Earnings call transcript: Materialise NV misses Q2 2025 EPS forecast

Materialise NV, a leader in 3D printing and digital manufacturing, reported its Q2 2025 earnings with notable discrepancies between its actual and forecasted earnings per share (EPS). The company posted an EPS of €0, falling short of the anticipated €0.02, representing a 100% miss. Despite this, the company’s revenue exceeded expectations, reaching €75.98 million compared to the forecasted €67.21 million, a surprise increase of 13.05%. Following this announcement, Materialise’s stock fell 13.83% in pre-market trading, closing at €5.325. According to InvestingPro analysis, the company currently appears undervalued, with a "FAIR" overall financial health score of 2.23 out of 5.

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Key Takeaways

• Materialise NV’s EPS fell short of expectations, missing the forecast by 100%.
• Revenue outperformed forecasts by 13.05%, reaching €75.98 million.
• Stock prices dropped by 13.83% in pre-market trading following the earnings release.
• The company revised its full-year revenue guidance downward.
• Medical segment revenue grew by 17%, while manufacturing declined by 25%.

Company Performance

Materialise NV’s overall performance in Q2 2025 was mixed. The company experienced a decrease in total consolidated revenue by 5.8% to €64.8 million, yet managed to improve its gross profit margin to 58.3%. The medical segment showed robust growth, increasing by 17%, whereas the software and manufacturing segments saw declines. The restructuring in the manufacturing division and geopolitical volatility were cited as key challenges.

Financial Highlights

• Revenue: €64.8 million, a 5.8% decrease year-over-year.
• Gross profit margin: 58.3%, an improvement from previous quarters.
• Adjusted EBIT: €3.1 million.
• Net profit: €0.2 million.
• Free cash flow: €6 million in the first half of 2025.
• Cash reserve: €117 million.

Earnings vs. Forecast

Materialise NV’s Q2 2025 EPS was €0, missing the forecasted €0.02 by 100%. However, revenue exceeded expectations, coming in at €75.98 million against the projected €67.21 million, marking a 13.05% surprise. This significant miss in EPS compared to the revenue beat suggests potential operational inefficiencies or cost-related challenges affecting profitability.

Market Reaction

The market reacted negatively to the earnings report, with Materialise’s stock falling 13.83% in pre-market trading. The stock’s last close was €5.02, and it has fluctuated between a 52-week high of €9.69 and a low of €3.93. The substantial drop indicates investor concerns over the missed EPS forecast despite the revenue beat.

Outlook & Guidance

Materialise revised its full-year revenue guidance downward to a range of $265-280 million, from a previous $270-285 million. The company maintained its adjusted EBIT guidance of €6-10 million. Despite challenges, Materialise expects continued growth in its medical segment and is focusing on strategic collaborations and innovations.

Executive Commentary

CEO Brigitte Devat expressed confidence in the company’s fundamentals, stating, "We remain convinced that the fundamentals of our business are solid and resilient." She highlighted the company’s strategic positioning, saying, "We are well positioned to capitalize on opportunities as market conditions improve."

Risks and Challenges

• Geopolitical and macroeconomic uncertainties impacting business operations.
• Declines in the software and manufacturing segments.
• Potential challenges in the US market and industrial segments.
• Restructuring efforts in the manufacturing division.
• Dependence on strategic collaborations for growth.

Q&A

During the earnings call, analysts inquired about the long-term strategic collaboration with Johnson & Johnson in the respiratory market. The company also discussed its use of a €20 million credit facility for potential mergers and acquisitions and capital expenditures. Concerns were raised about the manufacturing segment’s volume and pricing challenges, with executives emphasizing ongoing efforts to address these issues.

Full transcript - Materialise NV (MTLS) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Second Quarter twenty twenty five Materialise NV Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Harriet Fried of Alliance Advisors. Please go ahead.

Harriet Fried, Investor Relations Representative, Alliance Advisors: Thank you for joining us today for Materialise’s quarterly conference call. With us on the call are Prigithya Devat, Chief Executive Officer and Koon Poujas, Chief Financial Officer. Today’s call and webcast are being accompanied by a slide presentation that reviews Materialise’s strategic, financial and operational performance for the second quarter of twenty twenty five. To access the slides, if you’ve not already done so, please go to the Investor Relations section of the company’s website at www.materialise.com. The earnings press release that was issued earlier today 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 conference call. A reconciliation table is contained in the earnings release and at the end of this slide presentation. With that, I’d like to turn the call over to Brigitte Devett. Brigitte, go ahead, please.

Brigitte Devat, Chief Executive Officer, Materialise NV: Good morning and good afternoon to all of you. Thank you for joining us today. You can find the agenda for our call on slide three. First, I will summarize the business highlights for the second quarter of twenty twenty five. Then I will pass the floor to Kun, who will take you through the second quarter financials.

Finally, I will come back and explain what we expect the remaining months of 2025 to bring. When we’ve completed our prepared remarks, we’ll be happy to respond to questions. Moving to slide four for the highlights of the second quarter twenty twenty five. We celebrated our thirty fifth anniversary in the second quarter of this year. Thirty five years ago, our founders, Fried Franc Garn and Hilde Ingallaert started their journey to build a better and healthier world, thanks to the power of additive manufacturing.

I’d like to take this opportunity to thank all of our employees for the incredible energy and hardship they put into growing the adoption of additive manufacturing every single day. In thirty five years, we have grown into a leading profitable, cash flow positive company in this sector, and we keep pushing the boundaries. Our strategic position remains excellent as we benefit from the ongoing R and D investments in strategic areas, long term value creation in our growth segments. I am very proud that this quarter again, we made significant progress in our medical business. As you know, in our medical business, our strategy is to grow in existing markets and in new markets in order to reach more patients with our personalized solutions.

This is what we call our mass personalization strategy. Now, one of the new markets that we are developing is the respiratory markets. Two years ago, we launched a dedicated three d surgical planning solution with a focus on addressing the challenges in thoracic surgery to treat lung cancer patients. The Mimics Thoracic Planner. Now advances in screening and surgical techniques in that area have created an opportunity for earlier diagnosis and less invasive lung sparing procedures.

But these approaches in the respiratory field are technically demanding. To remove a tumor from the patient’s lungs, surgeons want to remove as much as needed for the tumor to be gone, but as little as possible in order to leave as much lung capacity for the patient after surgery. All of this while minimizing the incision to enable speedy recovery of the patient. To plan these complex interventions properly, the surgeon uses our three-dimensional view on the lung lobes and segments and the airways and blood vessels that he or she cannot only view but also engineer on. That means that he or she can simulate what happens when he or she takes a three centimeter margin around the tumor rather than a four centimeter margin and what lobes or segments are impacted.

Now, surgeons using our MEMS thoracic planner have reported that the software has actively helped them better understand each patient’s unique anatomy and plan surgeries with precision, supporting the shift from minimally invasive care towards minimally invasive care and lung sparing procedures. Now, building on these encouraging results, we are proud to announce a pilot collaboration with Johnson and Johnson’s surgical business in EMEA to advance the adoption of this solution in the region. As a leader in surgical technologies that help clinicians and patients in the lung cancer community, J and J will offer surgeons our planning solutions alongside their full portfolio of surgical technologies. And we also keep making progress in our existing markets. One of our oldest and most mature markets is the orthopedic market, and in particular, our knee guides.

Knee guides are amongst the most well known and mature applications of three d printing in the medical market. Knee guides are used to provide surgeons with surgical instrumentation that is customized to the patient’s anatomy using pre op CTs or MRIs and help surgeons to make accurate bone resections and ensure better knee implant position. Traditionally, knee implants were positioned using standardized angles, aligning them to the straight mechanical axis of the leg. Today, there’s a growing trend in the market to restore the natural alignment of a patient’s knee by positioning the implants based on the unique anatomy and cartilage wear, mimicking how the knee was before it was damaged. In the second quarter, we received five ten ks U.

S. Market clearance for this personalized alignment feature in our Knee Planner that is used by surgeons that choose to perform surgery with our personalized knee guides in The US. And this feature allows surgeons to tailor the knee implant positioning to each patient’s unique anatomy rather than getting the legs straight, so to speak. And with this clearance, surgeons can now choose between traditional mechanical straight alignment and the new personal alignment mode. We believe that this innovation will not only provide surgeons with greater flexibility, but also advance the field of knee surgery, creating positive impact for patients.

We will bring this feature to The U. S. Market in the third quarter. And software in manufacturing, we continue to face headwinds due to geopolitical volatility and the macroeconomic uncertainty impacting many of the market segments we are operating in. Customers worldwide are delaying investment decisions in order to get greater clarity around tariffs and interest rates.

Now that being said, we continue to see confirmation of our strategy to focus on specific customer and market segments, both in software and manufacturing. And this is particularly true in the current market reality, where the growth in additive, as far as industrial markets are concerned, comes primarily from specific sectors and from users that are already familiar with additive rather than from new adopters. As a result of the specific focus on our strategic market segments within software and manufacturing, we delivered growth again on the basis of an already strong quarter two last year in those market segments. As another strategic milestone in the second quarter, we have formally announced our decision to broadly engage engage in and support the defense sector in light of the current geopolitical landscape and the breakdown of traditional global alliances. Given the close connection between the defense and aerospace sectors, we believe our expertise will be particularly relevant in enhancing the regional defense capabilities across land, sea and space.

Additionally, we anticipate that this broader engagement will strengthen our position in segment and open up new opportunities in the future for both our manufacturing, as well as our software segment. Last but not least, we continue to make progress on our strategic roadmap in our software segment to build partnerships to complement our end to end workflows and enable customers to scale their additive operations more efficiently. In this context, we announced the collaboration with Senera to establish direct connectivity between Magics SDKs and Senera’s AgenTiC AI platform for engineers. Additive manufacturing organizations often use significant production time to manual build preparation workflows with human intervention driving up operational costs. The collaboration between Cinera and Us allows users to deploy additive manufacturing agents that handle design to print tasks, autonomously helping scale throughput while reducing manual effort and costs.

The new MAGICS SDK, launched in 2024, allows for platform integration with MAGICS powerful build preparation algorithms to prepare even the most complex models for successful printing, reducing field builds and improving part quality. The collaboration with SINERA will enable users to create end to end automation workflows for additive manufacturing, significantly reducing build failures, ensuring models are properly prepared for printing and reducing manual efforts throughout the process. Combined with other additive manufacturing solutions in the SINERA marketplace, users can manage the complete AM workflow from design to production with an integration between design and build preparation workflows, providing the designers with immediate feedback on manufacturability and build optimization directly within one environment. Now, while our top line remains under pressure in the current market environment for the Industrial Division, we continue to control our costs. In the second quarter, we have announced and successfully implemented a restructuring in our manufacturing division.

As part of this process, we reassessed what activities are core to our future portfolio and we classed some of our assets as assets held for sale on our balance sheet as a result of this evaluation. These assets and activities are non material to our activities. As the pressure on our top line persists, we will continue to manage our costs. By taking steps to reduce costs while continuing focused investments in our strategic areas, we are well positioned to capitalize on opportunities as market conditions improve. I will now turn over to Kun, who will present the financial results.

Koon Poujas, Chief Financial Officer, Materialise NV: Thank you, Brigitte. Good morning or good afternoon to all of you on this call. I’ll begin with a brief overview of our key financial results as shown on slide five. While our Medical segment once again achieved high double digit growth this quarter, total consolidated revenue decreased year over year by 5.8% to €64,800,000 Our gross profit margin remained strong and increased to 58.3% in the second quarter of this year, reflecting changes in our revenue mix, but also as a result of our ability to optimize direct production costs despite inflationary pressure. Adjusted EBIT for the 2025 amounted to €3,100,000 showing a strong increase compared to prior quarters, despite the lower revenue that was generated, reflecting once more the positive impact of targeted cost control.

The net result for the quarter amounted to a profit of €200,000 despite being impacted by large unfavorable effects from exchange rate fluctuations. During the first half of twenty twenty five, we generated a positive free cash flow, which led to a net cash position of €63,000,000 at the end of Q2, an increase of €2,000,000 versus the beginning of the year. In the following slides, I will elaborate further on these results. As a reminder, please note that unless stated otherwise, all comparisons are against our results for the second quarter of twenty twenty four. I would also like to draw your attention to a modification we have made in the adjustments definition that we apply to our adjusted EBIT and adjusted EBITDA.

As of this quarter, we will also be adjusting these non IFRS metrics for costs related to non recurring corporate initiatives, restructurings and reorganizations. We believe this modification will allow for a more correct comparison periods, while it brings us in line with general market practices. We do not anticipate that this modification will require restatements of prior periods results. Also in the current period, the adjustment made is immaterial to our overall results. Now turning to slide six, you will see an overview of our consolidated revenue.

As already mentioned, Materialise Medical continued its strong performance, delivering consistent high double digit growth, with revenue increasing by almost 17% this quarter and once again posting a quarterly revenue record. On the other hand, revenues from software and manufacturing segments were further impacted by intensified geopolitical and macroeconomic turbulence. As a result, revenue in both segments declined by 1225% respectively, leading also to a decrease of 5.8% of our consolidated revenue compared to the same periods of last year. Now this revenue decrease also reflects the unfavorable effect from a weaker US dollar in the second quarter of twenty twenty five. As you can see in the graph on the right side of the page, Materialise Medical accounted for 51%, Materialize Software for 15%, Materialize Manufacturing for 34% of our total revenue for the second quarter of twenty twenty five.

In the first half of this year, we generated over 131,000,000 Euro of revenue, which is stable versus last year’s same periods. At the same time, our deferred revenue balance related to software maintenance and license fees, coming both from our medical and software segments decreased in the second quarter of this year, in line with the annual seasonality pattern. Over the last twelve months, however, the balance increased by €3,000,000 bringing the total amount carried on our balance sheet at the end of the 2025 to €46,700,000 On slide seven, you will see our consolidated adjusted EBIT and EBITDA numbers for the second quarter of twenty twenty five. Consolidated adjusted EBIT totaled 3,100,000.0 Euro, compared to 3,900,000.0 Euro for the same period of 2024, representing an adjusted EBIT margin of 4.7%. Consolidated adjusted EBITDA for the second quarter amounted to €8,300,000 decreasing from the €9,200,000 last year, representing an adjusted EBITDA margin of 12.8.

Given current market volatility, we believe it is also important to compare our operational performance on a quarter over quarter basis. In this context, we saw significant improvement in both adjusted EBIT and EBITDA compared to the first quarter of this year. Our adjusted EBIT increased from 600,000 to €3,100,000 while adjusted EBITDA also increased by €2,100,000 These improvements reflect the positive impact of disciplined cost control and targeted cost reduction measures that we have taken to safeguard operational profitability. Over the first half of twenty twenty five, we generated €3,700,000 of adjusted EBIT and €14,400,000 of adjusted EBITDA. Moving now to slide eight, you will notice that the revenue in our Materialise Medical segment increased by almost 17% compared to the second quarter of twenty twenty four.

This solid growth was generated by both medical software and by revenue from medical devices sales, which grew respectively by 1418%. Within our medical devices and services activity, we saw continued growth, both in our direct and our partner sales. In line with top line growth, adjusted EBITDA grew further to over 10,700,000.0 Euro, resulting in an increased adjusted EBITDA margin of 32.7%. We continued our planned R and D investments in medical to drive future growth, while we achieved strategically important milestones during the second quarter of this year, as mentioned earlier by Birgitte. Over the first half of this year, our Materialise Medical segment realized €64,000,000 of revenue, up by 18% from last year, with an adjusted EBITDA of €19,800,000 representing a 31% adjusted EBITDA margin.

Slide nine summarizes the results of our Materialise Software segments. In the second quarter, software revenue decreased by 12% to 9,900,000.0 Euro. This was partly due to the further conversion to a recurring revenue model, but macroeconomic uncertainty and Forex evolutions put also pressure on our sales volumes, especially in The U. S. Markets.

During the second quarter, we continued our transition to a cloud subscription based business model. Over the quarter, around 84% of our software revenue was of a recurring nature, versus 80% in the previous quarter, demonstrating the progress we keep making. Despite the lower top line compared to the same period of last year, effective cost management allowed us to maintain a stable adjusted EBITDA of €1,400,000 representing an adjusted EBITDA margin of 14%. Over the first half of this year, our Software segment realized €19,600,000 of revenue and adjusted EBITDA of €2,000,000 representing a 10% adjusted EBITDA margin. Now, let’s turn to slide 10 for an overview of the performance of our Materialise Manufacturing segments.

In the second quarter of twenty twenty five, geopolitical uncertainty added to the macroeconomic headwinds that we have been facing for some time and drove our manufacturing revenue down by almost 25% compared to last year’s same period, realizing quarterly revenue of 22,100,000.0 Euro. Also in the second quarter of this year, we realized further growth in our strategic focus areas, while the automotive segment specifically continued to be under severe pressure. As a response to revenue pressure, we took further steps to bring the cost of our manufacturing segment structurally down. In addition to strict cost control, we reviewed in-depth the performance and potential of our manufacturing portfolio. And as an outcome of this review, we decided to stop our metal prototyping operations and to focus exclusively on metal series production, which resulted in a non recurring severance costs that we adjusted in our quarterly numbers.

Furthermore, we reclassified some of our manufacturing business assets on our balance sheets as assets held for sale. The operating results and net assets of this reclassification are immaterial to our consolidated results of operation and our financial position. Mainly as a result of the lower top line, the adjusted EBITDA of our manufacturing segment still ended negatively at minus €800,000 in the second quarter, slightly below the results of the first quarter of this year, which was at minus 400,000.0 but significantly up from the minus €3,000,000 adjusted EBITDA realized in the last quarter of twenty twenty four. Over the first half of this year, our manufacturing segment realized revenue of €47,600,000 with an adjusted EBITDA of minus €1,200,000 Slide 11 provides the highlights of our consolidated income statement for the second quarter of twenty twenty five. Over the period, our gross profit amounted to 37,800,000.0 Euro, representing a gross profit margin of 58.3%, significantly up from the 57% realized in the second quarter of twenty twenty four.

As mentioned earlier, this increase can be linked to mix effects, but it’s also the outcome of the efforts we made to generate further production efficiencies. Our operating expenses in the quarter decreased by €300,000 or close to 1% in aggregate, compared to the same period of last year, with R and D expenses remaining flat year over year. During the quarter, we invested again over 11,000,000 Euro in R and D, the majority of which in our Medical segments. Sales and marketing and G and A expenses decreased by 1.11.6% respectively, reflecting the impact from further indirect cost optimizations, compensating inflationary pressure. Net operating income in the quarter was 1,300,000.0 Euro, compared to 1,200,000.0 Euro last year.

As a result of these elements, the Group’s operating result in the quarter was positive at 2,700,000.0 Euro. In Q2 twenty twenty five, the net financial result amounted to a loss of 3,100,000.0 Euro, which includes interest income of 700,000.0 Euro from our cash reserves and interest expense on our financial debts of 400,000.0 and a significant negative impact from foreign exchange fluctuations of minus 3,300,000.0 Euro. In last year’s corresponding period, the net financial result was positive by EUR1 million, as we benefited from higher interest rates in our cash deposits and from favorable exchange rates effects at the time. Income tax in the quarter amounted to a positive EUR0.5 million, resulting from the recognition of deferred tax assets compared to a tax expense of EUR1 million in the corresponding period of last year. Despite the large negative effect from exchange rate fluctuations, we were still able to report a net profit for the second quarter of zero point two million Euro.

Now please turn to slide 12 for a recap of balance sheet and cash flow highlights. Also for the second quarter of twenty twenty five, we can report a strong balance sheet. As already mentioned during the review of our manufacturing segment, we reclassified a limited amount of business assets as held for sale, representing a net asset value of 3,600,000.0 Euro, which can be considered immaterial compared to the total consolidated balance sheets. Our cash reserve increased to EUR117 million by the end of the quarter. At the same time, also our gross debt increased to EUR54 million.

Both changes were largely impacted by 20,000,000 Euro drawing we made on an existing bank credit facility in line with earlier contractually agreed drawing periods. In the next twelve months, we will be drawing the remaining €30,000,000 of this facility. The net cash position at the end of the quarter amounted to €63,000,000 up by €2,000,000 compared to the beginning of this year and was as such not impacted by the previously mentioned drawing. Trade receivables, inventory and payables, positions on our balance sheet all decreased, but when corrected for the asset held for sale reclassification, the net working capital slightly increased by EUR0.7 million compared to the beginning of this year. Total deferred income position increased to EUR60 million, out of which EUR47 million was related to deferred revenues from software license and maintenance contracts, as mentioned before.

As you can see on the graphs on the right side of the page, the operating cash flow in the second quarter of this year was just negative, as the cash flow generated from P and L was entirely offset by negative evolution of working capital components. Over the first six months of this year, however, the operating cash flow is positive at €9,700,000 Capital expenditures for the second quarter amounted to €4,700,000 including €3,100,000 of non recurring CapEx, mainly spent on remaining machinery for the new agtech plants. Over the first half of this year, total CapEx amounted to 6,600,000.0 Euro, out of which 60% can be considered to be of a non recurring nature. Taking into account also cash inflows from limited asset sales and from government grants received for the AgTech investments, the free cash flow over the first half of this year is positive and amounts to EUR 6,000,000. And with that, I’d like to hand the call back to Brigitte.

Brigitte Devat, Chief Executive Officer, Materialise NV: Thank you, Kun. Let’s turn to page 13. I’ll conclude my remarks with a discussion of our full year 2025 guidance. As we move through 2025, we see a risk that geopolitical volatility and macroeconomic uncertainty intensify and also further impact the business climate for the remainder of this year. Unfavorable foreign exchange fluctuations might also add to the pressure on our revenue line and reported net results.

We therefore believe it is prudent to slightly reduce our revenue guidance for the full year from the earlier communicated range of $270,000,000 to $285,000,000 to a range of $265,000,000 to €280,000,000 We remain convinced though that the fundamentals of our business are solid and resilient and believe that further structural cost efficiencies will allow us to safeguard operational profitability. So, the slightly lower revenue outlook, we therefore are confirming, reconfirming our adjusted EBIT guidance range of 6,000,000 to €10,000,000 for fiscal year twenty twenty five, in line with our earlier communications in February and April year. This concludes our prepared remarks. Operator, we’re now ready to open the call to questions.

Conference Operator: Thank you. Our first question comes from the line of Troy Jensen from Cantor Fitzgerald.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, thanks for taking my questions. Good morning, good afternoon.

Brigitte Devat, Chief Executive Officer, Materialise NV: Hi Troy. Hello.

Troy Jensen, Analyst, Cantor Fitzgerald: Hey, so maybe just a quick question on, well, congrats on, you know, the the opportunity here with J and respiratory side. I wondered maybe could you quantify that opportunity? Is that something that could be as big as, you know, this maxiocranial facial opportunity you’ve had with them? Or just if you could help size it a little bit, that would be helpful.

Brigitte Devat, Chief Executive Officer, Materialise NV: Yeah, so that’s obviously a very good question. I think so I want to make a couple of comments on this. So first, I think we need to keep in mind that this is a very new market. So the cranio maxillofacial and the orthopedic markets are existing mature markets, whereas the respiratory market is a new market. Now, when we say new markets is really markets that we still are building.

So it’s a very start of a long journey. So you know, to read the size of, know, some of our existing markets, you know, we’re taking years. So that gives you a bit of a feeling for, you know, when to expect, you know, some of that impact. The second comment I want to make is, well, certainly, revenue impact is not to be expected this year at the very earliest, you know, it’s going to be next year. Third comment is that, you know, this is a pilot collaboration.

So, it’s a very first step in the direction in this respiratory market. So, while this is a really important milestone that will open up the respiratory market, and in this collaboration, I’m really convinced that this is a game changer. It is a new market, and opening up new markets and developing markets as a leader in those markets, you know, it’s a long journey. That is Yeah,

Troy Jensen, Analyst, Cantor Fitzgerald: thanks for the added color. Maybe a couple questions for Kuhn. First of all, 20,000,000 in debt you guys took out during the quarter. And did I hear you say it’s you’re taking out more? I’m sorry.

I tuned out a little bit during the end of the call, but is that correct?

Koon Poujas, Chief Financial Officer, Materialise NV: No, that is correct, Troy. It is part of an earlier agreement we made a couple of years ago, where we had, where we signed into a new, additional facility of fifty million Euro, five zero, and which foresaw a delayed drawing in three tranches, two tranches in the course of 2025 and the last tranche in the middle of 2026. So we are honoring those commitment, our own engagements and we are now we have made the first drawing of 20,000,000 in the second quarter.

Troy Jensen, Analyst, Cantor Fitzgerald: Interesting. So I guess that my first thought was maybe you guys had a change of thoughts on acquisitions, this is I mean, what what would you do with all of this additional cash on the balance sheet? Because And you know, obviously, flow positive and EBITDA positive, and I don’t need it, but there are a lot of assets out there in the market right now. So I didn’t know

Koon Poujas, Chief Financial Officer, Materialise NV: Yes, that cash was indeed, I think that was also the intention and when the agreement with the bank was made and it’s still the intention to put that cash to work, of course not to put it on our bank account. So that is it’s a bullet loan, so it is targeted at being used for CapEx or M and A investments in future.

Troy Jensen, Analyst, Cantor Fitzgerald: Okay. All right. Good luck. And then how about just quick on the gross margins? I mean, were obviously great this quarter, despite the lower revenues.

I’m assuming it’s mainly mix or just getting less manufacturing sales, but or was there other stuff behind that driving it better?

Koon Poujas, Chief Financial Officer, Materialise NV: No, it’s a combination of mix effects indeed, like you say, medical, less manufacturing, but it’s also it’s also coming from the fact that we are able to reduce the production cost or the direct costs, both in our medical segments and in our manufacturing segments where they play a role. No. That’s correct.

Troy Jensen, Analyst, Cantor Fitzgerald: Right. Alright. Perfect. Well, I’ll see the floor if there’s others. Got other questions for you guys, but then we can follow-up later too.

So

Brigitte Devat, Chief Executive Officer, Materialise NV: Alright. Thank you, Troy.

Troy Jensen, Analyst, Cantor Fitzgerald: Yep. Thanks. Congrats. Good luck.

Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Alexander from Kepler Cheuvreux.

Alexander Kaimers, Analyst, Kepler Cheuvreux: Hey. Hello. Alexander Kaimers from Kepler Cheuvreux here. So maybe to pick up on that first question of Troy. So you have these new features and new pilots coming up, but but next it is, of course, you have still the the the markets that you’re already active in and already already very much growing in.

I was just wondering if we could maybe get like a glimpse into the next years. Can we continue to expect like double digit growth in this segment? That would be the first question. Second question would be on the revised top line guidance. It’s down just 2%, but I’m just wondering what parameter you used.

Is this just like the FX rate on the U. S. Dollar is declining? Or what was exactly used to that it prompted just a 2% decline? And then maybe if you could just talk a bit about the volume price dynamics in the manufacturing segment.

Thank you very much.

Brigitte Devat, Chief Executive Officer, Materialise NV: Yeah, so let me get started on your first question. So on medical segment, so the medical market as such, so structurally, you know, I don’t see a reason to see a change in the growth that we see in the, you know, currently in the medical markets. So, you know, in the mix, obviously, you know, we grow in the existing lines, grow in the and then concurrently, we build the new markets. And so in the mix between existing and new as we go over the next couple of years, the mix might change. But in total, there’s, you know, a lot of promise in the medical market, a lot of growth today.

And there’s in the future continued promise in the medical market. I see that growth continue on an ongoing basis over the next couple of years, again, with potentially a different mix in the different markets that we’re serving. That is why we are, you know, investing in the new markets to keep the growth going over the next couple of years. But overall, the medical business will keep on growing. So that was your first question.

I forgot the second and the third in the meantime, should be writing down.

Alexander Kaimers, Analyst, Kepler Cheuvreux: No worries. So the question on the guidance is just 2%. What was like exactly the reason why you said, okay, 2% cut instead of like, let’s say, a 5% cut? Like, what what was the parameter you used for?

Brigitte Devat, Chief Executive Officer, Materialise NV: Yeah. So the way we approach our guidance or the reforecast, you know, every quarter is obviously we so it’s not a top down. Kun and I look at each other and we look out of the window and think, you know, what percentage can we apply? It’s a detailed exercise that we have with the different units, and we go through different business lines to, you know, estimate in the different business lines, how we look at, you know, what happens throughout the rest of the quarter. And every business line has a different forecast.

You know, obviously, look at medical difference in a different way than you know, some of the industrial segments. But within the industrial segment, our focus segments that are today going very well. We think they will continue to grow whereas others, I mean, is one of them. We believe that they will continue to have a difficult time throughout the rest of the year. The US market will continue to have a more difficult time than other geographies.

So it’s that whole mix that we go through, and it’s that balance that has led us to this new estimation of our top line. So it’s not a one parameter, but it’s a more detailed exercise that we have gone through. One of the factors that helps us obviously in those business lines where we have an order book to base our judgment on, That is obviously a parameter that is helpful. Now, you know that for not all of our business, for some of our business lines that are more transactional, we don’t have an order book to base our estimations on. So the more we have an order book that we can base ourselves on, the more visibility we have on the next quarter.

But that’s not the case for all of our business lines. So all of that taken into account led us to this new guidance that we we have now issued.

Alexander Kaimers, Analyst, Kepler Cheuvreux: And and maybe if I then just can ask a small follow-up, like which segment was then, yeah, let’s say underperforming versus the initial guidance or expectation?

Brigitte Devat, Chief Executive Officer, Materialise NV: So I think what you see in our current results, you know, those that we have discussed today, it’s pretty much for the second half of the year. I think the trend is pretty much what we see continue. I don’t think I see so in the brief in the forecast that we’ve done for the next six months, there’s no dramatic change in the trends when we look at the different business lines.

Koon Poujas, Chief Financial Officer, Materialise NV: Okay.

Alexander Kaimers, Analyst, Kepler Cheuvreux: Thank you. Yeah. And the last one was a bit on the foreign price dynamics in manufacturing.

Brigitte Devat, Chief Executive Officer, Materialise NV: The foreign price dynamics. Can you

Alexander Kaimers, Analyst, Kepler Cheuvreux: help me? The vol volume volume price dynamics. Yeah.

Koon Poujas, Chief Financial Officer, Materialise NV: To to to reply to your question, Alexander, from a more a financial point of view, I think as in in any manufacturing environment, the challenge we also have in manufacturing segment is that part of the costs are, I would say semi fixed. So if the top line becomes under pressure and the semi fixed cost is then typically related to the labor costs, that the direct labor costs in order to complete the manufacturing processes. And that’s of course always the challenge, if the volume is under pressure to protect the margin and that is difficult to a certain extent. And that is what we have been working hard on, I think also in the second quarter to make that balance or to reduce the cost base in line with the top line that continues to be under pressure.

Alexander Kaimers, Analyst, Kepler Cheuvreux: Yes, that’s clear. And maybe if I can also ask a small follow-up, which would be, so of the decline that we saw in the second half, like how much is that then mostly related to volumes? Or have you also seen a decline in basically the cost base considering that effect?

Koon Poujas, Chief Financial Officer, Materialise NV: In manufacturing, you mean? Yep. You see a significant you see a significant top line drop. And so that is a pure volume effect, certainly if you compare to last year. But I think, if you also make the comparison to last quarter, see that there is top line, which is volume pressure.

We try to offset that and you see that certainly if you compare the gross margin to the prior quarters that we try to compensate that to a certain extent in making our costs as variable as possible, the direct costs. But that is only possible to a certain extent. Top line pressure adds to the gross margin result. Okay,

Alexander Kaimers, Analyst, Kepler Cheuvreux: that’s clear. Thank you very much.

Conference Operator: Thank you. At this time, I would now like to turn the conference back over to Brigitte Divet for closing remarks.

Brigitte Devat, Chief Executive Officer, Materialise NV: Thanks again for joining us today. We, of course, look forward to continuing our dialogue with you through investor conference or one on ones, our virtual meetings or calls, and please reach out if you have any questions. Now, thank you for now, and goodbye to you all.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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