Q2 2025 Materialise NV Earnings Call
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Operator: Please be advised that today's conference is being recorded.
Good day and thank you for standing by. Welcome to the second quarter, 2025 materialize, Envy Financial results conference call. At this time will participants are in a listen-only mode. After the speaker's presentation, there will be a question answer session to ask a question during the session. You will need to press star 1, 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again.
Harriet Fried: I would now like to hand the conference over to your speaker today, Harriet Fried of Alliance Advisors. Please go ahead.
Harriet Fried: Thank you for joining us today for Materialise's quarterly conference call. With us on the call are Brigitte Vet, Chief Executive Officer, and Koen Berges, Chief Financial Officer.
Harriet Freed: Please be advised. That today's conference is being recorded, I would now, like to hand the conference over to your speaker today. Harriet freed of a Alliance advisors please go ahead.
Harriet Fried: 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 2025. 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.
Speaker Change: Thank you for joining us today for materializes. Quarterly conference call with us on the call. Our Pita devet chief executive officer and Kung Bells Chief Financial Officer.
Speaker Change: Today's call in webcast are being accompanied by a slide presentation that reviews materializes, strategic financial and operational performance for the second quarter of 2025.
Harriet Fried: Before we get started, I'd like to remind you that management may make forward-looking statements regarding the company's plans, expectations, and growth prospects, among other things. These forward-looking statements are subject to known and unknown certainties and risks that could cause actual results to differ materially from the expectations expressed, including competitive dynamics and industry change. Any forward-looking statements, including those related to the company's future results and activities, represent management's estimates as of today and should not be relied upon as representing their estimates as of any subsequent date. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations.
Speaker Change: 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.materialnotice.com
Speaker Change: Before we get started, I'd like to remind you that management may make forward-looking statements regarding the company's plans, expectations, and growth prospects among other things.
These forward-looking statements are subject to known and unknown, certainties and risks that could cause actual results to differ materially from the expectations expressed including competitive Dynamics, and Industry change.
Speaker 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.
Harriet Fried: 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.
Speaker Change: Management. Disclaims any duty to update, or revise any, forward-looking statements to reflect future events or changes in expectations,
Harriet Fried: 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.
Speaker Change: In 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.
Brigitte Vet: With that, I'd like to turn the call over to Brigitte Vet. Brigitte, go ahead, please. Good morning and good afternoon to all of you. Thank you for joining us today.
Speaker Change: Finally management will discuss certain non-ifrs measures on today's conference. Call at reconciliation table is contained in the earnings release and at the end of this slide presentation,
Reed devet: With that. I'd like to turn the call over to Reed devet.
Reed devet: Vita. Go ahead, please.
Reed devet: Good morning and good afternoon.
Brigitte Vet: You can find the agenda for our call on slide 3. First, I will summarize the business highlights for the second quarter of 2025.
Reed devet: To all of you. Thank you for joining us today.
Reed devet: You can find the agenda for our call on slide 3.
Brigitte Vet: Then I will pass the floor to Koen, who will take you through the second quarter financials.
Reed devet: first, I will summarize the business highlights for the second quarter of 2025
Brigitte Vet: 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.
Reed devet: Then I will pass the floor to Koon. Who will take you through the second quarter financials?
Reed devet: Finally, I will come back and explain what we expect the remaining months of 2025 to bring.
Brigitte Vet: Moving to slide four for the highlights of the second quarter 2025. We celebrated our 35th anniversary in the second quarter of this year. 35 years ago, our founders, Free Front Garden and Hilde Ingelar, 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 hardships they put into growing the adoption of additive manufacturing every single day. in a 35-year we have grown into a leading, profitable, cashflow positive company in the sector. And we keep pushing the boundaries.
Reed devet: Of the second quarter 2025.
Reed devet: We celebrated our 35th Anniversary in the second quarter of this year.
Speaker Change: 35 years ago, our Founders free frankan until the inl start of their Journey To Build a Better and healthier World, thanks to the power of additive Manufacturing.
Speaker Change: I'd like to take this opportunity to thank all of our employees, for the incredible energy and hardship. They put into growing the induction of additive manufacturing every single day.
Speaker Change: In the 3 5.
Brigitte Vet: Our strategic position remains excellent as we benefit from the ongoing R&D investments in strategic areas, driving long-term value creation in our growth sector.
Speaker Change: We have grown into a leading profitable, cash flow, positive company in the sector and we keep pushing the boundaries.
Our strategic position remains excellent. As we benefit from the ongoing R&D investments in strategic areas.
Brigitte Vet: 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 mock personalization strategy. One of the new markets that we are developing is the respiratory model. Two years ago, we launched a dedicated 3D surgical planning solution. with a focus on addressing the challenges in thoracic surgery to treat lung cancer patients. The Mimic's 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.
Speaker Change: Driving long-term value Creation in our growth segments.
Speaker Change: I am very proud that this quarter again. We made significant progress in our medical business.
Speaker Change: as you know,
Speaker Change: In our medical business. Our strategy is to grow in existing markets and in New Markets,
Speaker Change: in order to reach more patients with our personalized Solutions.
Speaker Change: This is what we call our Mass personalization strategy.
Speaker Change: And 1 of the new markets that we are developing is the respiratory remarks.
Speaker Change: 2 years ago, we launched a dedicated 3D surgical planning solution,
Speaker Change: With a focus on addressing the challenges. In thoracic surgery to treat lung cancer patients.
Speaker Change: The mimics theoretic planner.
Brigitte Vet: 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 she can simulate what happens when she takes a 3cm margin around the tumour rather than a 4cm margin, and what lobes or segments are impacted.
Speaker Change: Now advances in screening and surgical techniques in that area have created an opportunity for earlier diagnosis and less invasive, lung sparing procedures.
Speaker Change: But these approaches in the respiratory, field are technically demanding.
Speaker Change: To remove a tumor from the patient's lungs surgeons want to remove as much as needed.
Speaker Change: For that. You want to be gone?
Speaker Change: But as little as possible, in order to leave as much lunk capacity for the patient after surgery.
Speaker Change: all of this, while minimizing the incision,
Speaker Change: To enable speedy recovery of the patient.
Speaker Change: To plan these complex interventions properly, the surgeon uses our 3-dimensional, view on the lung lobes and segments and the Airways in blood vessels that he or she cannot only view, but also in engineering on
Speaker Change: That means that she he or she can simulate what happens.
Brigitte Vet: Now, surgeons using our MIMS 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 toward minimally invasive care and lung-sparing precision.
Speaker Change: when she takes a 3 cm margin around to tumor rather than a 4 cm margin and what the low what loes or segments are impacted
Speaker Change: Now surgeons using our mimics thoracic, planner have reported that the software has actively helped them better, understand each patient's unique anatomy and planned surgeries with precision.
Speaker Change: Supporting the shift for minimally invasive care.
Brigitte Vet: Now, building on these encouraging results.
Speaker Change: Um, towards sorry toward minimally, invasive care and lungs. Sparing procedures.
Brigitte Vet: We are proud to announce a pilot collaboration with Johnson & Johnson Surgical Business in the 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&J will offer surgeons our planning solutions alongside their full portfolio of surgical technologies. And we also keep making progress in our existing markets.
Speaker Change: Now building on these encouraging results.
Speaker Change: We are proud to announce a pilot collaboration with Johnson and Johnson, surgical business in emea, to advance the adoption of this solution in the region.
Speaker Change: As a leader in surgical technologies that help clinicians and patients in the lung cancer. Community JJ will offer surgeons our planning solution, alongside their full portfolio of surgical Technologies.
Brigitte Vet: one of our oldest. and most mature markets is the orthopedic market and in particular our kneecaps. Knee guides are amongst the most well-known and mature applications of 3D printing in the medical market. Knee guides are used to provide surgeons with surgical implementation 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 lats. Today, there is 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.
Speaker Change: And we also keep making progress in our existing markets.
Speaker Change: 1 of our oldest.
Speaker Change: And most mature markets is the orthopedic market. And in particular, our knee guides
Speaker Change: knee guides are amongst the most well-known and mature applications of 3D printing in the medical Market.
Speaker Change: Mig guys are used to provide surgeons with surgical implementation. That is customized to the patients are Anatomy. Using pre-op cities or mis and help surgeons to make accurate voting sections and ensure better knee implant position.
Speaker Change: Traditionally knee implants repositioned using standardized angles, aligning them to the straight mechanical axis of the lack.
Brigitte Vet: And the second quarter, we received 5,000 US 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 clear, insurgents 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 impacts for more patients.
Speaker Change: Mimicking. How the knee was before it was damaged?
Speaker Change: And the second quarter we received 5K us 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 guys. In the US.
Speaker Change: and this feature allows surgeons to tailor the knee and plant positioning to each patient's unique Anatomy rather than getting the legs straight so to speak,
Speaker Change: and with this clear Insurgent, can now choose between traditional mechanical straight alignment
Speaker Change: And the new personal alignment mode.
Brigitte Vet: We will bring this feature to the U.S. market in the third quarter.
Speaker Change: We believe that this in Innovation will not only provide surgeons with greater flexibility, but also Advanced the field of research and creating positive impacts for all patients.
Speaker Change: We will bring the feature to the US market in the third quarter.
Brigitte Vet: 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 additives, as far as industrial markets are concerned, comes primarily from specific sectors and from users that are already familiar with additives rather than from new adopters.
Speaker Change: And software in manufacturing, we continue to face headwinds.
Speaker Change: Due to geopolitical volatility.
Speaker Change: And the macroeconomic uncertainty impacting, many of the market segments. We are operating in
Speaker Change: Customers worldwide are delaying investment decisions. In order to get Creator karity around terrorists, and interest rates.
Speaker Change: Now that being said, we continue to see confirmation of our strategy to focus on specific customer and market segments.
Speaker Change: Both in software and Manufacturing.
Brigitte Vet: 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 2 last year in those markets.
Speaker Change: 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 that. If rather than from newer doctors
Speaker Change: as a result of the specific focus on our
Brigitte Vet: As another strategic milestone in the second quarter, we have formally announced our decision to broadly engage. and engage in and support the defense sector in light of the current geopolitical landscape and the breakdown of traditional global alliance. 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 the aerospace segment and open up new opportunities in the future for both our manufacturing as well as our software sector.
Speaker Change: market segments, within software and Manufacturing, we delivered roles again on the basis of an already strong quarter tool last year in those market segments.
Speaker Change: As another strategic milestone. In the second quarter, we have formally announced our decision to broadly engage
Speaker Change: And engage in and support the defense sector in light of the current geopolitical landscape and the breakdown of traditional Global alliances.
Speaker Change: Given the close connection between the defense and IRS space sectors. We believe our expertise will be particularly relevant in enhancing the regional Defence capabilities across land sea and space.
Brigitte Vet: 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 SINERA to establish direct connectivity between Magix SDKs and SINERA's SIGENTIC AI platform for engineers. Additive manufacturing organizations often lose significant production time to manual build preparation workflows, with human intervention driving up operational costs. The collaboration between Scenera and us allows users to deploy additive manufacturing agents that handle design-to-print tasks autonomously, helping scale throughput while reducing manual effort and cost.
Speaker Change: Additionally, we anticipate that this broader engagement will strengthen our position in the Aerospace segment at open up of new opportunities in the future for both our manufacturing as well as our software segment.
Speaker Change: Last but not least, we continue to make progress on our strategic road map in our software segments to build Partnerships to complement. Our end-to-end workflows and enable customers to scale their additive operations, more efficiently.
Speaker Change: In this context, we now announced the collaboration with sa to establish direct connectivity between metrics, sdks and scenarios agentic AI platform for engineers.
Speaker Change: Additive manufacturing organizations, often use significant production time to manual build preparation, workflows with human intervention. Driving up, operational costs
Brigitte Vet: The new MAGIX SDK, launched in 2024, allows for platform integration with MAGIX's powerful build preparation algorithm. to prepare even the most complex models for successful printing, reducing failed builds and improving part quality. The collaboration with SINERRA 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 Scenera 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.
Speaker Change: the collaboration between scenario and US allows users to deploy additive manufacturing agents that handle designed to print us also enormously helping scale through Goods, by reducing manual, effort and costs.
Speaker Change: The new metrics SDK launched in 2024 allows for platform integration with Magic's powerful, build preparation, algorithms.
Speaker Change: To prepare. Even the most complex models for successful printing, reducing field builds.
Speaker Change: And improving part quality.
Speaker Change: The collaboration within era will enable users to create end-to-end automation workflows for additive manufacturing significantly. Reducing build failures ensuring models of properly prepared for printing and reducing manual efforts through throughout the process.
Brigitte Vet: Now, while our supply 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 reclassed 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 by taking steps to reduce costs while continuing focused investment in our strategic area.
Combined, with other additive manufacturing, Solutions in the scenario Marketplace users can manage manage. The complete am workflow from design to production with an integration between design and build preparation workflows. Providing these designers with immediate feedback on manufacturability and build optimization directly within 1 environment.
Speaker Change: Now, while our stop line remains under pressure in the current market environment for the industrial division, we continue to control our costs.
Speaker Change: In the second quarter, we have announced.
Speaker Change: Any successfully implemented a restructuring in our manufacturing division.
Speaker Change: Class. Some of our assets is assets. Held for sale, on our balance sheet, as a result of this evaluation
Speaker Change: These assets and activities are non-material to our activities.
Speaker Change: As the pressure on our Topline persists, we will continue to manage our costs.
Speaker Change: By taking steps to reduce costs, while continuing focused invest.
Brigitte Vet: We are well positioned to capitalise on opportunities as market conditions improve.
Speaker Change: In our strategic areas.
Speaker Change: We are well, positioned.
Koen Berges: I will now turn over to Koen who will present the financial results. 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 5. While our medical segment once again achieved high double-digit growth this quarter, total consolidated revenue decreased year-over-year by 5.8% to €64.8 million. 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 optimise direct production costs despite inflationary pressure.
Speaker Change: To capitalize on opportunities as market conditions, improve.
Speaker Change: I will now turn over to Koon who will present the financial results.
Speaker Change: Thank you, obligator.
Speaker Change: Good morning or good afternoon to all of you on this call.
Speaker Change: I'll begin with a brief overview of our key financial results as shown on slide 5.
Speaker Change: While our medical segment. Once again, achieved a high, double double digit growth this quarter total Consolidated Revenue decreased year-over-year by 5.8% to 64.8 million euro
Koen Berges: Adjusted EBIT for the second quarter of 2025 amounted to 3.1 million euro, 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 €0.2 million, despite being impacted by large unfavorable effects from exchange rate fluctuations. During the first half of 2025, we generated a positive free cash flow, which led to a net cash position of 63 million euro at the end of Q2. an increase of 2 million euro versus the beginning of the year.
Speaker Change: Our gross profit margin remains 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,
Speaker Change: Adjusted ebit for the second quarter of 2025 amounted to 3.1 million euro, showing a strong increase compared to Prior quarters, despite the lower Revenue, that was generated.
Speaker Change: Reflecting once more the positive impact of targeted cost control.
Speaker Change: the net result for the quarter amounted to a profit of 0.2 million euro, despite being impacted by large, unfavorable effects from exchange rate fluctuations,
Speaker Change: during the first half of 2025, we generated a positive free cash flow, which led to a net cash position of 63 million euro at the end of due to
Koen Berges: In the following slides, I will elaborate further on these results.
Speaker Change: an increase of 2 million euro versus the beginning of the year.
Koen Berges: As a reminder, please note that unless stated otherwise, all comparisons are against our results for the second quarter of 2024. 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 EBW. 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 across periods, while it brings us in line with General Market Breakfast. We do not anticipate that this modification will require restatements of prior period results.
Speaker Change: In the following slides, I will elaborate further on these results.
Speaker Change: As a reminder, please note that unless stated, otherwise, all comparisons are against our results for the second quarter of 2024.
Speaker Change: 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 evida
Speaker Change: As of this quarter, we will also be adjusting these non if rest metrics for cost related to non-recurring corporate initiatives, restructurings and reorganizations.
Speaker Change: we believe this modification will allow for a more correct comparison across periods while it brings us in line with
Speaker Change: General market practices.
Koen Berges: Also in the current period, the adjustment made is immaterial to our overall result.
Speaker Change: We do not anticipate that this modification or require a statement of private periods results.
Koen Berges: 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 12% and 25% respectively. Leading also to a decrease of 5.8% of our consolidated revenue compared to the same period of last year. Now, this revenue decrease also reflects the unfavorable effect from a weaker US dollar in the second quarter of 2025.
Speaker Change: Also, in the current period, the adjustment made is immaterial to our overall results.
Speaker Change: Now, turning to slide 6, you will see an overview of our Consolidated Revenue.
as already mentioned materialized 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 records
Speaker Change: On the other hand, revenues, from software, and Manufacturing segments were further impacted by intensified geopolitical and macroeconomic turbulence.
Speaker Change: As a result Revenue in both segments declined by 12% and 25% respectively.
Speaker Change: Reading also to a decrease of 5.8% of our Consolidated Revenue compared to the same periods of last year.
Koen Berges: As you can see in the graph on the right side of the page, Materialise Medical accounted for 51%, Materialise Software for 15%, and Materialise Manufacturing for 34% of our total revenue for the second quarter of 2025. In the first half of this year, we generated over €131 million of revenue, which is stable versus last year's same period. 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 12 months, however, the balance increased by €3 million, bringing the total amount carried on our balance sheet at the end of the second quarter of 2025 to €46.7 million.
Speaker Change: Now, this Revenue decrease also reflects the unfavorable effect from a weaker US dollar in the second quarter of 2025.
Speaker Change: As you can see in the graph on the right side of the page. Materialized medical accounted for 51%, materialized software, for 15% and materialized manufacturing for 34% of our total revenue for the second quarter of 2025.
Speaker Change: The first half of this year, we generated over 131 million euro of Revenue, which is stable versus last year, same periods.
Speaker Change: 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,
2025 to 46.7 million euro.
Koen Berges: On slide 7, you will see our consolidated adjusted EBIT and EBITDA numbers for the second quarter of 2025. Consolidated adjusted EBITs total 3.1 million Euro compared to 3.9 million Euro for the same period of 25 years. representing an adjusted EBIT margin of 4.7%. Consolidated Adjusted EBITDA for the second quarter amounted to 8.3 million euros, decreasing from the 9.2 million euros last year, representing an adjusted EBITDA margin of 12.8%. Given current market volatility, we believe it's also important to compare our operational performance on a quarter-over-quarter basis. In this context, we saw significant improvements in both Adjusted EBIT and EBITDA compared to the first quarter of this year.
Speaker Change: On slide 7. You will see our Consolidated adjusted. Ebit in ebida numbers for the second quarter of 2025
Speaker Change: Consolidated adjusted ebit total 3.1 million euro compared to 3.9 million euro for the same period of 24.
Speaker Change: Representing. An adjusted ebit margin of 4.7%.
Speaker Change: Consolidated, adjusted. EBA for the second quarter amounted to 8.3 million euro.
Speaker Change: Decreasing from the 9.2 million. Euro last year, representing an adjusted, EBA margin of 12.8%.
Speaker Change: Giving current market volatility, we believe it's also important to compare our operational performance on a quarter of a quarter basis.
Koen Berges: Our Adjusted EBIT increased from €0.6 million to €3.1 million, while Adjusted EBITDA also increased by €2.1 million. 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 2025, we generated €3.7 million of adjusted EBIT and €14.4 million of adjusted EBITDA.
Speaker Change: In this context, we saw significant Improvement in both adjusted ebits and ebida compared to the first quarter of this year.
Speaker Change: our adjusted ebit increased from 0.6 million euro to 3.1 million euro,
Speaker Change: while adjusted ebida also increased by 2.1 million euro,
Speaker Change: These improvements reflect the positive impact of disciplined cost control and targeted cost reduction measures that we have taken to safeguard operational profitability.
Koen Berges: Moving now to slide 8, you will notice that the revenue in our materialised medical segment increased by almost 17% compared to the second quarter of 2014. solid growth was generated by both medical software and by revenue from medical devices sales, which grew respectively by 14 and 18 percent. 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 €10.7 million, resulting in an increased adjusted EBITDA margin of 32.7%. continued our planned R&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 Brigitte.
Speaker Change: Over the first half of 2025, we generate a 3.7 million euro adjusted, ebit and 14.4 million euro of adjusted ibida.
Speaker Change: Moving on. Now, to slide 8 you will notice that the revenue in our materialized medical segment increased by almost 17% compared to the second quarter of 24.
Speaker Change: The solid growth was generated by both medical software and by revenue from medical devices sales, which grew respectively by 14 and 18%.
Speaker Change: Within our medical devices and services activity. We saw continued growth both in our direct and our partner sales.
Speaker Change: In line with Topline growth adjusted ebida group further to over 10.7% in an increased adjusted. EBA margin of 32.7%
Koen Berges: Over the first half of this year, our Materialise medical segment realised €64 million of revenue, up by 18% from last year, with an adjusted EBITDA of €19.8 million, representing a 31% adjusted EBITDA margin.
Speaker Change: We continued our plant R&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 the Gita,
Koen Berges: Slide 9 summarizes the results of our Materialise software segment. In the second quarter, software revenue decreased by 12% to €9.9 million. 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 US market. 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 1.4 million euro, representing an adjusted EBITDA margin of 14%.
Over the first half of this year our materialized medical segment. Realised 64 million euro of Revenue up by 18% from last year with an adjusted ibida of 19.8 million representing a 31% adjusted DBA margin
Speaker Change: Slide 9 summarizes the results of our materialized software segments.
Speaker Change: In the second quarter software Revenue decreased by 12% to 9.9 million euro. This was partly due to the further conversion to recurring Revenue model but macroeconomic uncertainty and Forex Evolutions. But also pressure on our sales volumes especially in the US markets during the second quarter, we continued our transition to a cloud subscription, based business model
Speaker Change: Over the quarter around 84% of our software, Revenue was of recurring nature versus 80% in the previous quarter. Demonstrating the progress, we keep making
Koen Berges: Over the first half of this year, our software segment realized €19.6 million of revenue and an adjusted EBITDA of €2 million, representing a 10% adjusted EBITDA margin.
Speaker Change: Despite the lower Top Line compared to the same period of last year. Effective cost management, allowed us to maintain a stable adjusted. EBA of 1.4 million, euro representing an adjusted. Evida margin of 14%
Koen Berges: Now let's turn to slide 10 for an overview of the performance of our Materialise manufacturing segment. In the second quarter of 2025, geopolitical uncertainty added to the macroeconomic headwinds that we have been facing for some time and drove our manufacturing revenue down by almost 25 percent compared to last year's same period, realizing quarterly revenue of $22.1 million. 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.
Speaker Change: Over the first half of this year, our software segment realized 19.6 million euro of Revenue, and adjusted ebida of 2 million. Euro representing a 10% adjusted eida margin.
Now, let's turn to slide 10 for an overview of the performance of our materialized, manufacturing segments.
Speaker Change: In the second quarter of 2025, 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. Same periods, realizing quarterly revenue of 2 22.1 million euro
Speaker Change: also in the second quarter this year. We realized further growth in our strategic Focus areas while the automotive segment specifically continue to be under severe pressure
Koen Berges: 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 cost 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 0.8 million euro in the second quarter.
Speaker Change: 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.
Which resulted in a non-recurring severance costs that we adjusted in our quarterly numbers.
Speaker Change: Furthermore, we reclassified some of our manufacturing business assets on our balance sheets as assets held for sale. The operating results in net assets of these, reclassification are immaterial to our Consolidated results of operation, and our financial position.
Koen Berges: slightly below the result of the first quarter of this year, which was at minus 0.4, but significantly up from the minus 3 million euro adjusted EBITDA realized in the last quarter of 2024. Over the first half of this year, our manufacturing segment realized revenue of 47.6 million euro with an adjusted EBITDA of minus 1.2 million.
Mainly as a result of the lower Top Line, the adjusted ebida of our manufacturing segment still ended negatively at minus 0.8 million euro in the second quarter slightly below the result of the first.
Speaker Change: Quarter of this year, which was at minus 0.4. But, significantly up from the minus 3 million euro adjusted ibida realized in the last quarter of 2024,
over the first half of this year, our manufacturing segment realized revenue of 47.6 million euro, with an adjusted ebida of minus 1.2 million euro.
Koen Berges: Slide 11 provides the highlights of our consolidated income statement for the second quarter of 2025. Over the period, our gross profit amounted to 37.8 million euro, representing a gross profit margin of 58.3 percent, significantly up from the 57 percent realized in the second quarter of 2024. As mentioned earlier, this increase can be linked to mixed effects, but it's also the outcome of the efforts we made to generate further production efficiency. Our operating expenses in the quarter decreased by €0.3 million, or close to 1% in aggregate, compared to the same period of last year, with R&D expenses remaining flat year over year.
Slide 11 provides the highlights of our Consolidated income statement for the second quarter of 2025.
Speaker Change: Over the periods. Our gross profits amount to 37.8 million euro representing a gross profit margin of 58.3% significantly up from the 57%, um, realized in the second quarter of 2024
Speaker Change: 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,
Koen Berges: During the quarter, we invested again over €11 million in R&D, the majority of which in our medical segment. sales and marketing and G&A expenses decreased by 1.1% and 1.6% respectively, reflecting the impact from further indirect cost optimizations compensating inflationary pressure. Net operating income in the quarter was 1.3 million Euro compared to 1.2 million Euro last year. As a result of these elements, the group's operating result in the quarter was positive at 2.7 million euros. In Q2 2025, the net financial result amounted to a loss of 3.1 million euro which includes interest income of 0.7 million euro from our cash reserves, an interest expense on our financial debts of 0.4 million and a significant negative impact from foreign exchange fluctuations of minus 3.3 million euro.
Speaker Change: Our operating expenses in the quarter decreased by 0.3 million euro or close to 1% in aggregate. Compared to the same period of last year with R&D expenses, remaining flat year-over-year.
Speaker Change: During the quarter, we invested again over 11 million euro in R&D, the majority of which in our medical segment.
Speaker Change: Sales and marketing and GNA expenses. Decreased by 1.1% and 1.6% respectively, reflecting the impact from further indirect cost optimizations compensating. Inflationary pressure
Speaker Change: Net operating income in the quarter was 1.3 million euro compared to 1.2 million euro last year.
Speaker Change: As a result of these elements, the groups operating result in a quarter was positive at 2.7 million euro.
Koen Berges: In last year's corresponding period, the net financial result was positive by 1 million as we benefited from higher interest rates on our cash deposits and from favorable exchange rates effects at the time. Income tax in a quarter amounted to a positive 0.5 million euro resulting from the recognition of deferred tax assets compared to a tax expense of 1 million in the corresponding period of last Despite the large negative effect from exchange rate fluctuations, we were still able to report a net profit for the second quarter of 0.2 million euro.
Speaker Change: in Q2, 2025 the net Financial results mounted to a loss of 3.1 million euro, which includes interesting income of 0.7 million euro, from our cash reserves and interest expense on our financial depth of 0.4 million and a significant negative impact from foreign exchange fluctuations of minus 3.3 million euro,
And last year's corresponding period, the net Financial result was positive by 1 million as we benefited from higher interest rates in our cash deposits and from favorable exchange rates affects at a time.
Speaker Change: In income tax in a quarter amounted to a positive 0.5 million euro resulting from the recognition of deferred tax assets compared to a tax expense of 1 million in the corresponding period of last year.
Koen Berges: Now please turn to slide 12 for a recap of balance sheet and cash flow highlights. Also for the second quarter of 2025 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 3.6 million euro, which can be considered immaterial compared to the total consolidated balance sheets. Our cash reserve increased to €117 million by the end of the quarter. same time also our gross debt increased to 54 million euro. Both changes were largely impacted by 20 million euro drawing we made on an existing bank credit facility in line with earlier contractually agreed drawing period.
Speaker Change: Despite the large negative effect from exchange rate fluctuations, we were still able to report a net profit for the second quarter of 0.2 million euro.
Now, please turn to slide 12 for a recap of balance sheet and cash flow highlights.
Speaker Change: Also for the second quarter of 2025, we can report a strong balance sheet.
Speaker Change: As already mentioned during the review of our manufacturing segment where we classified, a limited amount of business assets as held for sale representing, a net asset value of 3.6 million euro which can be considered immaterial compared to the total Consolidated balance sheets.
Speaker Change: Our cash Reserve increased to 170 million euro by the end of the quarter.
Speaker Change: Same time. Also our gross depth increased to 54 million euro.
Koen Berges: the next 12 months, we will be drawing the remaining 30 million of this facility. The net cash position at the end of the quarter amounted to 63 million euro up by 2 million euro 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 Health for Sale reclassification, the net working capital slightly increased by 0.7 million euro compared to the beginning of this year. Total deferred income position increased to 60 million euro, out of which 47 million was related to deferred revenues from software license and maintenance contracts.
Both changes were largely impacted by 20 million euro drawing we made on an existing Bank credit facility in line with earlier contractually agreed drawing periods.
The next 12 months, we will be drawing the remaining 30 million of this facility.
Speaker Change: The net cash position. At the end of the quarter amounted to 63 million euro up by 2 million euro compared to the beginning of this year. And while as such not impacted by the previously mentioned drawing,
Koen Berges: mentioned before. As you can see on the graphs on the right side of the page, the operating cashflow in the second quarter of this year was just negative, as the cashflow generated from P&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 9.7 million euros.
Speaker Change: Out of which 46 million, 47 million. Sorry, what's related to different revenues from software license. And maintenance contracts as mentioned before
Speaker Change: 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 pnl was entirely offset by negative evolution of working capital components.
Koen Berges: Capital expenditures for the second quarter amounted to €4.7 million, including €3.1 million of non-recurring CAPEX mainly spent on remaining machinery for the new ag-tech plants. Over the first half of this year, total CAPEX amounted to €6.6 million, 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 ECTEC investments, the free cash flow over the first half of this year is positive and amounts to 6 million euro.
Speaker Change: Over the first 6 months of this year. However, the operating cash flow is positive at 9.7 million euro
Speaker Change: Capital expenditures for the second quarter amounted to 4.7 million euro including 3.1 million euro of non-recurring capex. Mainly spent on remaining machinery, for the new actik plants.
Speaker Change: Over the first half of this year, total capex amounted to 6.6 million euro, out of which 60% um can be considered to be of a non-recurring nature.
Brigitte Vet: And with that, I'd like to hand the call back to Brigitte.
Speaker Change: Taking into account also cash inflows from a limited asset sales. And from, um, government grants received for the active Investments. The free cash flow over the first half of this year is positive and amounts to 6 million euro.
Brigitte Vet: Thank you, Koen. Let's turn to page 13.
and with that, I'd like to hand the call back to Bri
Speaker Change: Thank you, Coon.
Brigitte Vet: I'll conclude my remarks with a discussion of our full year 2025 guide. 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 act to the pressure on our revenue line, hence 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 to 285 million Euro to a range of 265 to 280 million. We remain convinced, though, that the fundamentals of our business are solid and resilient and believe that further structural cost deficiencies will allow us to safeguard operational profitability.
Speaker Change: Guidance.
Speaker Change: As we move through 2025, we see a risk that geopolitical volatility in macroeconomic uncertainty intensify. And also further impact the business climate for the remainder of this year.
Speaker Change: Unfavorable foreign exchange fluctuations, might also act to the pressure on our Revenue line and reported net results.
Speaker Change: We therefore believe it is prudent to slightly reduce our Revenue. Guidance, for the full year,
Speaker Change: from the earlier communicated range of 20070 to 285 million euro to a range of 265 to 280 million euro.
Speaker Change: We remain convinced though that the fundamentals of our business of our business are solid and resilient.
Brigitte Vet: So despite the slightly lower revenue outlook, we therefore are reconfirming our adjusted EBIT guidance range of 6 to 10 million euro for fiscal year 2025, in line with our earlier communications in February and April of This concludes our prepared remarks.
Speaker Change: And believe that further structural cost efficiencies will allow us to safeguard operational profitability.
Speaker Change: So despite the slightly lower Revenue Outlook, we therefore are confirming, we confirming our adjusted ebit guidance range of 6 to 10 million euro for fiscal year 2025 in line with our earlier Communications in February and April of this year.
Operator: Operator. We're now ready to open the call to questions. Thank you.
Speaker Change: This concludes our prepared remarks.
Speaker Change: Operator. We now ready to open the call to questions.
Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster.
Speaker Change: Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please. Press star 1 1 again.
Troy Jensen: Our first question comes from the line of Troy Jensen from Cantor Fitzgerald. Hey, thanks for taking my questions. Good morning. Good afternoon. Hi, Troy. Hello.
Speaker Change: Please stand by while we compile the Q&A roster.
Troy Jensen: Our first question comes from the line of Troy Jensen from Cantor Fitzgerald.
Brigitte Vet: Hey, so maybe just a quick question on, well, congrats on the opportunity here with J&J and the respiratory site. I wondered, maybe could you quantify that opportunity? Is that something that could be as big as, you know, this MaxGio cranial facial opportunity you've had with them? Or just help size it a little bit, that'd be helpful. 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 cranial maxillofacial and the orthopedic markets are existing mature markets, whereas the respiratory market is a new market.
Speaker Change: Hey uh thanks for taking my questions. Uh good morning. Good afternoon. Hey Troy
Speaker Change: Hello um hey so maybe just a quick question on. Um,
Speaker Change: well, congrats on, you know the the opportunity here with J&J and the respiratory side, I wondered, maybe could you
Speaker Change: quantify that opportunity, is that something that could be as big as
Brigitte Vet: Now, when we say new market, it's really markets that we still are building. So it's the very start of a long journey. So, you know, to read the size of, you 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 certainly revenue impact is not to be expected this year. At the very earliest, you know, it's going to be next year.
Speaker Change: You know this maxcio cranial, facial opportunity you've had with them or just you could tell the size of a little bit that would be helpful. Yeah, so that's a obviously a very good question I think. Um, so I want to make a couple of comments on this. Um, so first, um, I think we need to keep in mind that this is a very new market. Um, so the cranium maxilla facial 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. Um,
Brigitte Vet: Third comment is that, you know, this is a pilot collaboration. So it's the 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. Today's issues. Yeah, thank you for the added color.
Speaker Change: Here. Um, it is a new market, um, in opening up new markets and developing markets as a leader in those markets, you know, it's a long journey.
Speaker Change: so, that is
Troy Jensen: Maybe a couple questions for Koen. First of all, $20 million in debt you guys took out during the quarter, and did I hear you say you... You're taking out more?
Koen Berges: I'm sorry, I tuned out a little bit during the end of the call, but is that correct? No, that is correct, Troy. It is part of an earlier agreement we made a couple of years ago where we signed into a new additional facility of 50 million euro, 5-0, and which foresaw a delayed drawing in three tranches, two tranches in the course of 2025, and a last tranche in the middle of 2026. So we are honoring those commitments, I own engagements, and we are now, we have made the first drawing of 20 million in the second.
Speaker Change: Yeah, thank you for that added color. Maybe a couple questions for Coon. Um, first of all 20 million in debt, you guys took out, uh, during the quarter and did I hear you say you? It's
Koen Berges: Very interesting. So I guess my first thought was maybe you guys had a change of thoughts on acquisitions, but this is... I mean, what would you do with all this additional cash on the balance sheet? Because obviously cash was positive, been a bit of 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. Yes, that cash was indeed, I think that was also the intention when the agreement with the bank was made, and it's still the intention to put that cash to work.
Coon: Oh, you're taking out more. I'm sorry. I tuned out a little bit during the end of the call. But, um, is that correct? No, that is correct, Troy. It is, uh, it is part of an earlier agreement. We made a couple of years ago, um, where we had, um, where we signed into a new, um, additional facility of 50 million, euro 50, and which was, which foresaw, um, a delayed drawing in in 3, tons 2, tons in the course of 2025, and the last tanch, um, in the middle of 2026. So, um, we are honoring those and, um, commitment, I own engagements and, and we are now we have made it first drawing of 20 million in the, in the second quarter.
Speaker Change: Very interesting. So I guess that. Yeah. My first thought was maybe you guys had a change of thoughts on Acquisitions, but this is, um, I mean, what, what what did you do, all of this additional cash on the balance sheet because um, yeah, basically positive of anybody that 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 if um, yes that cash was indeed. I think that was also the
Koen Berges: Of course, not to put it on our bank account, so that it's a bullet loan, so it is targeted at being used for CAPEX or M&A investments in future. Okay. All right.
Troy Jensen: Good luck.
Speaker Change: Intention, and when, 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, on our bank accounts. Um, so that is, it's a bullet loan. So, it is targeted at at being used for for capex or m&a Investments, um, in future.
Troy Jensen: And then how about I just click on the gross margins? I mean, they were obviously great this quarter, despite the lower revenues. I'm assuming it's mainly MEC. are just getting less manufacturing sales, but was there other stuff behind that driving it better? No, it's a combination of mixed effects. Indeed, like you say, more medical, less manufacturing, but it's also coming from the fact that we are able to reduce the production costs or the direct costs, both in our medical segment and in our manufacturing segment, where they play a role. Oh, it's going.
Speaker Change: Okay. All right. Um, good luck. And how about that? Just click on the gross margins. I mean they were obviously great this quarter um despite the lower Revenue as I'm assuming, it's mainly next.
Troy Jensen: All right, perfect.
Troy Jensen: Well, I'll cede the floor if there's others got other questions for you guys, but we can follow up. All right, thank you, Troy. Yep, thanks, congrats, good luck. Thank you.
Speaker Change: Right? Just getting less uh, manufacturing sales, but those are other stuff behind that drive better. No, no. It's a combination of mix effects, indeed, like you said, um, more, um, medical, um, less manufacturing. But it's also, it's also coming from the fact that we are, um, able to reduce the um, production cost or the direct costs. Um, both in our medical segments, and in our manufacturing segments, where they play a role now, that's correct. Great.
Speaker Change: All right, perfect. Well, I'll see the floor. If there's others. You got other questions for you guys, but then we can follow up later too. So, all right. Thank you draw.
Operator: One moment for our next question.
Speaker Change: Yeah, thanks. Congrats. Good luck.
Alexander Craeymeersch: Our next question comes from the line of Alexander Craeymeersch from Kepler Shuvra.
Speaker Change: Thank you. 1 moment for our next question.
Alexander Craeymeersch: Hey, hello, Alexander Craeymeersch from Capture Chevrolet here. So maybe to pick up on that first question of Troy, so you have these new features and new pilots coming up, but the next it is, of course, you have still the market that you're already active in and 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.
Speaker Change: Our next question comes from the line of Alexander K from Kepler shuvra.
Alexander Craeymeersch: Is it just like the FX rate on the US 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.
Alexander K: Hey, hello, Alexander from capture here. So um, maybe to pick up on that first question of Troy. So you have these new features and new pilots coming up. But, um, but next to this, of course, you have still the, the, the markets that you're already active in and already very, very much growing in. And I was just wondering if we could maybe get a like a glimpse into the next years. Can we can we continue to expect like double digit growth in this uh, segment? That would be the first question second. Question would be, um, on the the revised, Top Line guidance is down just 2% but I'm just wondering, what parameter you you used? Is it just like the effects rate or on on the US dollar this declining or what was exactly used to that? It prompted just a 2% decline. Um,
Brigitte Vet: Thank you very much. Yeah, so let me get started on your first question. So on the 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 market. So, you know, in the mix, obviously, you know, we grow in the existing lines, we 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.
Alexander K: and then maybe, if you could just talk a bit about, uh, the volume price, Dynamics in the manufacturing segment. Thank you very much.
Alexander K: Uh, yeah, so let me get started on your first question. So, on the, on the medical segment, um, so, um, so the, the Medical Market as such. Um, so structurally, you know, I don't see a reason to, um, uh, to see a change in the, um, growth that we see, um, in the, you know, currently in the, in the, in the medical markets. Um, so, you know, in the mix obviously, you know, we grow in the existing lines, we grow in the and then concurrently we build the new markets,
Brigitte Vet: 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 basis over the next couple of years, again, with potentially a different mix of the different markets that we're serving. That is why we are, you know, we're 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.
Brigitte Vet: I forgot the second and the third. In the meantime, I should be writing down. And 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 Yeah, so the way we approach our guidance or the re-forecast, you know, every quarter is obviously we, so it's not a top-down Koen 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.
Alexander K: Will keep on growing. Um, so that was your first question. I forgot the second and the third in the meantime, I should be writing down. No worries.
Speaker Change: Um, yeah, so the question on the guidance is just 2%. What was like, exactly the reason why you said okay, 2% cut um instead of like let's say 5% cut, like what what was the parameter you used for? Yeah, so the way we
Brigitte Vet: And every business line has a different forecast, you know. Obviously, we look at medical difference in a different way than, you know, some of the industrial segments. But within the industrial segments, our focus segments that are today growing very well, we think they will continue to grow, whereas others, I mean, automotive is one of them, we believe that they will continue to have a difficult time throughout the rest of the year. 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.
Speaker Change: Um, or the V forecast, you know, every quarter is obviously we uh um so it's it's not a top down, uh, coon. And I look at each other and we we 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 uh units and we go through different business lines through, um, 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. Um, you know, obviously we look at Medical, um, different in a different way than, you know, some of the industrial, um, segments. But within the dust industrial segments, our Focus segments that are today growing very well. We, we think they will continue to grow. Whereas others, I mean know,
Brigitte Vet: 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 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.
Speaker Change: Automotive is 1 of them. Uh, 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 um, um, geography. So is that all mixed that we go through? And it's that balance that has led us um, to this uh, this new estimation of our Top Line. Um, so it's it's not a it's not a 1 bare meter but it's a it's it's a more detailed exercise that we have going through 1 of the factors that helps us obviously in those business lines where we have an an order book.
Brigitte Vet: So, all of that taken into account led us to this new guidance that we have now issued.
Speaker Change: So base, our judgment on. Um, that is obviously a parameter that is helpful. Um, now, you know, that not not for not all of our business, uh, for some of our business lines that are more transactional. We don't have an order book to base our our estimations on. Um, so the more we have an order book, um, that we can base ourselves on the more visibility we have on the next quarter, um, but that's not the case for all of our business lines.
Brigitte Vet: 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. Well, 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 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.
Speaker Change: so, all of that taken into account, led us to this new guidance that we, uh, we have now issued
Speaker Change: And and maybe if I then just can ask uh, a small follow-up like which segment was then? Yeah, let's say underperforming uh versus the initial.
Speaker Change: Guidance or expectation. So I think what you see in our current results, uh, 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 continued. Um, I don't think I see. So in the brief in the, in the forecast that we've done for the, for the, for the next 6 months, there's no, um, dramatic change in the trends. Um, when we look at the different business lines,
Speaker Change: Okay.
Brigitte Vet: you.
Koen Berges: And then the last one was a bit on the falling price dynamics in manufacturing. The Foreign Price Dynamics, can you have it? The Volume Price Dynamics. To reply to your question, Alexander, from a more financial point of view, I think as in any manufacturing environment, the challenge we also have in our 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 labour costs, that the direct labour 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.
Speaker Change: Thank you. Uh, yeah. And then and then the last 1 was a bit on the following price Dynamics in manufacturing.
Speaker Change: The foreign price Dynamics uh can you help the, the volume volume, volume volume price Dynamics. Yeah,
Koen Berges: Yeah, that's clear. And maybe if I can also ask a small follow-up, which would be of the decline that we saw in the second half, is that mostly related to volumes, or have we also seen a decline in basically the cost base? Considering that they're fake. In manufacturing you mean? You see a significant top line drop, 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, you 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, so top line pressure adds to the gross margin.
Koen Berges: resorts. Okay, that's clear.
Alexander Craeymeersch: Thank you very much. Thank you.
Brigitte Vet: At this time, I would now like to turn the conference back over to Brigitte Vet for closing remarks. Thanks again for joining us today. We of course look forward to continuing our dialogue with you through investor conference or one-on-one virtual meetings or calls and please reach out if you have any questions.
Brigitte Vet: Now, thank you for now and goodbye to you all.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you for watching!