarter last year. Segment EBITDA increased to 3,756 kEUR from 2,055 kEUR while the segment EBITDA margin was 39.4% compared to 22.1% for the prior-year period.
Revenue from our Materialise Medical segment decreased 19.3% to 11,735 kEUR for the second quarter of 2020 compared to 14,546 kEUR for the same period in 2019. Compared to the second quarter of 2019, revenues from our medical software grew 6.7% and revenues from medical devices and services decreased 31.8%. Segment EBITDA decreased to 1,139 kEUR compared to 2,738 kEUR while the segment EBITDA margin was 9.7% compared to 18.8% for the second quarter of 2019.
Revenue from our Materialise Manufacturing segment decreased 31.7% to 16,777 kEUR for the second quarter of 2020 from 24,550 kEUR for the second quarter of 2019. Segment EBITDA decreased to 650 kEUR from 2,835 kEUR while the segment EBITDA margin was 3.9% compared to 11.5% for the second quarter of 2019.
Gross profit was 19,986 kEUR, or 52.4% of total revenue, for the second quarter of 2020 compared to 26,527 kEUR, or 54.8% of total revenue, for the second quarter of 2019.
Research and development (“R&D”), sales and marketing (“S&M”) and general and administrative (“G&A”) expenses decreased, in the aggregate, 18.5% to 22,705 kEUR for the second quarter of 2020 from 27,861 kEUR for the second quarter of 2019. Specific cost reduction initiatives in S&M and G&A resulted in decreases compared to the second quarter of 2019 of 22.9% and 24.3% respectively, while R&D expenses decreased only 0.9%.
Net other operating income was 892 kEUR compared to 1,370 kEUR for the second quarter of 2019.
Operating result decreased to (1,827) kEUR from 36 kEUR for the second quarter of 2019.
Net financial result was (295) kEUR compared to (190) kEUR for the second quarter of 2019. The share in result of joint venture amounted to 0 kEUR compared to (82) kEUR for the same period in 2019.
The second quarter of 2020 contained income tax income of 191 kEUR, compared to an income tax expense of (61) kEUR in the second quarter of 2019.
As a result of the above, net loss for the second quarter of 2020 was (1,932) kEUR, compared to (297) kEUR for the same period in 2019. Total comprehensive loss for the second quarter of 2020, which includes exchange differences on translation of foreign operations, was (2,977) kEUR compared to (727) kEUR for the 2019 period.
At June 30, 2020, we had cash and equivalents of 125,454 kEUR compared to 128,897 kEUR at December 31, 2019. Gross debt amounted to 121,549 kEUR, compared to 127,939 kEUR at December 31, 2019. As a result, our net cash position increased 2,947 kEUR during the first half year of 2020.
Cash flow from operating activities for the second quarter of 2020 was 7,053 kEUR compared to 4,760 kEUR for the same period in 2019. Total capital expenditures for the second quarter of 2020 amounted to 3,398 kEUR.
Net shareholders’ equity at June 30, 2020 was 132,847 kEUR compared to 142,675 kEUR at December 31, 2019.
Mr. Leys concluded, “With the continued spread of COVID-19 in many parts of the world and the increased disruption to the global economy, we expect the pandemic’s impact on our operations to be even more pronounced in the third quarter and to continue throughout the entire second half of the year. While we anticipate today that Materialise Medical will gradually pick up in the third quarter of the year, we expect that our Materialise Software and Materialise Manufacturing businesses will continue to be significantly impacted. Our overall goal remains to limit the impact of the COVID-19 crisis, including the associated cost-saving measures we take, on our long-term plans, in particular on our ongoing research and business development programs. Accordingly, we expect the third quarter impact of the crisis on our Adjusted EBITDA will be significant.”
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.