A leader in additive manufacturing (AM) and medical software, Materialise (Nasdaq: MTLS) was optimistic after posting its earnings report for the fourth quarter and full-year 2020. Even though the last quarterly results continued to be impacted by the COVID-19 pandemic – just like the second and third quarters of 2020 – company management believes there are several encouraging signs of recovery. The 3D printing services provider saw 2020 completely disrupted in what it called a “roller coaster year,” with several productions and sales activities coming to a near-complete standstill in the second quarter. However, due to the accelerated digitization, particularly cloud-based services, its software segment picked up significantly.
On March 9, 2021, Materialise revealed a fourth-quarter loss of €2.1 million ($2.5 million) after reporting a profit of €1.2 million ($1.4 million) in the same period a year earlier. While quarterly revenue is still 10.7% lower than the fourth quarter of 2019, it represents an 11.1% increase on a sequential basis from the third quarter of 2020. Despite the revenue decline, Materialise’s adjusted EBITDA margin remained healthy at 16.3%, ten basis points higher than the 15.3% margin reported in the same period of 2019, said Executive Chairman Peter Leys during the company’s Earnings Call.
“In the first quarter of 2021, we currently expect both our Software and Medical segments will continue to recover steadily, with the potential of posting revenues that come close to their levels in the pre-pandemic first quarter of 2020. We do not expect our Manufacturing segment to recover to the same extent and at the same pace over that period,” continued Leys. “As a result, we believe that our consolidated revenues in the first quarter of 2021 will be 5% to 10% lower than our revenues in the same period of 2020. Based on the information we currently have, we believe that in the subsequent quarters of this year, as the COVID-19 crisis subsides, the entire group, including our Manufacturing segment, will perform well and grow sequentially.”
Led by a robust recovery of its medical segment in the second half of 2020, Materialise claims it had demonstrated its flexibility and innovation by the superfast development of several products in the early days of the pandemic – when supply chain issues became one of the biggest challenges worldwide. Simultaneously, the company released several new software products to expand its Mimics Innovation Suite, a software toolbox to create accurate 3D models, as well as hospital-based point-of-care 3D printing solutions. These new releases proved to be powerful tools for hospitals deprived of regular supplies and leveraged Materialise for growth in the cardiovascular market. Despite the severe economic difficulties for hospitals and related companies, revenue from medical software sales accounted for 30% of the quarterly segment revenue, resulting in year-over-year growth for the medical segment.
After the Leuven, Belgium-based company announced its financial results, the company stock trading under the ticker symbol MTLS on the NASDAQ climbed 18%. Materialise shares had fallen 44.2% since the beginning of the year, closing at its lowest point in six months the day before the earnings report came out. On March 8, 2021, the stock had slumped to $30.25, down from a record $80.62 on February 9. According to CNN Business, analysts offering 12-month price forecasts for Materialise now have a median price target of $38.14, with a high estimate of $43.16 and a low estimate of $36.13.
As for the total revenues for the year ending December 31, 2020, Materialise said they had decreased 13.3% compared to the prior-year period, with revenues from the company’s software and manufacturing segments declining. Instead, healthcare saved the day as the medical division managed to modestly grow by 1.5% from €60.8 million ($72.6 million) in 2019 to €61.7 million ($73.7 million) in 2020, driven by increases in revenues from medical devices and services. For the year, the company reported a loss of €7.3 million ($8.7 million) or 13 euro cents (16 cents) per share.
In line with the company’s growth strategy, management said the latest IT infrastructure program for €3.3 million ($3.9 million) was rolled out, and the acquisition of RS Scan and RS Print was fully financed. Founder and CEO Wilfried Vancraen said his company empowers sustainability, making it an ideal fit for future aerospace and automotive needs. Vancraen suggested Materialise can provide services in which energy and materials consumption are minimized and enable customers to do the same. Such as with the lightweight RapidFit fixtures (an automotive tooling solution) that are reusable and cater to the needs of the electric car manufacturing market – projected to reach 27 million units by 2030. RapidFit saw historically high order intake at the end of 2020.
Vancraen also considers the footwear and eyewear markets have demonstrated resilience in 2020 and will grow in the next decade, which is why the company made a substantial strategic investment in that direction in the third and fourth quarters of 2020. Millions of consumers need the right personalized solutions that only AM can deliver for eyewear and footwear. The CEO said during the Earnings Call that Materialise’s “passion for personalization” led them to develop the products and processes for customized 3D printing. It also headed the expansion of the “entire software backbone” that allows users to create and harvest value from the data capturing the moment at the point-of-sale with an optician or a podologist, up to the delivery of the final product in-house.
Even though the COVID-19 crisis continues to impact AM businesses, Materialise is encouraged by the fourth-quarter results, and the customer feedback received to-date in 2021. It expects to see it’s software and medical segments continue to recover steadily and get closer to pre-pandemic revenue levels. As hard as it is to estimate which sectors will recover quicker, Materialise already sees the automotive industry return to pre-crisis levels and the healthcare sector getting there as well. Hopefully, the rest of the industries will follow, leading to greater adoption of AM and better earnings and revenues for 3D printing.
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