Good day, and thank you for standing by. Welcome to the Q2 2024 Materialise Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today Harriet Fried of LHA. Harriet?

Good morning, and thank you for joining us today for Materialise's quarterly conference call. With us on the call are Brigitte de Vet, Chief Executive Officer; and Koen Berges, Chief Financial Officer. Today's call and webcast are being accompanied by a slide presentation that reviews Materialise's strategic, financial and operational performance for the second quarter of 2024. To access the slides, if you've not already done so, please go to the Investor Relations section of the company's website at www.materialise.com. The earnings press release that was issued earlier today can also be found on that page. Before we 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 date. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations. A more detailed description of the risks and uncertainties and other factors that 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 call. A reconciliation table is contained in the earnings release and at the end of the slide presentation. With that introduction, I'd like to turn the call over to Brigitte de Vet. Go ahead please Brigitte.

Thank you, Harriet. Good morning and good afternoon, and thank you all for joining us today. You can find the agenda for our call on slide 3. First I will summarize the highlights of our financial results for the second quarter of 2024. Then I will take you through some of the progress we have made in realizing our strategic priorities over the last couple of months. And after that, I will pass the floor to Koen who will go into our second quarter numbers in more detail. Finally I will come back and explain what we expect the remaining months of 2024 to bring. When we've completed our prepared remarks, we'd be happy to respond to questions. Now looking at our key results for the second quarter 2024 summarized on page 4, I'm very pleased to announce that we performed strongly in all of our business segments and once again delivered profitable results this quarter. Looking at this quarter's results. We realized record quarterly revenue of €68.8 million growing more than 6%, compared to an already strong second quarter of 2023 and with growth in all segments. We realized a gross margin of 57% in the second quarter which is up from the first quarter this year and in line with the comparable period of 2023. And this solid performance enabled us to increase our adjusted EBIT to €3.9 million, representing 5.6% of revenue, while intensifying our investments in particular in R&D. We generated a net profit of €3.9 million or €0.07 per share. Our net cash position at the end of the second quarter evolved to €67.5 million, up by €4.3 million from the beginning of this year. Koen, will elaborate further on these results in his remarks, later in this call. Moving now to Slide 5, I'm…

Thank you, Brigitte. Good morning or good afternoon to all of you, on this call. I'll begin with a brief review of our consolidated revenue on Slide 6. As a reminder, please note that unless stated otherwise all comparisons in this call are against our results for the second quarter of 2023. In this year's second quarter, total revenue increased 6.2% to €68.8 million, which is as Brigitte already indicated the highest quarterly revenue, we have ever realized. We can report growth in all three of our business segments. Our medical segment turned in another very strong performance and increased its revenue by 13%. In spite of continued challenging market conditions, impacting manufacturing and further conversion of our software business model, also our manufacturing and software segments each grew by 2% in the second quarter. As you can see in the graph on the right side of the page, Materialise Manufacturing accounts now for 43%, Materialise Medical for 41% and Materialise Software for 16% of our total revenue, during the second quarter of 2024. Over the first half of 2024, we generated over €132 million of revenue, which is 1.3% above the strong first half of 2023, while we were still behind last year after the first quarter. The amount of deferred revenue on our balance sheet, coming from software license and maintenance fees amounted to almost €44 million, at the end of June 2024. On Slide 7, you'll see our consolidated adjusted EBIT and EBITDA numbers for the second quarter of this year. Consolidated adjusted EBIT increased to €3.9 million compared to minus €0.6 million for the corresponding period of 2023, in spite of significantly increased R&D investments this year, mainly in our medical and software segments. Our adjusted EBIT margin was 5.6% compared to minus 0.9% last year.…

Thank you, Koen. Let's now turn to Page 13. I'll conclude my remarks with a discussion of our full-year 2024 guidance. Given the strength of our operational performance halfway through 2024, we believe that we are well on track to deliver the growth targets we set at the beginning of this year. Accordingly, we continue to expect to report consolidated revenue for the full fiscal year 2024 within the €265 million to €275 million range, we communicated earlier. We are also maintaining our adjusted EBIT guidance of €11 million to €14 million for 2024, in spite of the recent FEops acquisition that will weigh on OpEx in 2024 and into 2025, given the integration costs and further investments in its product portfolio. This concludes our prepared remarks. Operator, we're now ready to open the call to questions.

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Troy Jensen of Cantor Fitzgerald. Your line is now open.

Yes. Hi. Thank you. Congrats on the nice results here Brigitte and Koen.

Thank you, Troy.

So a couple of questions if you don't mind. So I want to start with the acquisition. I guess, I'd be slightly curious on like the size of the organization. I'm assuming it's pre-revenues right now but this OpEx increases potentially because of the new headcount or some more insight would be helpful?

Okay. Let me first from my end Troy try to answer on the financial side of the acquisition. As you know we have not disclosed the purchase price as we also agreed that with the sellers. But I can confirm that the transaction will have no material impact on our net cash position. Nevertheless, as Brigitte explained coming months will require further cash outs from our side as we will be accompanying sales FEops in its further growth and as such we will support the further R&D investments and working capital needs they will have. The integration of FEops will initially have a limited negative impact on our EBIT which we expect to gradually decrease in the coming months and over 2025 by further growing its revenue and by further implementing cost synergies. But at least on the coming quarters that will still have an impact as Brigitte said that we at least in this year be able to -- I think we can absorb within the guidance that we communicated earlier.

Yes. And maybe just one other element that might help you work through this. FEops is a growth company. So as Koen said further investments required and as such it's a small addition to our family but an important one in terms of the strategic importance in this market.

Yes. Understood. When this does start to revenue is this going to go into the medical business or the 3D software?

Yes. Absolutely. Yes.

So it does go into medical you're saying?

Yes.

Yes.

Okay. And then can you remind me -- I got questions on the software side. Can you remind me how much of the medical business now is software? If we figured out right -- if we look at the...

It's around 30% of the total medical revenue that is related to software.

Okay. All right. Perfect. And then also on the 3D it's nice to see it grow. It so kind of stuck to me in that kind of €10 million to €12 million range. But I think you said 70% of revenues now are recurring. I'd be curious has that been growing Koen and do you feel like we're at a stage now or a point where we can actually start to see growth in the time of the software business?

That is indeed going up quarter-after-quarter step-by-step. I don't think we are at the end of the journey there. So we will continue to see that conversion to the recurring business model continue for at least a couple of quarters till we've reached the end that we probably never get to 100%. But it will be a gradual journey that is going to continue and that will continue to impact our top-line in the coming quarters couple of years in that timeframe I think we need to.

Okay. Understood. I will just [indiscernible] other ask questions. Congrats on the nice result.

Thank you, Troy.

Thank you. [Operator Instructions] One moment for our next question. Our next question comes from the line of Jacob Stephan from Lake Street Capital Markets. Your line is now open. Q – Jacob Stephan: Hi, guys. Thanks for taking my questions. I'll add to the congratulations as well on the solid quarter.

Thank you, Jacob Q – Jacob Stephan: I guess first starting off here the large kind of year-over-year improvement in medical segment EBITDA. Can you just remind us Q2 of 2023, why EBITDA margins were down to just 11%?

On the EBIT? On the medical segment specifically? Q – Jacob Stephan: Yes.

That is the impact of the arbitration award that was granted against us, I think in the course of May of last year. And that was processed in the medical results and then also in our consolidated numbers in the second quarter of last year. Q – Jacob Stephan: Okay. Got it. Thank you. And then next question. Manufacturing return to growth here this quarter, but prototyping demand is kind of in the weak spot in that segment. I'm just wondering, kind of what you're seeing in the prototyping segment after a month of Q3 here, and maybe how we can think about the ACTech utilization here?

Yes. So maybe just a comment on the prototyping side, maybe less specifically to the quarter three numbers specifically, but more as to how you need to look at that including the third quarter. The prototyping market sees a structural weakness, which I don't expect to disappear quickly. So we'll continue to see that as an industry and therefore, also Materialise in our results. So that's one. And then the second one is related to ACTech. Can you repeat your questions, and make it specific on the ACTech side? Q – Jacob Stephan: Yes. I was just curious about capacity utilization, with ACTech. More to get a sense on how you're filling out the kind of additional capacity that you guys have been building there.

Yes. So, one thing to understand is that the opening of our additional plant is in September. So in our results so far here today obviously, that additional plant hasn't had an impact, yet. Now, we will expect to see -- so we do expect to start seeing that impact as of the opening of the facility. But it's going to be a very gradual impact. As always, when you open a new facility, there is a start-up phase, so first of all. And the second is that, we do expect the fitting of the capacity, but also adding further capacity to continue over the next couple of months, quarters and years that it's a gradual process during which, we will continue to add in the new building further machinery. So it's not a one-step immediate impact that you would see. It's a gradual increase over the coming months and a period of one or two years. Q – Jacob Stephan: Okay. Very helpful. I’ll hop back in the queue. Congrats.

Thank you.

Thank you.

Thank you. I'm showing no further questions, at this time. I would now like to turn it back to Brigitte de Vet, CEO.

Thank you. And thank you all for joining us today. We look obviously, forward to continuing the dialogue, with you as always through our Investor Conference our one-on-one meetings or the various calls. And certainly, please reach out to us, if you have any further questions. Thank you and goodbye to you all.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.