Materialise NV

Good day, and thank you for standing by. Welcome to the Q2 2023 Materialized Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Harriet Freed of LHA. Please go ahead.

Thank you, everyone, for joining us today for Materialize's quarterly conference call. With us on the call are Freed Von Kron, founder and chief executive officer of Materialize, Peter Lays, executive chairman, and Kuhn Berges, 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 second quarter of 2023. To access the slides, if you have not already done so, please go to the investor relations section of the company's website at www.materialize.com. The earnings press 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 uncertainties 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 may impact the company's future business or financial results can be found in the company's most recent annual report on Form 20-F 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 at the end of the slide presentation. With that, I'd like to turn the call over to Peter Leys. Go ahead, please, Peter.

Thank you, Harriet. And thank you, everyone, for joining us today. You can find the agenda for our call on slide three. As the first item on the agenda, I will summarize the highlights of our financial results for the second quarter of this year. Then I will pass the floor to Fried, who will discuss our investments in a new facility for medical mass customization production in the US. After that, Koen will walk you through our second quarter numbers in more detail. As you may recall, Koen assumed the position of our Chief Financial Officer in May of this year. And we've already experienced that he does bring a lot of valuable experience to the role. And as you will notice, he has gotten off to a very quick start. Finally, I will come back to give you some observations about what we currently believe the rest of the year may bring. And as always, when we have completed our prepared remarks, we will be happy to respond to any questions that you may have. So let's turn to slide four, which summarizes the highlights of our financial results. Our operational performance during the second quarter was very much in line with our very solid performance in the previous quarter. In the second quarter of 2023, we recorded 64.8 million euro in revenues, representing a growth of almost 12% compared to last year's period. Our adjusted EBITDA for the quarter, which was impacted negatively by the unexpected adverse resolution of an arbitration proceeding for a total amount of 5.2 million euro, amounted to €4.8 million, which is still a 12% growth compared to last year's period. In the absence of this one-time adverse event, our current EBITDA margin of 7.3% would have been 15.3%. As a result of this unexpected event, our net results turned negative, to 0.5 million euro negative or minus one euro cent per share for the period and with that i would like to pass the floor to fleet thank you peter good morning or good afternoon to all of you listening to this call After the tailwinds that we discussed a quarter ago in our medical business, we faced a serious headwind in Q2 2023 at the $80 level. But fundamentally, we confirmed the robustness of our profitable growth in medical devices and software during this quarter. In essence, the medical segment performed at the level of revenue and operational profitability even stronger in Q2 than in Q1, where we talked about the tailwinds. If we want to ensure profitable growth in the longer term, we need to invest wisely in our medical activities. In the important US markets, our personalized implants are the major growth drive. Until now, materialized manufactured titanium CMS implants solely at our 3D printing facility in Belgium. This will change when our new production line in Plymouth will become operational this summer. The new facility will not only provide capacity for further growth, It will also improve our service offerings strategically in the United States. With the opening of this 3D printing line, Materialise will accelerate the delivery of patient-specific medical implants to patients in the United States. Surgeons are increasingly embracing 3D printing solutions as they recognize the added value these solutions bring to personalized patient care. including a more predictable and accurate surgical outcome and time savings during the surgery. As the new production line in our Prima facility, Materialise specialises in the 3D printing of personalised titanium cranio-maxillofacial implants for the reconstruction of bone segments. CMS implants are used for facial reconstructive surgery, facial asymmetry resolution, bite corrections, as well as gender affirmation surgery. With a dedicated 3D printing facility in the U.S., we can respond to surgeons' needs with greater reliability while significantly reducing the delivery time of fully personalized implants to less than a week for U.S. patients. This expansion of capabilities complements materialized existing production of 3D printed surgical guides and models that existed already in the United States. It also expands our collaboration with the pre-synthesis division of Johnson & Johnson for the delivery of patient-specific instruments and CMF implants. Currently, Materlach produces 280,000 personalized 3D printed tubes and implants per year, of which 160,000 are for the US market. The advent of technologies such as 3D printing and advanced visualization techniques has transformed personalized patient care. Patient-specific 3D printed medical solutions include surgical guides to enhance the accuracy and the efficiency, anatomical models for diagnostic purposes, and finally, the reconstructive implants themselves. These solutions are designed to bolster surgeons' comfort before and during surgery, leading to more predictable and accurate surgical outcomes. As a result, surgeons increasingly adopt 3D printing as part of their medical practices to bring personalized care closer to the patients while reducing overall costs for the healthcare system. Materialise has more than three decades of experience in developing FDA-cleared medical solutions. We offer a comprehensive range of medical visualization and surgical planning software solutions. 3D printed guides and implants are additional components to our solution that empower researchers, engineers, and clinicians to revolutionize innovation patient care. 30 years ago, surgical solutions were highly standardized. Patient-specific solutions were very rare for unfortunate patients that really had no alternatives. For the medical device industry, it was highly unprofitable to deliver personalized implant solutions, and as a consequence, it was only done in a compassionate care context. Materialise has pioneered numerous groundbreaking medical 3D planning and printing applications, and we continue to do so with our ever-increasing research and development efforts. We have built a leading position by changing the mindset. Now, patient-specific surgical solutions can be delivered in a cost-effective and economically viable way by the healthcare industry. Custom surgical solutions are still very valuable for the unfortunate patients in rare, complex situations, often overcoming the limits of current standard treatments. For instance, in 2021, materialized innovative 3D planning and printing tools played a pivotal role in the world's first simultaneous double-hand and face transplant that was successfully performed at NYU Langone Health in New York City. But today, personalized implant solutions are also important for more patients that suffer from more frequent diseases or accidents. Thanks to mass customization, more people can benefit from the first-time right approach and better quality solutions in a cost-effective way that enhances the quality of our healthcare system. In 2017, we introduced one of the first personalized CMF implant portfolios in the United States. This is an opportunity for the healthcare industry and for Materialise in particular. With the opening of our new 3D printing facility in the US, we bring personalized care closer to US patients. And at the same time, thanks to our software offering, we bring the concepts and building blocks of mass customization also closer to the US healthcare industry. The Plymouth facility acts as the regional headquarters for our medical and industrial software solutions in the US. Thanks to the expanded facility, we are now able to demonstrate even better than before how all of our tools operate in a patient-specific context for real AI product development and for real 3D printing production lines, and on top of that, in a certified environment. Let me now pass the call to Koen.