Leading European 3D printing service Materialise, also a provider of additive manufacturing software, closed FY 2016 last December 31st with a total Materialise global revenues increasing by 12.2% to €114.5 million euro, compared to €102 million for the year ended December 31, 2015.
EBITDA margin for the year ended December 31, 2016 was €9.5 million, a whopping increase of 156.5% compared to €3.7 million for the previous year. The Adjusted EBITDA margin increased to 8.3% for the year ended December 31, 2016 from 3.6% for the year ended December 31, 2015. This increase was primarily the result of the combination of a 12.2% revenue growth, a 14.7% improvement in gross profit and an increase of only 5.4% in operational costs in R&D, S&M and G&A, which was offset in part by a decrease in net other operating income of €890,000.
Software-specific revenues increased by 16.8% to €30 million for the year as growth was driven by a 24.6% increase in recurrent sales from annual and renewed licenses and maintenance fees. The software segment’s EBITDA margin was 33.6% in 2016, compared to 35.2% in 2015.
In a challenging environment, Materialise had a good quarter, contributing to a strong year. Total revenues for the year increased 12% to 114,477 kEUR and Adjusted EBITDA grew 157% to 9,458 kEUR. Strategically, we also made substantial progress during 2016, entering into several partnerships that position us to benefit from the expected growth of additive manufacturing of end parts in general and, more specifically, from the potential growth of specific vertical markets. Operationally, all three of our segments enhanced the focus and effectiveness of their internal operations, contributing to our successful year. Peter Leys, Executive Chairman, Materialise.
Revenues from the Medical segment grew by 8.8% for the year ended December 31, 2016 to 38 million from €35 million for the year ended December 31, 2015. Medical software growth was 7.4%, partner sales growth 4.2%, and direct sales growth 45.2%. The segment EBITDA margin increased to 2.4% from 1.2% primarily as a result of the combination of revenue growth of 8.8% and limited increases in operating expenses, partly offset by lower net other operating income, primarily due to lower income from project grants.
The manufacturing segment increased 12.1% to €46 million for the year ended December 31, 2016 from €41 million. Revenue from end parts increased by 27.7% an the segment’s EBITDA margin increased from 4.0% in 2015 to 8.3% in 2016, primarily as a result of steady production efficiency improvements. Net loss increased from €2 million for 2015 to a net loss of €3 million for 2016.
The company’s fourth quarter also recorded a total revenue increase of 12.3% from the fourth quarter of 2015 to €31.5 million, with increases in all three business segments. Total deferred revenue from annual software sales and maintenance contracts increased €3,7 million to €16.8 million. Adjusted EBITDA increased 50% to €4.5 million. Net profit for the quarter was 620,000, or €0.01 per diluted share.
Mr. Leys stated that “the additive manufacturing market continues to evolve, particularly in the direction of end part production, and we intend to continue positioning Materialise to benefit from this promising growth market in the coming years. Our strategic priorities for 2017 are to sustain our leadership position in software through continued innovation and strategic partnerships; to drive the next stage of growth in our medical division through our focus on the hospital market; to continue increasing our manufacturing of end parts; and to enable the development of additive manufacturing in specific vertical markets. We anticipate delivering sales and Adjusted EBITDA margin expansion in 2017 while reinvesting efficiency gains in selected business development initiatives.
“For fiscal 2017 – he continued – we expect to report consolidated revenue between 128,000 – 134,000 kEUR and Adjusted EBITDA between 10,500 – 13,500 kEUR. As the seasonality of our Materialise Manufacturing segment and our software businesses are expected to combine with the effects of the ramp up of the partnerships we entered into in the past months, we expect our financial results to be particularly strong in the third quarter and even stronger in the fourth quarter. We expect the amount of deferred revenue that Materialise generates from annual licenses and maintenance in 2017 to increase by an amount between 4,000 – 5,000 kEUR.”