Materialise NV

Hello, ladies and gentlemen, and welcome to the Q1 2021 Materialize Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Harriet Freed of LHA. Please go ahead.

Thank you for joining us today for Materialize's quarterly conference call. With us are Freed Von Kron, founder and chief executive officer of Materialize, Peter Lays, executive chairman, and Johan Albrecht, chief financial officer. Today's call and webcast are being accompanied by a slide presentation that reviews Materialize's strategic, financial, and operational performance. for the first quarter of 2021. To access the slides, please go to the investor relations section of the company's website. The earnings release that was issued earlier this morning can also be found on that page. Before we get started, I'd like to remind you that management may make forward-looking statements regarding the company's plans, expectations, and growth prospects, among other things. These forward-looking statements are subject to known and unknown certainties and risks. that could cause actual results to differ materially from the expectations expressed, including competitive dynamics and industry change. Any forward-looking statements, including those related to the company's future results and activities, represent management's estimates as of today and should not be relied upon as representing their estimates as of any subsequent day. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations. A more detailed description of the risks and uncertainties and other factors that could impact the company's future business or financial results can be found in the company's most recent annual report on Form 20F, filed with the SEC. Finally, management will discuss certain non-IFRS measures on today's call. A reconciliation table is contained in the earnings release and also at the end of the slide presentation. With that introduction, I'd like to turn the call over to Peter Ley. Peter?

Hi, Harriet. Thank you. And thank you, everyone, for joining us today. You can find the agenda for our call on slide three. As the first item on our agenda, I will summarize the highlights of our financial results for the first quarter of 2021. After that, I'll give you a bird's eye view of the company's current strategy and approach to market. Then I will pass the floor to Frit, who will give you more context about the Link3D transaction that we announced earlier this month. After that, Johan will, as always, walk you through our first quarter numbers in more detail. And finally, I will come back to give you some observations about what we currently believe the near-term future may bring. When we've completed our prepared remarks, we will be happy to respond to questions. So, let's turn to slide four, which summarizes the highlights of our financial results. While, just like the last three quarters of 2020, the results of our first quarter this year were impacted by the COVID-19 pandemic, we are continuing to see signs of a steady recovery of our business. First, our revenue of 45.5 million euro this quarter came close to the revenue level of 46.2 million that we posted in the first quarter of 2020, which was, as you know, only slightly impacted by the crisis. Importantly, both our medical and software segments showed growth again of 3.7 and 4.1% respectively. Second, our adjusted EBITDA margin was 11.7%, compared to the 7.8% margin that we realized in the same period last year before the crisis kicked in. Importantly, as we navigated through the crisis, we did not lose sight of the engines of our future growth, Therefore, in the quarter, our R&D spending represented a solid 14.3% of total revenue, and we strengthened and secured our leading position in the additive manufacturing software market for the coming years by gearing up for an upcoming acquisition of Link3D, a provider of additive manufacturing execution systems. Frits will explain the Link3D transaction in more detail. Before he does so, we thought it could be worthwhile to remind you of the overall strategy of Materialise. Therefore, we summarized our positioning and vision on the two subsequent slides 5 and 6. So let's turn to slide 5. First, Materialise enables the users of AM technology to be more productive, more cost efficient, and more sustainable. We call this our horizontal or backbone strategy. We bring solutions to the market that are typically fairly neutral, if not off the shelf, and that can be used regardless of the specific application that the 3D printing technology is used for. As a result, our horizontal products have a broad addressable market, but typically only represent a relatively small part of the value chain that our customers are active in. As many of you know, our two key horizontal products are our two flagship software platforms, the Magix software platform and the Mimix innovation suite. Our Magix software platform includes both functionality that increases the productivity of an individual 3D printer, as well as solutions that automate and control an entire 3D printing facility. Our Magix platform is neutral. It integrates with the technology of virtually all manufacturers of industrial printers, both in plastics and in metal. We support customers who 3D print prototypes, so-called mini-in, mini-out facilities, as well as customers who print larger batches of end parts, and customers that engage in so-called mass customization projects. Our Magix software platform is brought to the market by Materialise Software. As the adoption of AM in general increases, we believe that materialized software will continue to grow accordingly. Our collaboration with Link3D will, in our opinion, accelerate the growth of materialized software further. Frits will, in a minute, explain that in more detail. Second flagship. The Mimix Innovation Suite helps researchers, medical device companies, and hospitals to engineer on the human anatomy. Mimix visualizes the human anatomy in three dimensions, allowing its users to plan individual surgeries and to design customized medical devices, which may subsequently be 3D printed. Mimix can be used by a very wide variety of medical applications, ranging from dental to orthopedic and cranio-maxillofacial to cardiovascular applications, to name only a few. Our Mimix innovation suite is brought to the market by Materialise Medical. The performance, the strong performance of Materialise Medical, both on its top and bottom line, is partially the result of the success of our Mimix innovation suite, including the successful introduction of software planning tools in the hospital market. Now, moving to slide six, I'd like to go over the ways that, in addition to enabling the use of AIM as such, Materialise also empowers specific, meaningful applications of the 3D printing technology. These solutions, which we internally call our verticals, are more tailored to a specific use of the AM technology and typically include a complex mix of customized software solutions, dedicated engineering support and complex 3D printing services. As a result, The addressable market of these solutions is more focused, but we are involved in a larger part of the value chain. Our most widely accepted vertical solutions today are brought to the market by Materialise Medical. These include our customised surgical knee guides in the orthopaedic market and our customised instruments and implants in the CMF market. particular RCMF vertical, contributed to the good performance of Materialized Medical over the last couple of quarters, both in terms of revenue and in terms of profitability. More recently, Materialized Manufacturing started incubating new verticals, which include our eyewear and footwear initiatives. Each of these wearable initiatives draws on the experience we gained in Materialise Medical and makes use of the Materialise software Magix platform. While the revenues of each of these wearable initiatives are currently still fairly modest, we believe that they are well-chosen drivers for future long-term growth. Now, if you look back at the major initiatives that we have announced over the last 18 months, you will note that they perfectly match the strategy that I have just outlined. The acquisition of Engine Plan expands our vertical CMF portfolio and market reach. The acquisition of RSCAN and RSPRINT fits in our vertical footwear initiative. And the recently announced transaction with Link3D strengthens our horizontal Magix software platform. With this overall introduction and background, I'd like to give the floor to Frit, who will give you more color on our excitement with respect to the Link3D opportunity.