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3D Printing Financials: Despite Q3 Revenue Drop, Materialise Beats Analyst Forecasts & Medical Division Grows

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Additive manufacturing software and of 3D printing service provider Materialise posted financial results in its third-quarter for 2020. As the Belgium-based company continues to suffer consequences from the COVID-19 pandemic, total revenue for Q3 was down 19.2% to €40.8 million compared to €50.4 million for the same period in 2019. While the revenues for Materialise’s manufacturing and software segments decreased, its medical division grew by 11% and posted a record EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin of 32%, building on the success of the company’s eyewear and footwear initiatives.

Since the company released its quarterly report, there was a major sell-off in Materialise shares, with a stock down 31% to US$33.90 on November 2, as reported by, underperforming compared to an S&P 500 index which is up 1.25% from the start of the year. The company lost €0.01 per share, far better than the €0.04 loss per share expected by analysts polled by Materialise’s revenue also beat analysts’ forecasts by €5.5 million.

During the last months, the medical business rebounded exceptionally well, while the other software and manufacturing segments continued to be impacted negatively by the crisis, with decreases in revenue of 12.7% for software and 41.3% for manufacturing. As a result, the consolidated revenue decreased by almost €10 million to €40.8 million. However, the company managed to keep solid overall EBITDA margins of 14.8% (a decline of roughly one percentage point compared to last year) mainly due to “disciplined spending,” particularly in general and administrative expenses and in sales and marketing.

The company reported industrial activities are slowly recovering from the steep declining orders experienced in the second quarter of 2020 and during the summer holidays due to the ongoing COVID-19 pandemic that resulted in worldwide lockdowns and manufacturing grinding to a halt in key sectors. Demand for many of Materialise’s 3D printing products and services decreased amid the growth of the work-from-home economy so the recovery is not immediately visible in the financial numbers. Especially as the decline in Q2 was still moderated by the execution of orders from Q1, a reduction of work-in-progress, and a reduction of working capital.

Materialise 3D printing services. Image courtesy of Materialise

According to company executives, this trend is now gradually being reversed in a buildup of orders. Mainly because some of the traditional industrial segments, like the automotive sector, is “prudently” reinvesting in projects. Both industrial machines and medical devices are getting back to more normal levels and Materialise’s online business seems to be recovering. However the negative impact of aerospace and automotive – which represents more than half of the normal industrial activities – is still huge, and they don’t discard an undermining of the positive trend due to the second wave of COVID-19 cases that are already beginning to hit many European countries.

Given the challenging situation, the company looked toward investment and financing decisions that might strengthen its standing. As part of a strategic move to accelerate the digital transformation of personalized solutions in the footcare industry, Materialise agreed to acquire RS Print and RSscan. Continuing R&D efforts into a renewed portfolio for its customers, Executive Chairman Peter Leys announced during the company’s earnings call on October 29, the signing of an agreement to fully acquire the RSscan dynamic foot measurement technology and RS Print – the owner of the Phits personalized insole product line –, as well as a collaboration with premium insole developer Superfeet to accelerate personalization of footcare solutions. The acquisition expands Materialise’s scanning and analysis technology with RSscan laboratory’s advanced 3D motion tracking, gait analysis, finite element analysis, and complementary test equipment.

Materialise agrees to acquire RS Print. Image courtesy of Materialise

“As we move through the fourth quarter, traditionally an important period for our business, the COVID-19 pandemic continues to disrupt everyday life, the markets in which we operate, and macroeconomic conditions in general,” said Leys. “Accordingly, the outlook for the short term remains unclear. We are being disciplined in managing our business, but, just as importantly, are dedicated to pursuing our vital R&D programs and our strategic investment initiatives, which we believe will position Materialise very well for the coming years. Our balance sheet and liquidity are particular areas of strength.”

Although Materialise is pursuing vital R&D programs and strategic investment initiatives, and third quarter medical segment revenues showed an uptick, there is a risk of second abrupt shutdowns that could still impact medical sales significantly for Q4. That combined with a manufacturing activity that is expected to continue to suffer heavily, particularly as automotive and aerospace businesses take time to return to normal, could lead to a short-term outlook that remains unclear. Materialise, like many other software businesses and 3D printing companies that traditionally peak in the last quarter of the calendar year, can be looking at pretty uncertain spreadsheets in the current circumstances. This unpredictability will most likely continue to impact sales and services, moving through one of the most difficult years in the last decades.

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