With grand promises of future growth, the well hyped 3D printing “sector” has started to see some IPO activity. On February 2013 we saw the IPO of ExOne (NASDAQ:XONE), a company that specializes in the 3D printing of metals. On October 18th 2013 we saw the IPO of Voxeljet (NYSE:VJET), a company that sells 3D printers, one of which has the highest volumetric output rate in the industry. These companies would have a return today of +19% and -10% respectively to an investor who bought them both on the first day of trading. One other 3D printing company that offers 3D printing software and services, Materialise, just announced yesterday that they have filed for an IPO.
Founded in 1990, Belgium based Materialise recently announced the hiring of employee number 1000 and one week later, filed with the SEC to raise up to $125 million in an IPO. Prior to this offering, members of the Board of Directors and senior management of Materialise owned approximately 90.4% of the ordinary shares. Materialise has what they believe is the largest 3D printing services center in the world in Belgium, and facilities in 10 different other countries worldwide. The Materialise service centers have a total of 98 3D printers from companies such as 3D Systems (33), Stratasys (34), and EOS GmbH (14). The Company has 64 patents and 95 pending patent applications. For the years ended December 31, 2013 and 2012, R&D expenses were 15.4% and 15.9% of their total revenues, respectively.
As of December 31, 2013, Materialise had $17.3 million in cash and debt of $16 million. In 2013, the Company took in $94.6 million in revenues with a gross profit margin of 60.4%. Net income for 2013 was around $4.7 million, a 134% increase over the year prior. The income statements and year-on-year changes for Materialize in 2012 and 2013 are as follows (in Euros):
Revenues by geographic region for the year ended December 31, 2013 were Europe 55.2%, the Americas 36.2% and Asia 8.6%.
Materialise has divided their business into 3 segments as shown in the below diagram:
The 3D Printing Software segment represented 19.6% of total revenues in 2013, a 19.9% growth over the prior year. Materialise has a current installed base of more than 8,000 software licenses to over 4,000 customers. Their software supports printers from the 10 leading 3D printing companies. In 2013, the ten largest customers in this segment represented 13.3% of total revenues. This segment had an EBITDA margin of 38.3% in 2013. The Medical segment represented 40.8% of total revenues in 2013 with 11.5% growth over the prior year. Materialise has a current install base of 2,000 medical software licenses to over 1,200 customers. In 2013, this segment printed more than 146,000 medical devices. For the year ended December 31, 2013, the 4 largest customers in the Medical segment represented 64.4% of total revenues. The Industrial Production segment represented 39.7% of total revenues, a 20.4% growth over the prior year. In 2013, this segment printed more than 394,000 parts for 2600 different customers. For the year ended December 31, 2013, the ten largest customers in this segment represented 18.3% of total revenues. Materialise has also developed a printer called the Mammoth, which they believe is the largest in the market and prints parts utilizing a build area of approximately 1.65 cubic yards and a length of 2.62 yards. They currently operate 13 Mammoth 3D printers in their service center in Leuven, Belgium.
Materialise is a profitable business with revenue streams that are geographically diversified, a large customer base which is not overly dominated by their largest customers, and well defined segments which are all experiencing strong growth. Hopefully the downturn in 3D printing stocks lately will lead to a reasonable opening price for investors to take a long position in what seems to be a very attractive 3D printing services company.
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