2023-05-10 12:51:38 ET
Summary
- Materialise NV reported its Q1 2023 financial results on April 27, 2023, beating revenue estimates.
- The company provides additive manufacturing software and services to commercial and industrial customers worldwide.
- MTLS saw a drop in performance in 2022, but contract repricings are taking effect in 2023 and the company is expanding its partnerships.
- For investors seeking exposure to the additive manufacturing space, my outlook on MTLS is a Buy at around $8.65 per share.
A Quick Take On Materialise NV
Materialise NV ( MTLS ) reported its Q1 2023 financial results on April 27, 2023, beating revenue estimates.
The firm provides additive and 3D manufacturing services and related software and consultancy services.
Continued strength in the company's medical segment can help mitigate any downside risks due to slowing macroeconomic conditions.
For investors seeking exposure to the growing additive manufacturing space, my outlook on MTLS stock is a Buy at around $8.65 per share.
Materialise Overview
Leuven, Belgium-based Materialise NV was founded in 1990 and provides 3D manufacturing services and software to industrial and commercial customers worldwide.
The firm is headed by Founder and CEO, Mr. Wilfried Vancraen, who was previously a research engineer and consultant at the Research Institute of the Belgian Metalworking Industry.
The company's primary offerings include the following:
-
Materialise Software
-
Materialise Medical
-
Manufacturing
MTLS acquires customers through its direct sales and marketing efforts and has collaboration agreements with major medical product companies.
Materialise's Market & Competition
According to a 2022 market research report by Grand View Research, the global market for additive manufacturing was an estimated $13.8 billion in 2021 and is forecast to reach $75.8 billion by 2030.
This represents a forecast CAGR of 20.8% from 2022 to 2030.
The main drivers for this expected growth are increasing demand for prototyping applications in various industry verticals, particularly in healthcare, aerospace and defense, and automotive, and improved technological innovations by industry participants.
Also, the chart below shows the historical and projected future growth trajectory for the additive manufacturing market from 2022 to 2030, by technology type:
N. America Additive Manufacturing Market (Grand View Research)
Major competitive or other industry participants include the following:
-
Stratasys
-
EnvisionTec
-
3D Systems
-
GE Additive
-
Made In Space
-
Canon
-
Voxeljet AG
-
Others
Materialise's Recent Financial Trends
-
Total revenue by quarter has risen per the following chart:
-
Gross profit margin by quarter has fluctuated as follows:
-
Selling, G&A expenses as a percentage of total revenue by quarter fell sharply in the most recent quarter:
-
Operating income by quarter has risen recently but has varied materially:
-
Earnings per share (Diluted) have also varied significantly recently:
(All data in the above charts is GAAP)
In the past 12 months, Materialise's stock price has fallen 42.81% vs. that of Stratasys' ( SSYS ) drop of 19.56%, as the chart indicates below:
For the balance sheet, the firm ended the quarter with $153.7 million in cash and equivalents and $73.1 million in total debt, of which $17.7 million was categorized as the current portion due within 12 months.
Over the trailing twelve months, free cash flow was $0.5 million, of which capital expenditures accounted for $23.6 million.
Valuation And Other Metrics For Materialise
Below is a table of relevant capitalization and valuation figures for the company:
Measure ((TTM)) | Amount |
Enterprise Value/Sales | 1.7 |
Enterprise Value/EBITDA | 21.8 |
Price/Sales | 2.0 |
Revenue Growth Rate | 15.1% |
Net Income Margin | 60.0% |
EBITDA % | 7.8% |
Market Capitalization | $523,340,000 |
Enterprise Value | $451,080,000 |
Operating Cash Flow | $21,410,000 |
Earnings Per Share (Fully Diluted) | $0.02 |
(Source - Seeking Alpha)
Commentary On Materialise
In its last earnings call (Source - Seeking Alpha), covering Q1 2023's results, management highlighted the firm's steepening growth trajectory as evidence of its potential in the additive manufacturing space.
Notably, the second half of 2022 saw inflationary pressures weigh negatively on results, so price increases per the firm's contracts started to take effect in 2023.
The firm's medical segment for medical devices saw strong growth as COVID-19-era surgery postponements abated.
Total revenue for the quarter increased 22.0% year-over-year, and gross profit margin rose 1.3 percentage points.
Leadership did not disclose any company or customer retention rate information.
SG&A as a percentage of revenue dropped 6.1 percentage points while operating income grew sharply to $5.4 million.
Looking ahead, management guided 2023 full-year revenue to $286 million, or a 17.4% growth rate. 2023 EBITDA is expected to be $33.55 million at the midpoint of the range.
The company's financial position concluded the quarter with ample liquidity, moderate debt, and very slight positive cash flow.
Regarding valuation, the market is valuing the firm at an EV/Sales multiple of 1.7 on forward revenue growth of 17%.
The primary risk to the company's outlook is slowing macroeconomic conditions, which management has highlighted as weighing on its forward guidance.
From management's most recent earnings call, I prepared a chart showing the frequency of key terms mentioned (or not) in the call, as shown below:
I'm most interested in the frequency of potentially negative terms, so management cited 'Uncertain' once and 'Macro' once in various contexts.
A potential upside catalyst to the stock could include reduced inflationary pressures and the further upward repricing of contracts throughout 2023 contributing to increased revenue growth and operating income.
Continued strength in the company's medical segment can help mitigate any downside risks due to slowing macroeconomic conditions.
For investors seeking exposure to the growing additive manufacturing space, my outlook on MTLS is a Buy at around $8.65 per share.
For further details see:
Materialise NV Sparks Revenue Growth As Contracts Reprice