Materialise Shows Increased Revenues in Third Quarter 2016 Financial Results

Materialise, headquartered in Belgium, has just released their third quarter results for 2016, ending September 30, 2016. Still going strong for the year, they are continuing the strength that was seen picking up last quarter. For this quarter, the leader in 3D printing software and services showed an increase in total revenue of 11%, at 28,736 kEUR.  This is in comparison to 25,883 kEUR for the third quarter of 2015.

Once again, they have shown gains in all three segments, Materialise Software, Materialise Medical, and Materialise Manufacturing. The company points out that adjusted EBITDA increased from 1,175 kEUR to 2,833 kEUR, as a result of the following:

• Revenues that continue to grow
• Gross margin improvements
• Modest increase in operational expenses

The adjusted margin for EBITDA in Q3 was at 9.9%, compared to only 4.5% at the same time last year.

The success continues in Materialise Software as well, showing an increase of 21.1% for the third quarter. Materialise states that this is because of more OEM sales and licensing revenues. Segment EBITDA rose to 2,814 kEUR from 2,157 kEUR while the segment EBITDA margin was 36.9% compared to 34.2% in the prior-year period.

Materialise Medical showed an increase of 4.5% in this quarter, with an increase from 9,537 kEUR in comparison to 9,123 kEUR at the same time last year.

“The increase was driven by direct sales of our complex surgery solutions, which increased by 28.0% from the same period in 2015,” stated Materialise.

Executive Chairman Peter Leys

There was a decrease shown in the Materialise medical device business at 2.2%, along with software sales there decreasing 1.9% from the same period last year. The company pointed out that segment EBITDA was approximately flat at 754 kEUR compared to 763 kEUR while the segment EBITDA margin decreased to 7.9% from 8.4% in the third quarter of 2015.

Materialise Manufacturing showed an increase of 10.6% for this quarter when compared to the same quarter last year. For this segment that provides 3D printing software for engineers in both industrial and commercial capacities, Materialise sees these numbers resulting from ‘increased end part manufacturing.’ Segment EBITDA rose to 1,723 kEUR from 799 kEUR, including 460 kEUR related to the updated accounting valuation of resin materials stock as result of steady efficiency improvements. The segment EBITDA margin increased to 14.9% from 7.6% for the 2015 quarter.

“Despite continued soft market conditions, Materialise again delivered double-digit revenue growth and an increase in Adjusted EBITDA. Led by gains in our Materialise Software segment, where we realized strong gains in new licenses and recurring license revenue, total revenue rose 11.0% from the third quarter of 2015. Adjusted EBITDA increased from 1,175 kEUR to 2,833 kEUR. While many market participants continue to await the introduction of the next generation of printers, Materialise took a significant step forward with the launch of our partnership with HOYA Vision Care to transform the eyewear industry. Together, we are enabling the world’s first vision-centric 3D-tailored eyewear, using 3D printing technology to provide individualized lens and frame design backed by an end-to-end digital supply chain,” stated Executive Chairman Peter Leys.

“Our groundbreaking partnership with an industry leader is a prime example of the way we continue to position Materialise as the software and services backbone of the 3D printing industry. We are developing additional meaningful partnerships that should serve us well when the industry resumes its growth and continue to fine-tune our operations to enhance efficiency.”

Further highlights are as follows:

• Gross profit increased to 16,937 kEUR, which is 58.9% of total revenue. This is in comparison to the same quarter last year at 14,702 kEUR, or 56.8% of total revenue.
• R&D, sales and marketing, and general and administrative expenses increased to 4.6% to 17,974 kEUR for the third quarter of 2016 from 17,179 kEUR for the third quarter of 2015. R&D specifically decreased from 4,566 kEUR to 4,389 kEUR, with S&M down slightly from 8,657 kEUR to 8,299 kEUR. G&A expenses increased from 3,956 kEUR to 5,286 kEUR.

“As in the first two quarters of 2016, these changes compared to last year primarily reflected the managerial structure and support we have implemented within our S&M and R&D groups to support their significant growth since our initial public offering. A number of employees with mixed roles within these groups have evolved into more managerial/administrative roles, and their cost as well as certain other expenses are now categorized into G&A,” states Materialise.

• Net other operating income decreased by 274 kEUR to 1,369 kEUR, compared to 1,643 kEUR for the third quarter of 2015.
• Net financial result was (124) kEUR, compared to 151 kEUR for the prior-year period.
• Net loss for the third quarter of 2016 was (52) kEUR, compared to a net loss of (1,104) kEUR for the same period in the prior year.
• Cash and equivalents of 50,490 kEUR were on hand, as compared to 50,726 kEUR at December 31, 2015.
• Net shareholders’ equity at September 30, 2016 was 78,098 kEUR, compared to 82,955 kEUR at December 31, 2015.

As for other activity, the company has expanded facilities in both Poland and Belgium, with plans to invest 17,000 kEUR further in the next year.

“The company’s outlook for fiscal year 2016 remains within our previous guidance range for revenues and Adjusted EBITDA, which called for consolidated revenue between 115,000 – 120,000 kEUR and Adjusted EBITDA between 7,000 – 9,000 kEUR,” stated Materialise.

“We expect a seasonally active fourth quarter for our Materialise Software segment, but given the transition stage of our industry, which is awaiting a new generation of systems with increased value propositions, we expect that revenues for fiscal year 2016 will be at the lower end of the guidance range. We expect deferred revenue from annual licenses and maintenance to increase by an amount between 2,000 and 3,000 kEUR from 13,136 kEUR as of December 31, 2015.”

A replay of the November 9th conference call regarding the release of these figures is available for US participants by dialing 855-859-2056. International participants can dial 404-537-3406. The access code for the replay is #2102394. You can also find the conference call webcast and slide presentation at Materialise for the next year. Discuss in the Materialise Financial forum at 3DPB.com.