Good day ladies and gentlemen, and welcome to the Q1 2020 Materialise Financial Results Conference Call. [Operator Instructions] As reminder this conference call is being recorded. I would now like to turn the conference over to your host Ms. Harriet Fried of LHA.

Thank you for joining us today for Materialise's quarterly conference call. With us on the call are Fried Vancraen, 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 on the Investor Relations Section of the company’s website. The earnings press release issued earlier today can also be found on that page. Before we begin, I’d like to remind you that management may make forward-looking statements regarding the Company’s plans, expectations and growth prospects, among other things. These forward-looking statements are subject to known and unknown uncertainties and risks that could cause actual results to differ materially from the expectations expressed, including competitive, dynamics and industry change. Any forward-looking statements, including those related to the Company's future results and activities, represent management’s estimates as of today and should not be relied upon as representing their estimates as of any subsequent day. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations. A more detailed description of the risks and uncertainties and other factors that could impact the Company’s future business or financial results can be found in the company’s most recent Annual Report on Form 20-F filed with the SEC. Finally, management will discuss certain non-IFRS measures on today’s conference call. A reconciliation table is contained in the earnings release and also at the end of the slide presentation. And now, I'd like to turn the call over to Peter Leys. Go ahead please, Peter?

Thank you, Harriet, and thank you, everyone for joining us today. You will find us always in the agenda for our call on Slide 3. I'll begin with a brief recap of our results for the quarter. I'll also give a summary of some of the key measures that we have taken to protect our people and our business against the impact of the corona crisis. Then Fried will come on and he will give you an overview over the short-term initiatives that we have taken in response to COVID-19. And he will also talk of what we believe may be the longer term impact of this crisis on the additive manufacturing industry as a whole. After that, Johan will go through our first quarter numbers in more detail and finally, I will come back on to reflect on our financial guidance for 2020. When we then have completed our prepared remarks, we will be happy to answer to any questions that you may have. So turning to Slide 4, you will see the highlights of our first quarter results. In the first quarter of 2020 where we only start to feel the impact of the crisis in the course of the month of March, total revenue decreased by 1.8% to €46.2 million, while adjusted EBITDA declined from €5.8 million to €3.6 million. In the period, our software and medical segments continue to grow their revenues by respectively 5% and roughly 15%, while revenues of our manufacturing segment decreased by almost 14%. In the unprecedented circumstances of today, it is definitely worthwhile to highlight a few key indicators pertaining to our financial resilience. At the end of the first quarter of 2020, we have cash and cash equivalents for a total amount of about €127 million and short-term debts as…

Good morning, or good afternoon everyone. Thank you for joining us today. Since our previous earnings call on March 4, the world has changed dramatically. In the beginning of March, we saw only a limited impact of the corona crisis on our Asian operations mainly in China. At that time, we were still expecting an overall relatively normal 2020. As of the following week however, the situation deteriorates dramatically in Italy, and the COVID-19 virus spread quickly over Europe. The same week, Materialise implemented measures to protect its employees and in doing so we detected multiple new meaningful 3D printing applications. First, we applied social distancing rules for those people who could not work from home as Peter indicated, before they were even imposed by governments. But there were still contamination risks, especially those caused by surfaces stored by many people, such as door handles, or light switches. In response, the engineering team of Materialise manufacturing invented hands free door openers. Door openers were installed and tested at Materialise. As we believe, we should share our innovations with all those in need. The files were made available both for free download and for purchase by Materialise to our 180,000 3D printing contacts over the next weekend. Within five days, our team went from ID to testing multiple concepts to distribution of a cost effective stable solution with a full risk analysis, documentation and instruction videos. Given the vast experience of the Materialise engineering team with AM technologies, the file was printable on small extrusion based home printers, as well as on industrial systems such as those from HP, self-assisted 3D systems in [U.S.] and others. In the following days, we receive pictures of 3D printed door openers being installed all over the world. Our preventive devices, has now been downloaded…

Thank you, Fried. I’ll begin with a brief review of our consolidated revenue on Slide 6. As a reminder, when refer to sales in our presentation, we mean revenues plus deferred revenues. Also, please note that unless otherwise stated, all comparisons in this call are against our results for the first quarter of 2019. As Peter mentioned in his opening remarks in this year's first quarter, revenue decreased 1.8%. COVID-19 began having impacting all segments, especially during the last weeks of the quarter. Our Manufacturing segments started the year in a continued tweak macroeconomic environment, and so revenues decreased by 13.9%. Our Software and Medical segments however, continue to increase their revenues by 5% and 15.3% respectively, the growth that excludes the increase of deferred revenues from annual and especially medical software sales and maintenance fees of €2 million. For the quarter, Materialise Software accounted for 21% of our total revenue. Materialise Medical for 24%, and Materialise Manufacturing for 45%. Gross segment revenue from software products accounted for 32% of our total revenue. Moving to Slide 7, you'll see our consolidated adjusted EBITDA numbers for the first quarter. Consolidated adjusted EBITDA declined 38.2% from €5,829,000 to €3,603,000. Our EBITDA margin decreased from 12.4% to 7.8%. The revenue decrease in our Manufacturing segment continued costs of capacity, small increases in operating expenses and increased sales from annual software licenses, and maintenance fees that we had to classify as deferred revenue led to this €2.2 million lower result. Slide 8 summarizes the results of our Materialise Software segment. Here, revenue grew by 5% or €0.5 million. The 19% growth of recurring revenue was partially offset by a decrease of non-recurring sales of 11%. The recurring was mainly due to delayed sales from the automotive and aerospace industry in the context of COVID-19.…

Johan, thank you. As I indicated earlier, before giving the floor to you for questions, we want to actually - we have to come back to our financial guidance for this year. As a reminder in early March, we expected to report for fiscal 2020 consolidated revenue between €202 million and €260 million, adjusted EBITDA between €27.5 million and €30 million, and an increase of deferred revenues from software licenses and maintenance by €3 million to €5 million as compared to the end of last year. The impact of the corona crisis on all three of our segments I believe there is no other option, but to withdraw that guidance. And because no one has visibility on how long the crisis will last, we are currently not in a position to provide any alternative financial outlook. What we can do is give you some qualitative indications of our current outlook. Albeit with the exclusive caveats that’s our current view may be outdated in a matter of weeks, if not days in function of the developments. Our second quarter will be materially impacted by the crisis. Our first quarter results should by no means be viewed as an indication on how Materialise could perform during the rest of the year. Let's have a look segment-by-segment. Our Medical segments, which has performed extremely well in recent years, including scope in the last quarter will because of the nature of the solutions that we offer, be seriously impacted. As Fried already indicated, elective surgeries which includes the majority of the orthopedic and craniomaxillofacial interventions for which we offer solutions are almost all being discovered, as a result of travel restrictions for patients and more importantly with a view to freeing up hospital beds for COVID-19 patients. This obviously impacts our partner business, as…

[Operator Instructions] Your first question comes from the line of Troy Jensen with Piper Sandler.

Maybe for Peter or Johan, I just be curious if you guys could give us any kind of comparison how the first month of the quarter has been versus maybe a year ago, right. April over April sales and how much - I don’t know if you have that information available if it's something you'd be able to address?

Hello Troy, yes, it's Peter answering. You mean the first month of the second quarter?

Exactly. Yes.

Yes, well at this moment, we can only say that the auto level has dropped to approximately 50% of last year.

Really, okay, all right. So and I guess, I want to get into Fried addition, see a lot of opportunities with COVID out there. And I do appreciate all the efforts that you guys and Materialise have made to kind of help out here. But specifically then other parts and facemask and nasal swabs and whatnot. So does feel like there's some opportunities for growth in healthcare but clearly you guys are exposed to a lot of elective. I guess within elective - within healthcare I’ll be curious to know what is your non-elective, it seems like CMF probably wouldn't be or - with hips and knees probably are, but just some thoughts on the opportunities on COVID and kind of how much exposure you have to elective medical?

Yes, unfortunately CMF is also 90% elective. There are a couple of cancer related cases that need to be executed on relatively short notice. But even in most of the cancer cases, the fact is that yes, the first removal of the tumors is very often not combined instantly with reconstruction. And there is some period passing between the cancer surgery and the actual final reconstructive surgery. So it's really a small minority of cases that are still going ahead.

How about just shifting gears a little bit? Just be curious on the manufacturing business, I know you guys have a lot of auto exposure, a lot of aerospace exposure. So anyway you could kind of quantify how much you have there, versus maybe other verticals that may be less impacted with kind of some of these COVID shutdowns?

What we can tell you Troy is that the negative results of our manufacturing segment are this quarter to a very large extent, attributable to ACTech, which is as you know very, I mean 80% plus exposed to the automotive industry. Actually our traditional additive manufacturing business, if you want, that is also exposed to automotive but has a much broader exposure to many other sectors. This in the first quarter of 2020, actually very well, and even in spite of our traditional business also being hit by the COVID crisis towards the end of March actually did better than the first quarter of 2019. So, it's really the part of our manufacturing segment that was very focused on automotive that was only hit, and it is to a large extent responsible for the results that we've posted in the first quarter within our manufacturing segment.

[Operator Instructions] Your next question comes from the line of Jason Celino with KeyBanc.

I know that you didn't do any, large layoffs with your workforce but did you - can you maybe talk about the average salary reductions across the company or any other, blanket cost reductions?

Yes, it's - any information that we pass on obviously is average. And we need to be fine-tuned team-by-team, segment-by-segment, jurisdiction-by-jurisdiction, but I think overall, it's definitely so that work has reduced by at least 20% and remuneration has been adjusted accordingly.

Okay, great. Thank you. And relative to the shifts and production that you mentioned having the two shifts, I guess when did you begin to implement that and then are you - is that still the case?

Yes, we started implementing in the second week of March so, around the 11th of March and the - currently this is still ongoing. There are actually, I just mentioned it's a dynamic process. For instance, the elective surgeries went gradually down because a lot of the - yes, on average lead time for those surgeries is between one up to six weeks for the most complicated implants. So in the month of April, the occupation rate has been gradually going down, and we adjusted the workforce accordingly.

Great, thank you. And one last question from me. And, I apologize if you already mentioned it, but relative to your software businesses, the software segment and also the medical software segment. How much is recurrent?

Yes, I would say it's again, variable between the two segments you're mentioning but on average, I would say 65%.

I am showing no further questions at this time. I would now like to turn the conference back to Peter Leys, Executive Chairman for any closing remarks.

Thank you, Krystal. So thanks again all for joining us today. Today's environment is as I already said earlier unprecedented. But importantly the morale here at Materialise is and remains good. Our employees are committed and heartwarmingly enthusiastic about opportunities to contribute including through some of the new products that Fried discussed earlier. Obviously, we do not have any trips or conferences scheduled at the moment that could bring us physically closer to you. However, we are only in phone calls, Skype, zoom or teams call away. So if you have any questions or concerns, please feel free to reach out because we do believe that it is important to stay in touch with the investment community as together all of us weather this storm. Thank you and goodbye for now.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.