Q3 2021 Materialise NV Earnings Call
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[music].
Good day, Thank you for standing by and welcome to the Q3 of 2021.
<unk> 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.
I ask a question during that session you will need to press star one on your telephone keypad. If you require any further assistance. Please press star zero. Thank you I'd now like to hand, the conference over to your speaker today on this call yet feed off early Jay the floor is yours.
Thank you for joining us today for Materialise. This quarterly conference call with us on the call our fried Bun crime founder and Chief Executive Officer of Materialise, Peter Leys, Executive Chairman and Johan Albrecht Chief Financial Officer.
Today's call and webcast are being accompanied by a slide presentation that reviews materialize, the strategic financial and operational performance for the third quarter of 2021.
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 Dot materialized Dot com.
The earnings release issued earlier. This morning can also be found there.
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.
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 managements 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 its most recent annual report on form 20-F filed with the SEC.
Finally management will discuss certain non ifr S measures on today's call. A reconciliation table is contained in the earnings release.
At the end of the end at the end of the slide presentation.
That introduction I'd like to turn the call over to Peter Leys Go ahead. Please Peter.
Thank you Harriet.
Before addressing the agenda of today's call I would like to add just a small additional paragraph two the safe Harbor language that you have as always read so eloquently.
Johan and myself.
Our today, just the messengers of the <unk>.
<unk> results that we have the owner to report to you today.
The true heroes of our third quarter, you're only one responsible for the results are our 2200 plus collaborators.
Now surgical spoiling the fun of the rest of the school.
We would like to thank and congratulate each and every one of them for the record results both at the top and bottom line.
But they have achieved during this quarter.
With that little additional message I would now like to turn to slide three which as always holds the agenda for today's call and.
And as the first item.
I will summarize with great pleasure the highlights.
All of our financial results for the third quarter then.
I will pass the floor to fleet.
Who will provide some insights into how we are creating value.
Both for our customers and for our company in Materialise manufacturing.
After that Johan who will walk you as always through our third quarter numbers in much more detail and finally I will come back to give you. Some observations about what we currently believe the rest of 2021 will bring.
And when we have completed our prepared remarks, we will then of course open the call for any questions that you may have.
Sure.
Let's turn to slide four.
The highlights.
In the third quarter of 2021 materialized posted all time quarterly records both in terms of revenues and in terms of earnings.
Driven by a double digit growth in each of our segments are.
Our consolidated revenues increased by 28% to a quarterly records.
$52 million 195000 Euro.
Each of our segments realized very strong EBITDA margins.
As a matter of fact in the third quarter each of our segments met or exceeded that.
The long term internal EBITDA margin benchmarks.
Software realized.
EBITDA margin of more than 35%.
Medical came close to 28%.
And manufacturing posted.
Margin of more than 15%.
As a results our consolidated adjusted EBITDA increased by 62% to a quarterly record yet again of 9 million 700039.
739.
Zero.
Representing almost 19% of total revenues.
Net profit for the quarter of 2021.
<unk>.
8.652 million or 15 euro cents per diluted share.
Yeah.
We believe that these numbers show that our strategy of continuing to invest throughout the COVID-19 pandemic.
People.
In our existing businesses, such as the magics and mimics software platforms, and our three D printing and factoring activities.
As well as in our growth initiatives, including our Mes CMS and Wearables initiatives.
What's the right choice and is already paying off in the short term.
And activity of materialize that remains somewhat under the radar during the Corona crisis.
Is the continued and very selective search by order materialized manufacturing business developers.
Applications for which batches and parts can be produced more effectively through three D printing, including in metal.
I would like to now pass the floor to fleet.
Who will give you some more insights in some of our recent accomplishments in that particular area.
Yes.
Thank you Peter.
Good morning, or good afternoon to all of you who are listening to this call.
Let me go back to the roots of materialized.
Our mission to enable a better and healthier world based on our deep competence in hardware and software for additive manufacturing.
From the very beginning of the industry.
When it was still called stereolithography or rapid prototyping or three or four in fabrication or any other name that was given to a subset of technologies that we call today additive manufacturing or <unk> printing.
It was our conviction that the key for the successful adoption of the technology did not exclusively in the development of a successful machine or software.
But in the smart use of the technology to enable meaningful applications.
At Materialise, we have constantly focused on enabling deep meaningful applications.
Because these are the applications difficulty eight most advent.
And it is our strong belief that we hope to create a better and healthier world by creating value for our customers and then we can do well as a company by enjoying our fair share.
The value that we can co create with our customers.
Since COVID-19.
Medical business hasn't been demonstrating on a quarterly basis that the medical devices that materialized final needs to develop.
Individual patients with customized solutions.
Ken generates solid growth at a healthy margin.
Our manufacturing segment.
Suffering much longer from Covid.
To date, we see that as the market rebounds, we are.
Also able to generate healthy numbers in the manufacturing segment.
This is largely due to the transition of our manufacturing segment towards a more and more certain defined manufacturing project.
And this despite the continuing weakness in the automotive and aerospace markets.
In the past quarter.
The revenue decrease that we still have in a classic automotive prototyping business.
In the commercial airline segment.
Is largely offset by growth in areas, such as the vegetables vegetables business.
Medical instrumentation and new activities in aerospace.
This continued focus on meaningful applications resulted in a 61% revenue increase of our manufacturing segment and then 15 five.
EBITDA margin.
Let me try to make this more tangible for you with a concrete example.
Slide five shows the fiction overhang Ashcroft from the company leased aircraft.
This ultra light vehicle represents one of multiple new mobility solutions to reach with data device manufacturing is contributing.
The hiccup of aircraft is an electric vehicle that was built with a view to significantly lowered the barrier for short commute by air.
In order to be ultra light the engineering team behind the Hix Huh.
<unk> will materialize to help design and produce it.
Multiple components.
As a result, each and can go ahead.
Now contains 89 different three D printed and parts.
For example, the wide Brexit that is shown on slide six is a structural component that we go developed together with leased aircraft team in titanium.
It was optimized and is used in weight from 250 to 150 grams.
Important for a component of diffused six times in a plane that should remain below 115 kilograms.
The optimization also reduced costs by reducing the build time and eliminating support structures.
Thus, enabling leased aircraft to reach the market pricing.
The first prototypes.
What is produced.
In flight.
Six weeks time.
The entire optimization process for production.
No more than three months.
Leased aircraft.
Has been the first company to produce.
Vito vertical takeoff and landing vehicles in serial production in the United States.
This story.
It is another proof point.
Additive manufacturing.
Can make an entirely new types of value creation, and new business concepts possible.
Provided that these are carefully chosen.
The chances that additive manufacturing becomes a successful and sustainable production method increase significantly if the technology is used for applications that require more complex design smallest cities or even individualized parts.
These types of applications.
Time to develop.
But.
If they prove to be meaningful.
They will be sustainable in the future.
Materialise strategy is to keep investing in those meaningful applications.
Not just by printing them as a subcontractor.
But by getting under the skin.
Appreciation owner.
And by being involved in the entire process from initial design to delivery at the customer and.
And by protecting some of the intellectual know involved in that process.
In the coming years.
More and more.
Meaningful applications reinvesting today are likely to scale in the market.
We feel confident that this will help ensure our long term success.
On top of that we have.
Happy to inform our shareholders that we have.
Combining good financial numbers with serious progress on the reduction of our carbon footprint.
And two.
2017.
We provide a sustainability report to the global compact organization of the United Nations in the framework of the 17 sustainable development goals.
In this framework, we have taken multiple actions.
More which the development of a structured measurement over the materialized global carbon footprint.
Since.
2020.
Dr taking corrective actions to reduce our global carbon footprint.
The aim to reach 50% reduction by 2025.
We are proud to announce that we will have reached 33% reduction compared to 2019 by the end of 2021.
And we are implementing further measures to reach 40% of production by the end of 2022.
We are aware that we first focused on the low hanging fruits and further reductions will become more and more difficult.
But.
While our political leaders are going to meet.
26 in Glasgow materialize is once more taking the lead in the AAM sector to show the way to a better and healthier world with tangible progress.
Okay.
Thank you Bridget.
Again with the brief review of our consolidated revenue on slide seven.
As a reminder, when we refer to sales in our presentation, we mean revenues plus deferred revenues.
Also please note that on the ultra white spaces comparisons in this call are against our results for the third quarter of 2020.
Revenue was $52 2 million euro for the quarter, 28% above the level of the same period last year.
Growth took place in all three segments.
Our software and medical segments grew by 10% of revenue in manufacturing both by 61%.
Deferred revenues from software license and maintenance fees increased by half a million euro compared to DM So last year.
For the third quarter of 2021, Materialise software Goldman towards 20% of our total revenue, but to utilized benefactor input 36 materializes manufacturing for 44%.
Cross segments revenue from software products represented 31% of our total revenue.
Moving to slide eight you will see our consolidated.
EBITDA loss for the third quarter of 2021.
Consolidated adjusted EBITDA grew to a new quarterly record of 9 billion 739000, Euro 6 million last year.
Revenue grew 28% EBITDA grew 62% this.
This increase was the result of a variety of positive factors.
Our strong revenue growth.
With improved gross margin triggered by increased in sourcing of continuous productivity improvement.
Disciplined spending in particular with respect to overhead.
Fortunately the increase of our EBITDA multiple is your expense.
R&D spending, which actually increased by 13% compared to last year.
In addition, the initial district previously described to enhance or the total business application platform continued.
We're on track.
Slide nine summarizes the results of our Materialise software segment.
Software revenue increased 10, 4% to $7 million $468 in jewelry.
For the current for the current 71 loans.
The only recurring revenue grew 33, 6% driven by a new perpetual license noncompliance fees.
EBITDA increased 19% to $3 7 million Euro.
The adjusted EBITDA margin grew to 35, 4%.
This is the result of the solid revenue growth.
Our operating expenses kept well under control even efforts in R&D and in our digital transformation projects continue.
Moving now to slide 10, you will see the total revenue in our Materialise medical segment increased by 10, 2% to $18 9 million Euro.
Revenue for medical software sales grew 15% while revenue from medical devices and services increased eight 5% compared to last year.
Revenue for medical software sales accounted for 31% all segments revenue.
Adjusted EBITDA amounted to $5 million 251 sells in June compared to $5 million last year.
This quarter's adjusted EBITDA was negatively impacted by 800000 euro with respect to an accrual for the litigations originated in 2014.
To which we received the court decision this quarter.
Excluding the nonrecurring expenditures to citizens.
EBITDA margin was 31, 8%.
Same level as last year.
This was a combined result of continued top line growth production efficiency improvements in sourcing programs and containment of operating expenses.
This all was the accelerated execution of our R&D programs and continue our digital transformation project.
So, let's turn to slide 11 for an overview of the Q3 performance will materialize for the Victoria's segment.
Revenue increased 61, 2% or $8 7 million to $22 8 million Euro.
Importantly revenue was approximately at the Q2 level of $3 7 million higher than in the first quarter of this year.
Personal when we first noticed the positive signs from segments, let's have this hard during the Corona.
20.
Adjusted EBITDA for the quarter Rose $3 9 million to $3 5 million Euro.
The adjusted EBITDA margin grew to 15, 5% as a result of the revenue growth optimize capacity usage.
Improved production efficiencies.
The EBITDA was positively affected by a one time fee.
<unk> of 900000 bowlers that the disease in the framework of the winding down of our partnership with digital.
Slide 12 provides the highlights of our income statement for the first quarter.
Gross profit increased 33, 4%.
$31 1 million Euro was a gross profit margin grew to 59, 5% from 57, 1% last year.
Solid margin was due to the increased revenue.
Higher level of capacity usage.
The improvements in all of our segments.
Operating expenses increased 11, 3% when compared to last year's quarter, but part of the room renovation costs received to various government support programs.
Our sales and marketing spending increased 12, 7% G&A expenditures increased eight and R&D expenses grew 12, 6%.
This quarters net operating income was 365000 Bureau, compared to $1 2 million last year.
As a result of these elements the groups operating results grew $4 2 million to $4 million 529000 euro compared to 284000 in last year's period.
Our financial net income was positive $4 2 million euro compared to a net cost of $1 3 million in the previous year.
Come to purchase additional shares in connection with the public offering or 4 million shares issued in June 2021.
At September 30th or cash amounted to 194.9 million euro compared to 111, and a half million dollars at the end of last year.
Whereas in this weather quarterly position decreased by 12.9 million Euro two 102.2 million Euro.
Only 21 million euro over depth was short term.
The 30th.
And thus cash position could improve this quarter to 92.8 million euro.
Equity increased 95.4 million to $228 5 million Euro, let's combine results of the capital increase of 85.8 million you know the first nine months net profit amounting to eight 4 million as positive conversion differences of.
1.1 million Euro.
Total deferred revenue amongst 235 million euro.
Of this amount 13.8 million was related to annual software sales of maintenance contracts versus.
32 million.
December 31st 2020.
Cash flow from operating activities for the first nine months of 2021.
We're 17.5 million euro compared to $14.8 million in 2020.
Some expenditures for the quarter amongst a 3.3 million euro or whatnot finest pizza.
Thank you.
Now they started to slide 14 before opening the floor to questions. We want to give you some insights into what we currently belief the remainder of 2021 will break.
Based on what we know today, we have comfort that are consolidated revenues for 2021 will be closer to the higher end of the 197, two 200 million Euro range that we provided during last quarter's earnings announcements.
We intend to gradually increase our operational expenses with the due to boosting our growth initiatives.
But we expect that this accelerated efforts will impact our 2022 visuals much more than this year's results.
Therefore for 2021, we are increasing our adjusted EBITDA guidance by 3 million Euro two up to 28 million Euro.
With that positive note I would like to conclude our prepared remarks. So operator. Please go ahead and open to go through questions. Thank you.
As a reminder to ask a question you've only just past style. One on your telephone keypad again that is Taiwan on your telephone keypad.
Yeah first question comes from the line of seven hours from key Bond capital markets. Your line is now open.
Hi, good afternoon.
Non for Jason Thanks for taking my questions.
First of all I have is you mentioned automotive market was still relatively unstable due to supply chain disruption last quarter have you seen any sort of signs of improvement from the market and are there other markets that you're experiencing supply chain interruptions.
Yes, I mentioned.
Weakness of the automotive market definitely in Europe, but we hear that it's also the case in on other continents.
And.
We expect it to continue this entire year at this moment.
Fully materialize.
There is also a serious impact.
Of the headliner market. These two weeks in at the level of.
The rate at which new add drops are being constructed by the major companies such as bringing an endless.
But these are the two segments, where we where we experienced difficulties and the remainder of our activities in segments, where at least for us.
The impact of the supply chain disruption is quite limited.
Oh, great Yeah, that's very helpful and I just have one more offer me.
Automatically segment.
Quarter growing 8% sequentially.
Just want to ask what kind of drove diet growth there have to walk through all the pent up demand.
And should we expect more normalised level of dramatic going forward for that segment.
As you.
Notice.
Software grew by 15% in our medical segments. So that is not pent up demand that is actually just a continuation of.
Of the solid growth that the segment in general in that particular subsegment of our medical segment has been showing over the last I would say four to eight quarters.
And in our.
Devices activity I think the growth was between eight and 9%.
And there I think it's more and more structural growth rather than recovering pensive remarks.
That the hotter months of us the harder quarter was the second quarter of last year.
Not only reporting already on the third quarter of.
Of 2021, so there are still some pent up demand that these numbers basically also show who continued structural strength and growth within that segment.
Great. Thank you so much.
Sure. Thank you.
Your next question comes from the line of no valid down from space. All your line is Nelson.
Hi, guys are not congratulations on a one quarter.
10.
Hi, So my first question just relates to guidance and I understand there's a lot of kind of puts have taken in terms of one time items in the quarter and and what we just talked about in terms of.
Some of the times in the market, but it it does seem that historically your fourth quarter is meaningfully stronger your your third quarter, which would kind of get you about the high end of the the $200 million and 200 million Euro guidance that you're talking about and also kind of your EBITDA guidance suggests I step down.
And Martin pretty substantial so I just want to make sure I understand the all of the elements there and.
Or maybe you could comment on to what degree you might be a little bit conservative.
Give any.
Overall prevailing kind of economic uncertainty thanks, yeah.
No. It's again. Thank you for your question. It's a combination yes, there are still some economic uncertainty that we definitely want to factor in to an hour.
Vision into the future on the other hand.
What we have been trying to do yet after year and what we continue to do is give guidance over a full year periods.
And we know that in a full year period, there will be quarters, and sometimes that are months that are stronger than expected and quite often then there's also a quarter or a months that is just for whatever reason weaker than expected, but overall, we have learned we have a very good grip on where we think we will land on a one years.
Basis.
Obviously spokespeople if you have a good third quarter that takes some pressure away from the fourth quarter.
But again you are right.
If you haven't record quarter and to some extent.
That is I think it's basically driven by an excellent recovery and buyer of the strength of our products by the markets, but it's also partially driven because some deals that may be able to forward in queue for now have forward in Q3.
Hence our comforts that we will be at the high end of the range in terms of revenues.
But not.
Sufficient comfort to suddenly based on one record quarter go beyond the guidance on revenue that we have given for the entire year.
EBITDA Noel.
As the crisis is gradually subsiding.
We are increasing as we also explains the are increasing our.
Efforts in particular in the field of our growth initiatives.
That also implies that you.
Tried to hire the right people.
And that typically impact more of the next quarter, then the quarter, where you start hiring so as we are recovering in terms of revenues were also more and more trying to make sure that we have the right people in place to boost the growth of our growth initiatives.
And as you hire people those people will have less impact on the portrait where you hire them and they will have a bigger impact of the subsequent quarters. So hence also.
I think a strong message increasing and guidance on EBITDA by more than 10% I think is strong sign of comfort.
We want to make sure that everybody remains realistic. This is a company that wants to continue to combine strong results with smart investments in the future hen.
Hence the the EBITDA guidance of up to 28 million for the full year.
Perfect.
Great just wanted to make sure we all understood.
And second could you just give us a bit of an update on.
Hum some of your your key strategic priorities, maybe if you could just touch on some of the.
The vertical invested the investments that you're making and growth vertical.
Perhaps CMS and footwear and eyewear, if you can kind of give us a sense of where the standard.
Where you're seeing traction heading into heading into 2022.
Yeah.
Well.
Let me start by.
Seeing that.
We have reported growth.
All three of them.
And.
Of course, the bulk of our devices business.
In medical.
It's definitely do growth engine of the medical devices business. There, we anticipate to continued growth into next year.
And the same is true for our.
Footwear.
Initiatives.
Our materialized motion bid.
Business in.
In footwear has very heavy.
Vestment.
Schedule in front of it.
That will.
Unable to release of several.
Products and even product categories.
Here.
That should ensure.
Serious long term growth.
In Iowa.
The one to be open that.
We closed.
Ditto.
Investment on favorable financial terms, but it's a drawback for the digital side of the development to be heading minds. So we are at this moment a little bit more cautious.
With the growth expectations.
There.
Very moment.
Okay. Thank you very much.
Thank you.
Next question is from Charlie Johnson finally, see it's capital. Please go ahead.
Hey, gentlemen, I'd also like to say congratulations.
Margins operating margins everything looks spectacular quarter with the exception of maybe the guidance, but I'll.
I'll take the over on that teeter, but congrats gentlemen.
Yeah.
But.
So Ah quickly at this time I wear and footwear and thank you for the update on the highway.
Three but.
Those segments run through medical sales.
Really.
Reported in manufacturing.
Okay, and then not enough to really know manufacturing a huge quarter that wasn't really anything to do with I. We're in footwear that was it really just manufacturing correct.
Eyewear footwear.
Have performed very well or parts of manufacturing correct.
The real growth engine for the third quarter was R.
And parts additive manufacturing business within.
The entire segments notes prototyping part the other parks performed well, but that is really that was that's the engine for the growth and this year.
So I'd like to talk a little bit more about just manufacturing visibility I guess, it's my belief that with all the supply chain constraints that.
And manufacturers around the around the globe right or just go into local machine shops, and added a service bureaus and trying to get parts right to kind of fill.
Phillips some of the bridge some of these supply constraints so.
It's definitely been a short term benefit Ah modern in D. C are you seeing more production applications are you seeing more conviction on.
Extending into longterm benefits and then now brought this up last quarter too and just would love to hear your thoughts and puts change on.
Materialized being a broader digital manufacturing company, you guys incubate new technologies and new areas.
It seems like something that would be right up your wheelhouse, but I will go ahead.
Thank you Troy I find this a very very good question.
And that is why I stressed.
In my part of the presentation. So much the focus of materialize on spin.
Specific what we call meaningful applications that we are not just jumping into temporarily opportunities, but we are trying to focus on on.
Applications on environments, where we can.
Sustainably produced box.
Preferably cannot be produced by any artist technology.
And.
Also not just parts that have been in the in the past produced.
In Asian countries in classical supply chains.
In our forests that are yes.
Working on new good quality product categories.
And I gave the explicit example of the veto.
It's a new breed of vehicles.
That is expected to be any.
Growing markets.
Really a market of the of the future.
And a new mode of mobility mobility that we will see appearing.
And.
Yes.
The unique benefits of additive manufacturing really crucial too.
To to build reliable systems that are so light they can take a person just only with electric energy.
And this is the kind of.
Oh.
Markets, where we really fundamentally believes in.
So I would say maybe some companies take advantage of those.
Short term supply chain disruptions, but I dare to say that it's not as old as the case in the revenue that materializes reporting.
Awesome Love hearing how about just one for Ah for Ah Jonah.
Are you an excuse me.
Gross margins I mean, they're huge it's Carter right in AT&T guide to like a sluggish revenue level and visit some recorded with with gross margins be flat. Just wondering what you think just maybe 22 gross margins or or just how how their twenties, we're going to continue to go higher now with with better economies of scale or.
Or his assistant and now we're seeing.
Chris margins as mentioned to know.
Prepared remarks that the revenue grew for you.
Have a better capacity usage, so are fixed costs are sort of against.
Higher level of revenue.
Improvements by in sourcing certain.
Lines or activities in the production does to use to outsource of course through state.
Revenue will grow and we also have folded.
Production efficiency as the three order utilizing my prisoner optimizing our technology and of course, we come to the physician.
So it's the also the bundled appropriate mixed will a quarterly basis with the drums is that the margins was Stacey.
Gradually food will increase because the principal pulled the pricing, but let's say that.
The two looked goodall.
Awesome sounds like it's all good news over there so congrats guys keep up the good work.
Hence, hence the guidance to bring some balance into it all [laughter] alright.
Okay.
Thank you.
Again, if you would like to ask a question. Please fast style one on your telephone keypad.
Your next question comes from the line of graduating from Brian Gardening. Your line is now open.
Yes, hi, Thank you have a good afternoon.
Particularly my question.
So we find that the first one.
To come back to the guidance do you.
[noise] confirm that.
Guidance on the revenues exclude.
The treaty.
So it was much closer to Arafat Ah.
<unk>, that's not being here.
Exercise kits.
And my second question to come back to it.
British Christian counting to gross margin when we do get.
The outstanding margin manufacturing Division.
We've huh.
19.3 million euros.
Expensive.
Sure around roughly 2 million euros.
Two years ago on the quality.
Obviously can you imagine you have some backyard utilization.
After printers.
So if you see.
Okay.
Thank you for holding.
Movements.
Do you think that.
Current.
Ritualization kept capacity utilization.
And of course sustainable.
You'll have to invest in your printers.
Hire more people.
Flat screen is 15 from 5%.
Alternate option manufacturing not sustainable.
Okay, Yeah, I will give you a covered under the first question is very short there is.
Option has not yet been exercised so there's no revenue whatsoever.
<unk> and the numbers that we have presented earlier and for the second part of the question I will hand, the floor to feet.
Yeah could I get regarding the gross margin of manufacturing.
I want to see on one hand that.
We are motivated indicated that manufacturing is a more cyclic business.
So we have the advantage of snow to have them.
To be in a more positive.
Area of the cycle.
And that helps of course.
With the margin on the other hand, I want to stress that it's not the aim of materialize too over to invest in capacity.
Because you have always seen that we.
We need to focus our manufacturing to the high end applications of treaty printing and rather than filling it with volume we prefer to go for.
Framed it again in meaningful applications, the dose applications, where we believe.
That serious value can be made.
So.
No plans too.
Big.
Spent the capacity in a big way.
Do want to say that.
Metal activities are still in a growth mode.
And we are going to expend desktop paucity in the future.
Because we just have opened a new plan.
Earlier this year.
In Bremen and in this plan.
At gradually some extra machines in the coming years.
Maybe I didn't answer your question in full Gregory but also the guidance does not include any revenue from limited.
Okay, that's clear.
Thank you very much.
Sure. Thank you.
That sounds all my question and answer session I'll turn the call back over to Peter for closing remarks.
Thank you so much operator, and thank you again, all for joining us today and for engaging in this interesting discussion we.
We hope to see several view obviously at four next just a couple of weeks from now.
And in the meantime, if you have any other questions. Please feel free to reach out.
Thank you again and goodbye for now Bye Bye Bye bye.
That concludes today's conference call. Thank you all for participating you may now disconnect.
[music].
[music].
Good day, Thank you for standing by and welcome to the Q3 of 2021 material.
Life's 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 that session you will need to press star one on your telephone keypad if require any further assistance. Please press star zero. Thank you all.
Now like to hand, the conference over to your speaker today, Ms hard yet feed off L. J.
If yours.
Thank you for joining us today for Materialise. This quarterly conference call with us on the call our fried bunk Rod founder and Chief Executive Officer of Materialise, Peter Leys, Executive Chairman and Johan Albrecht Chief Financial Officer.
Today's call and webcast are being accompanied by a slide presentation that reviews, Materialises strategic financial and operational performance for the third quarter of 2021.
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 Dot materialized Dot com.
The earnings release issued earlier. This morning can also be found there.
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.
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 managements estimates as of today and should not be relied upon as representing their estimates as of any subsequent date.
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 its most recent annual report on form 20-F filed with the SEC.
Finally management will discuss certain non <unk> measures on today's call. A reconciliation table is contained in the earnings release.
At the end of the end at the end of the slide presentation.
With that introduction I'd like to turn the call over to Peter Leys Go ahead. Please Peter.
Thank you Harriet.
Before addressing the agenda after.
Today's call I would like to add just a small additional paragraph two the safe Harbor language that you have as always read so eloquently.
Johan and myself.
Our today just the messengers of the excellent results that we have the honor to report to you today.
The true heroes of our third quarter, the only ones responsible for the results are our 2200 plus collaborators.
No surgical spoiling the fun of the rest of the school.
We would like to thank and congratulate each and every one of them for the record results both at the top at the bottom line, but they have achieved during this quarter.
With that little additional message I would now like to turn to slide three which as always holds the agenda for today's call.
And as the first item.
I will summarize with great pleasure the highlights of our financial results for the third quarter then.
I will pass the floor to fleet, who.
Who will provide some insights into how we are creating value.
Both for our customers and for our company in Materialise manufacturing.
After that Johan will walk you as always through our third quarter numbers in much more detail and finally I will come back to give you. Some observations about what we currently believe the rest of 2021 will bring.
And when we have completed our prepared remarks, we will then of course open the call for any questions that you may have.
So.
Let's turn to slide four.
The highlights.
In the third quarter of 2021 materialized posted all time quarterly records both in terms of revenues and in terms of earnings.
Driven by a double digit growth in each of our segments our.
Our consolidated revenues increased by 28% to a quarterly record of <unk>.
$52 million 195000 Euro.
Each of our segments realized very strong EBITDA margins.
As a matter of fact in the third quarter each of our segments met or exceeded that.
<unk> long term internal EBITDA margin benchmarks.
Software realized.
The EBITDA margin of more than 35%.
Medical came close to 28%.
And manufacturing posted.
Margin of more than 15%.
As a results our consolidated adjusted EBITDA increased by 62% to a quarterly record yet again of $9 million 730.
<unk> 39.
739.
Europe.
Representing almost 19% of total revenues.
Net profit for the quarter of 2021.
Yeah.
8.652 million or 15 euro cents per diluted share.
We believe that these numbers show that our strategy of continuing to invest throughout the COVID-19 pandemic and our people.
In our existing businesses, such as the magics and mimics software platforms and our three D printing manufacturing activities.
As well as in our growth initiatives, including our Mes CMS and wearable initiatives.
Was the right choice and is already paying off in the short term.
And activity of materialize that remained somewhat under the radar during the Corona crisis.
Is the continued and very selective search buyout materialise manufacturing business developers.
Applications for which batches of end parts can be produced more effectively through three D printing, including in metal.
I would like to now pass the floor to fleet, who.
Who will give you some more insights in some of our recent accomplishments in that particular area.
Thank you Peter good morning, or good afternoon to all of you listening to this call.
Yes.
So let me go back to the roots of materialized.
Our mission to enable a better and healthier world based on our deep competence in hardware and software for additive manufacturing.
From the very beginning of the industry.
When it was still <unk> stereolithography or rapid prototyping or three four in fabrication or any other name that was given to a subset of technology that we call today as a different a factoring or CD printing.
It was our conviction that the key for the successful adoption of the technology.
Not exclusively in the development of a successful machine or software.
But in the smart use of the technology to enable meaningful applications.
At Materialise, we have constantly focused on enabling these meaningful applications.
Because these are the applications that create most added value.
And it is our strong belief that we hope to create a better and healthier world by creating this added value for our customers and that we can do well as a company by enjoying our fair share.
The value that we can co create with our customers.
Since Covid, our medical business has been demonstrating on a quarterly basis that the medical devices that materialized final needs to develop.
Individual patients with customized solutions.
Ken and generate solid growth at a healthy margin.
Our manufacturing segment.
Suffering much longer from Covid.
To date, we see that as the market rebounds.
Also able to generate healthy numbers in the manufacturing segment.
This is largely due to the transition of our manufacturing segment towards the more and more certified manufacturing approaches.
And this despite the continuing weakness in the automotive and aerospace markets.
In the past quarter.
The revenue decrease that we still have in a classic automotive prototyping business and.
In the commercial airline segment.
Is largely offset by growth in areas such as the variables ratable business.
Medical instrumentation and new activities in aerospace.
This continued focus on meaningful applications resulted in a 61% revenue increase of our manufacturing segment and the $15 five.
EBITDA margin.
Let me try to make this more tangible for you with a concrete example.
Slide five shows the picture of a hiccup Ashcroft from the company lift aircraft.
This ultra light vehicles represents one of multiple new mobility solutions to reach Materialise manufacturing is contributing.
The hiccup aircraft is an electric vehicle that was built with a view to significantly lowered the barrier for short commutes by air.
In order to be ultra light the engineering team behind the hix relied on materialize to help design and produce it.
Multiple components.
As a result each.
Kraft now contains 89 different three D printed and parts.
For example, the wide Brexit that is shown on slide six is a structural component that we co developed together with lift aircraft team in titanium.
It was optimized and reduced in weight from 250 to 150 drops.
Important for a component of diffused six times in a plane that should remain below 115 kilograms.
The optimization also reduced costs by reducing the build time and eliminating support structures.
Thus, enabling lift aircraft to reach the market pricing.
The first prototype.
<unk> produced and tested in flight in.
Six weeks time.
The entire optimization process for production.
No more than three months.
Lift aircraft.
Has been the first company to produce.
Vito vertical takeoff and landing vehicles in serial production in the United States.
This story.
As another proof point.
Additive manufacturing.
<unk> make an entirely new types of value creation, and new business concepts possible.
Provided that these are carefully chosen.
The chances that additive manufacturing becomes a successful sustainable production method increase significantly if the technology is used for applications that require more complex design smallest cities or even individualized parts.
These types of applications.
Time to develop.
But.
If they prove to be meaningful.
They will be sustainable in the future.
Materialise strategy is to keep investing in those meaningful applications.
Not just by printing them as a subcontractor.
But by getting under the skin of the application owner.
And by being involved in the entire process from initial design to delivery at the customer and.
And by protecting some of the intellectual know hope involved in that process.
In the coming years.
More and more.
Meaningful applications reinvesting to date are likely to scale in the market.
We feel confident that this will help ensure our long term success.
On top of that we are happy to inform our shareholders that we are combining good financial numbers with serious progress on the reduction of our carbon footprint.
Since.
2017.
We provide a sustainability report to the global compact organization of the United Nations in the framework of the 17 sustainable development goals.
In this framework, we have taken multiple actions.
More which the development of a structured measurement over the materialized global carbon footprint.
Since.
2020.
Dr taking structural actions to reduce our global carbon footprint.
With the aim to reach 50% reduction by 2025.
We are proud to announce that we will have reached 33% reduction compared to 2019 by the end of 2021.
And we are implementing further measures to reach 40% of production by the end of 2022.
We are aware that we first focused on the low hanging fruits and further reductions will become more and more difficult.
But.
While our political leaders are going to meet.
<unk> 26 in Glasgow materialize is once more taking the lead in the energy sector to show the way to a better and healthier world with tangible progress.
Okay.
Thank you Chris.
Beginning with a brief review of our consolidated revenue on slide seven.
As a reminder, when we refer to sales in our presentation, we mean revenues plus deferred revenues.
Also please note that on this otherwise faces comparisons in this call are against our results for the third quarter of 2020.
Revenue was $52 2 million euro for the quarter, 28% above the level of the same period last year.
Growth took place in all three segments.
Our software and medical segments grew by 10% of revenue in manufacturing bulk spec.
61%.
Deferred revenues from software license and maintenance fees increased by half a million euros compared to <unk> 12 last year.
For the third quarter of 2021, Materialise software Gulf of towards 20% of our total revenue, but to utilized benefactor in four to six and a few less manufacturing for 44%.
Cross segments revenue from software products represented 31% of our total revenue.
Moving to slide eight you will see our consolidated adjusted EBITDA for the third quarter of 2021.
Consolidated adjusted EBITDA grew to a new quarterly record of $9 million 739000, Euro 6 million last year.
Revenue grew 28% EBITDA grew 62% this.
This increase was a result of a variety of positive factors.
Our strong revenue growth.
With improved gross margin triggered by increased in sourcing of continuous productivity improvements.
Disciplined spending in particular with respect to overhead.
Fortunately the increase of our EBITDA multiple at the expense of.
R&D spending, which actually increased by 13% compared to last year.
In addition, the initiatives previously described to enhance our internal business application platform continued.
<unk> on track.
Slide nine summarizes the results of our Materialise software segment.
Software revenue increased seven 4% to $30 million 468 zero.
For recurrence recurrent 70 were flat nonrecurring revenue grew 33, 6% driven by a new perpetual licenses and compliance fees.
EBITDA increased 19% to three 7 million Euro as is.
EBITDA margin grew to 35, 4%.
This is a result of the solid revenue growth.
Our operating expenses under control even efforts in R&D and in our digital transformation projects continue.
Moving now to slide 10, you will see the total revenue in our Materialise medical segment increased by telephone to peso to $18 9 million Euro revenue for medical software sales grew 15% while revenue from medical devices and services.
<unk> increased eight 5% compared to last year.
Revenue for medical software sales accounted for 31% of segment revenue.
Adjusted EBITDA amounted to $5 million 251 zero compared to $5 million last year.
This quarter's adjusted EBITDA was negatively impacted by 800000 Euro with respect to an accrual for a litigation originated in 2014 related to which we received the court decision this quarter.
Excluding the nonrecurring expenditures the segment's adjusted EBITDA margin was 31, 8%.
The same high level as last year.
This was a combined result of continued top line growth.
Collections efficiency improvements in sourcing programs and containment of operating expenses.
This all was the accelerated execution of our R&D programs and continued our digital transformation project.
So, let's turn to slide 11 for an overview of the Q3 performance of our Materialise manufacturing segment.
Revenue increased 61, 2% or $8 7 million to $22 8 million Europe.
Importantly revenue was approximately that the Q2 level and $3 7 million higher than in the first quarter of this year.
Personal when we first noted the positive signs from segments that has its hard during the Corona op units in 2020.
Adjusted EBITDA for the quarter grew to $3 9 million to $3 5 million Euro.
The adjusted EBITDA margin grew to 15, 5% as a result of the revenue growth optimize capacity usage.
Improved production efficiencies.
The EBITDA was positively affected by a one time fee of $900000. The disease in the framework of the winding down of our partnership with digital.
Slide 12 provides the highlights of our income statement for the first quarter.
Gross profit increased 33, 4% to $31 1 million Euro was a gross profit margin grew to 59, 5% from 57, 1% last year.
The higher level of capacity usage.
The improvements in all of our segments.
Operating expenses increased 11, 3% compared to last year's quarter, but part of our remuneration costs received through various government support programs.
Our sales and marketing spending increased 12, 7% G&A expenditures increased eight and R&D expenses grew 12, 6%.
This quarters net operating income was 355000 euro compared with $1 2 million last year.
As a result of these elements the groups operating results grew $4 2 million to $4 million 529000 euro compared to 284000 in last year's period.
Our financial net income was positive $4 2 million euro compared to a net cost of $1 3 million in the previous year.
This quarter's results included a positive $3 7 million euro effect, probably covering our borrowings positions, including interest from digital of positive currency exchange gains of $1 2 million Euro mainly from our global position, we maintain from a June July.
Click offering proceeds.
The third quarter of 'twenty 'twenty. One contains income tax expenses of 80000 euro compared with tax income of 764000 in the third quarter of 2020.
The profit for Q3 increased to a quarterly record of $8 million 652000, compared to a net loss of 282000 Euro for the 2020 period.
For the first time, the company's history, we reported earnings of <unk> 15 Euro cents per share.
So please turn to slide 12 for a recap of balance sheet and cash flow highlights.
In July of 2021, our balance sheet was further strengthened by the net capital increase of $11 4 million Euro from the issuance of 600000 additional new shares following the exercise of the underwriters option to purchase additional shares in connection with the public offering.
4 million shares issued in June 2021.
At September 30, our cash amounted to 194 9 million compared to 100 and de lever than a half million lbs book.
Book last year.
Whereas this what our borrowing position decreased by $12 9 million Euro to 102.2 million Euro.
Only 21 million euro over the short term a September 30th.
Our net cash position further improved this quarter to 92 eight in Europe.
Equity increased $95 4 million to $228 5 million Euro as a combined result of the capital increase of $85 8 million Euro. The first nine months net profit amounted to $8 4 million.
This conversion differences of one 1 billion euro.
Total deferred revenue amounted to 35 million euros.
This amount 30.8 million was related to annual software sales and maintenance contracts versus $30 2 million as of December 31, 2020.
Cash flow from operating activities for the first nine months of 2021 were $17 5 million compared to 14.8.
Million Euro in 2020.
Capital expenditures for the quarter amounted to $3 3 million euro or whatnot financed Peter.
Thank you Johan.
Now if you could please turn to slide 14 before opening the floor to questions. We want to give you some insights into what we currently believe the remainder of 2021 will bring.
Based on what we know to date, we have comfort that our consolidated revenues for 2021, we'll be closer to the higher end of the 197 to 200 million Euro range that we provided during last quarter's earnings announcements.
We intend to gradually increase our operational expenses with a view to boosting our growth initiatives.
But we expect that this accelerated efforts will impact our 2022 results much more than this year's results.
Therefore for 2021, we are increasing our adjusted EBITDA guidance by 3 million euro to up to $28 million Euro.
With that positive note I.
I would like to conclude our prepared remarks. So operator. Please go ahead.
On the call to questions. Thank you.
As a reminder to ask a question you will need to press star one on your telephone keypad again that is style one on your telephone keypad.
Our first question comes from the line of Kevin <unk> from Keybanc capital markets. Your line is now open.
Hi, Good afternoon. This is <unk> on for Jason Thanks for taking my questions.
The first one I have is you mentioned automotive market was still relatively unstable due to supply chain disruptions last quarter have you seen any sort of signs of improvement from that market.
Are there other markets that you are experiencing supply chain interruptions.
Okay.
Yes.
Mentioned.
The weakness of the automotive market definitely in Europe, but we hear that it's also the case in other.
On the continent.
And.
We expect this to continue this entire year at this moment.
Fully materialize.
There is also a serious impact.
<unk>.
Of the.
Headline us market.
Two weeks in the level of.
Yes.
The rate at which new add crops are being constructed by major companies such as bringing an endless.
Yes.
But these are the two.
<unk>, where we where we experienced difficulties in the remainder of our activities is in segments, where at least for us.
Impact on the supply chain disruption is quite limited.
Great. Yeah, that's very helpful. And then just one more from me.
On the medical segment.
Good quarter growing 8% sequentially I.
Just wanted to ask what kind of drove that growth or have you worked through all of the pent up demand or.
And should we expect kind of a more normalized level of demand going forward for that segment.
As you.
Notice.
Software grew by 15% in our medical segment. So that is not pent up demand that is actually just.
Continuation of.
The solid growth that the segment in general in that particular sub segment of our medical segment has been showing over the last I would say four to eight quarters.
And in our divvy.
Devices activity I think the growth was between eight and 9%.
And there.
It's more of a more structural growth rather than recovering pent up demand.
The Hunter amongst the other quarter was the second quarter of last year.
Now we're reporting already on the third quarter of.
Of 2021, so there's still some pent up demand, but these numbers basically also show continued structural strength and growth within that segment.
Great. Thank you so much.
Sure. Thank you.
Your next question comes from the line of Noelle Dilts from Stifel. Your line is now open.
Yes.
Hi, guys and congratulations on a strong quarter.
Okay.
Hi, So my first question just relates to guidance and I understand there's a lot of kind of puts or takes in terms of one time items in the quarter and what we just talked about in terms of.
Some of the trends in the market, but it does seem that historically your fourth quarter is meaningfully stronger.
Our third quarter.
Which would kind of get you above the high end of the two.
200 and.
200 million Euro guidance that Youre talking about and also kind of your EBITDA guidance suggests a step down and margin pretty substantial so I just want to make sure I understand all of the elements there.
Or maybe you could comment on to what degree you might be seeing a little bit conservative.
Given me.
Overall prevailing kind of economic uncertainty.
Yes.
No.
Again, thank you for the question, it's a combination.
There is still some economic uncertainty that we definitely want to factor in to an hour.
<unk> vision into the future on the other hand.
What we have been trying to do year after year and what we continue to do is give guidance over a full year periods and.
And we know that in our full year periods, there will be quarters, and sometimes that are months that are stronger than expected.
And quite often lenders also a quarter or a month that is just for whatever reason weaker than expected, but overall, we have learned we have a very good grip on it.
Where we think we will land on a one year basis.
Obviously, it's comfortable if you have a good third quarter that take some pressure away from the fourth quarter.
But again you're right.
If you haven't a record quarter and to some extent.
I think it's basically driven by an excellent recovery and by the strength of our products by the markets, but it's also partially driven because some deals that may be able to forward in Q4 now have forward in Q3.
Hence our comfort that we will be at the high end of the range in terms of revenues.
But not <unk>.
Sufficient comfort to suddenly based on one record quarter go beyond the guidance on revenue that we had given for the entire year.
EBITDA.
As the <unk>.
Crisis is gradually subsiding.
We are increasing as we also explained we are increasing our <unk>.
Efforts in particular in the field of our growth initiatives.
That also implies that you.
Tried to hire.
The right people.
And that typically impact more next quarter than the quarter, where you start hiring so as we are recovering in terms of revenues. We are also.
More and more trying to make sure that we have the right people in place to boost the growth of our growth initiatives.
And as you hire people those people will have less impact on the quarter, where you hire them and they will have a bigger impact of the subsequent quarters. So hence also.
I think a strong message increasing and our guidance.
By more than 10% I think is a strong sign of comfort.
We want to make sure that everybody remains realistic. This is a company that wants to continue to combine strong results with smart investments in the future.
Hence the IB.
EBITDA guidance of up to $28 million for the full year.
Perfect.
Great just wanted to make sure we all understood that.
And second could you just give us a bit of an update on.
Some of your key strategic priorities, maybe if you could just touch on some of.
The vertical investment the investments that youre, making in growth vertical.
Perhaps a CMS and footwear and eyewear, if you could kind of give us a sense of where that stands.
Where you're seeing traction heading into heading into 2022.
Well.
Let me start by saying that.
We have reported growth in all three of them.
And <unk>.
CMS is of course, the bulk of our devices business in medical.
And it's definitely the growth engine of the medical devices business, where we anticipate to continue to growth into next year.
And the same is true for hours.
Footwear.
Initiatives.
Our materialized motion.
Business in.
In footwear.
Very heavy.
Investment.
Schedule in front of it.
Will enable the release of several new products and even product categories next year.
That should ensure.
Serious long term growth.
In Iran.
We want to be open.
We closed it.
Ditto investment.
Investment.
Favorable financial terms, but it's a drawback for the digital side of the developments we have in mind. So we are at this moment a little bit more cautious.
With the growth expectations of our eyewear.
At this very moment.
Yeah.
Thank you very much.
Thank you.
Sure.
Next question is from Troy Jensen from Lake Street Capital. Please go ahead.
Hey, gentlemen, I'd also like to say congratulations that gross margins operating margins, yeah, everything looks spectacular quarter with the exception of maybe the guidance, but I'll.
I'll take the over on that Peter but that congrats gentlemen.
Yep.
Hey, so quickly just on <unk>.
In footwear and thank you for the update on the highway.
Great.
Those segments, one through medical sales.
No.
They are reported in manufacturing.
Okay, and they're not enough to really have no manufacturing had a huge quarter that wasn't really anything to do with outerwear and footwear that was it really just manufacturer.
I wear and footwear.
Have performed very well our parts of manufacturing.
The real growth engine for the third quarter was our.
And Bart additive manufacturing business within the entire segment not the prototyping part the other parks performed well, but that is really that was the that's the engine for the growth in the in this year.
Okay.
So I'd like to talk a little bit more about just manufacturing visibility I guess, it's my belief that with all these supply chain constraints that.
<unk> manufactures around the around the globe radar just go into local machine shops, and additive service bureaus and trying to get price right.
Fill up some of the air bridge some of the supply constraints. So.
It's definitely been a short term benefit I'm wondering do you see are you seeing more production applications are you seeing more conviction on.
This extending into the long term benefits and then now brought this up last quarter too and just would love to hear your thoughts and puts change on.
Materializing in a broader digital manufacturing company, because incubate new technologies and new areas.
It seems like something that would be right up your wheelhouse, but go ahead.
Thank you Troy I find this a very very good question.
And Thats why I stressed in my part of the presentation. So much the focus of materialize.
Yes specific what we call meaningful applications.
We are not just jumping into temporarily opportunities, but we are trying to focus on.
Yes applications on environments, where we can.
Sustainably produce parts that preferably cannot be produced by any ultra technology.
Hence it are also not just parts that have been in the past produced.
In Asian countries in classical supply chains now in our bars that are yes.
We are working on new.
Good call it product categories.
And I gave the explicit example of the veto.
Ed.
It's a new breed of vehicles.
It is expected to be in.
In growing markets.
Really a market of the office of the future.
New mode of mobility mobility that we will see a beginning.
And where do.
The unique benefits of additive manufacturing.
Really crucial.
To build reliable systems that are so light they can take passengers only with electric energy.
And this is the kind of.
<unk>.
The markets, where we really see.
Adamantly believe in.
I would say maybe some companies take advantage of those.
Short term supply chain disruptions, but I dare to say that it's not at all.
<unk> in the revenue doesn't materialize reporting.
Awesome Love hearing about just one for John.
Excuse me.
<unk> gross margins I mean, a huge this quarter right.
E&P guys do like a flattish revenue level in the December quarter with gross margins be flat in <unk>.
Wondering what you think just maybe what 22 gross margins or just how they're trending we're going to continue to go higher now with better economies of scale or.
Or is this just an anomaly we're seeing.
Gross margins as mentioned.
Sure.
Prepared remarks today.
The revenue grow we have a better capacity usage. So our fixed costs are set off against.
Higher level of revenue.
Have improvements by in sourcing certain.
<unk>.
Lines or activities in the production that we used to outsource of course through state.
Revenue will grow when we ultimately unfolded.
<unk> efficiency.
After utilizing by further optimizing our technology.
And of course, we counted as substantial so it also depends on the product mix on a quarterly basis, but the trend is that the margins will stay and will gradually further increase but that depends also on the pricing, but let's say that the.
We will not go down.
Sounds like it's all good news over there so congrats guys keep up the good work.
Hence, hence the guidance to bring some balance into at all.
Alright.
Alright.
Okay.
Yeah.
Thank you.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Your next question comes from the line of Gregory Ramirez from Bryan Garnier. Your line is now open.
Alright.
Yes, hi, Thank you good afternoon.
Thank you for taking my question.
If I may for Swan.
Just to come back to the guidance.
Film that scheme.
Guidance.
Guidance on revenues execute.
The treaty.
So that's coincidental events.
The auction has not been.
Yes.
Been exercised yet guidance.
Our guidance and my second question to come back to you.
Previous question.
King.
Margin.
We look at the.
The outstanding margin.
Factoring division.
Uh huh.
19 country began euros.
Uh huh.
Sure Ralph.
Roughly 2 million euros less venture.
Two years ago on a quarterly basis.
Obviously.
You mentioned that you have some backyard utilization.
After printers.
So if you see.
What changed.
Our position for all.
Do you think that.
Conference.
Utilization capacity.
Each indication.
And of course sustainable.
And you'll have to invest in your printers.
Hire more people.
Okay.
<unk> is 15, 5%.
Also any margin manufacturing is not sustainable.
Okay.
What gives you comfort on your first question is very short there is the option has not yet been exercised so theres no revenue whatsoever.
<unk> in the numbers that we have presented earlier and for the second part of the question I will hand, the floor to fleet.
Yes.
Regarding the gross margin of manufacturing.
I wanted to see on one hand that.
We have always indicated that manufacturing is a more cyclical business.
So we have the advantage now to have them.
To be in a more positive.
Area of over the cycle.
And Thats helps of course.
With the margin on the other hand, I want to stress that it's not the aim of materialise to over invest in capacity.
Because we have always seen that.
We need to focus our manufacturing to the high end applications of <unk> printing and rather than feeling it COVID-19 volume we prefer to go for.
Framed as again in meaningful applications, the dose applications, where we believe.
That's serious value can be made.
So there is no plan to.
Big <unk>.
<unk> the capacity in a big way I do want to say that.
Our metal activities are still in a growth mode.
And that we are going to expand that capacity in the future.
Because we just.
<unk> opened a new plant.
Earlier this year.
In Bremen.
And in this plant.
Gradually some extra machines in the coming years.
Maybe I didn't answer your question in full Gregory but also the guidance does not include any revenue from <unk>.
Okay, that's clear.
Thank you very much.
Sure. Thank you.
That ends our question and answer session I'll turn the call back over to Peter for closing remarks.
Thank you so much operator, and thank you again, all for joining us today and for engaging in this interesting discussion we.
We hope to see some of you obviously at four next just a.
A couple of weeks from now.
In the meantime, if you have any other questions. Please feel free to reach out.
Thank you again and goodbye for now.
Bye bye.
That concludes today's conference call. Thank you all for participating you may now disconnect.