Materialise Q3 earnings show company recovering from COVID shock led by software and medical
Materialise, one of the largest additive manufacturing companies in Europe, reported its third-quarter earnings on October 29, 2020. The results show Materialise recovering from the COVID shock to manufacturing on the strength of its software division. The company reported total revenue of 40 785 000 Euros, compared to 50 449 000 Euros in Q3 2019. This discrepancy, at first glance a nearly twenty percent dip from the previous year, is an improvement over second-quarter revenue, which only grossed 38 117 000 Euros. The company’s total cash position decreased slightly from 125 454 000 Euros in Q2 to 110 691 000 Euros. This reserve represents more than double gross revenues, which is indicative of the company’s strong defensive position going into the fourth quarter and new European pandemic restrictions.
The company reported a gross profit of 23 220 000 Euros, or 56.9% of total revenue, for the third quarter of 2020 compared to 29 023 000 Euros, or 57.5% of total revenue, for the third quarter of 2019.
Materialise’s net financial result was a deficit of 1 331 000 Euros compared to 966 000 Euros for the third quarter of 2019. The share in results from joint ventures amounted to 0 Euros compared to a loss of 41 000 Euros for the same period in 2019. After the end of the third quarter, the company agreed to acquire substantially all assets of RS Scan, our joint venture partner in RS Print, and thereby acquire the remaining 50% interest in RS Print.
The company’s revenue from specific segments shows an uneven recovery with further room to grow. The Materialise software segment decreased by 12.7% to 9 478 000 Euros for the third quarter of 2020 from 10 860 000 Euros for the same quarter last year. Medical segment revenue increased by 10.8% to 17 161 000 Euros for the third quarter of 2020 compared to 15 488 000 Euros for the same period in 2019. Compared to the third quarter of 2019, revenues from medical software grew 3.1% and revenues from medical devices and services increased by 14.5%. Manufacturing segment revenues, however, decreased by 41.3% to 14 154 000 Euros for the third quarter of 2020 from 24 127 000 Euros for the third quarter of 2019.
Executive Chairman Peter Leys commented on these earnings results by saying that:
“Given the challenging environment, Materialise performed well this quarter, thanks to the continued hard work and inspiring contributions of our entire workforce. While the revenues of our Materialise Manufacturing and, to a lesser extent, Materialise Software segments decreased in the midst of the COVID-19 pandemic, our Materialise Medical segment grew its revenues by an impressive 11% and posted a record EBITDA margin of 32%. Further building on the success we had with some of our medical applications, we made a strategic investment in our eyewear initiative, in connection with our previously announced collaboration with Ditto, and, on October 29, 2020, we announced an increased investment in our footwear platform through the acquisition of RS Print and RS Scan. In the third quarter, we also increased our overall ongoing R&D efforts by more than 4% and began implementing an internal digital transformation program, including a new e-commerce portal and new customer relationship management (CRM) and enterprise resource planning (ERP) systems.”
Though manufacturing earnings at Materialise lagged somewhat in the third quarter, the company’s prospects appear to have recovered going into the final quarter of 2020. Revenues from software and medical sectors helped buoy the company’s finances; its cash reserve indicates that it will be able to weather continuing COVID economic disruptions.
