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Summary

  • MTLS is a leading provider of additive manufacturing software and of sophisticated 3D printing services.
  • MTLS is a service bureau, a company which provides business services for a fee.
  • MTLS barely broke even in Q1 '14 and the P/E for the 2013 year is 130, which is high for what is essentially a 3D printing service bureau.

Based in Leuven, Belgium, Materialise NV (NASDAQ:MTLS) scheduled a $104 million IPO on the Nasdaq with a market capitalization of $612 million at a price range midpoint of $13 for Wednesday, June 25, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Co-Managers: Piper Jaffray, Credit Suisse

Joint Managers: BB&T Capital Markets, Janney Montgomery, Scott Stephens, KBC Securities

End of lockup (180 days): Monday, December 22, 2014

End of 25-day quiet period: Monday, July 21, 2014

Summary

MTLS is a leading provider of additive manufacturing software and of sophisticated 3D printing services. MTLS is a service bureau, a company which provides business services for a fee.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (MM)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV*

% offered in IPO

annualized Q1 '14

Materialise NV

$611

5.9

1352

5.1

5.3

17%

Based on 2013 yr

130

Conclusion

MTLS's top-line revenue grows about 20% annually. The business is somewhat seasonal.

MTLS barely broke even in Q1 '14 and the P/E for the 2013 year is 130, which is high for what is essentially a 3D printing service bureau.

The rating is negative.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

MTLS is a leading provider of additive manufacturing software and of sophisticated 3D printing services. MTLS is a service bureau, a company which provides business services for a fee.

MTLS's customers are active in a wide variety of industries, including healthcare, automotive, aerospace, art and design and consumer products.

Since its founding in 1990 by its Chief Executive Officer, Wilfried Vancraen, MTLS has consistently focused on developing innovative applications of additive manufacturing technologies.

Proprietary software platform

MTLS believes its proprietary software platforms, which enable and enhance the functionality of 3D printers and of 3D printing operations, have become a market standard for professional 3D printing, with a current installed base of more than 8,000 licenses.

MTLS believes that its commitment to enabling 3D printing technologies has significantly supported and accelerated the acceptance and proliferation of additive manufacturing and will continue to play an instrumental role as the industry evolves.

Healthcare sector

In the healthcare sector, MTLS's technology was directly responsible for the design and manufacture of over 146,000 customized, patient-specific medical devices during 2013. In its 3D printing service centers, including what MTLS believes to be the world's largest single-site additive manufacturing service center in Leuven, Belgium, MTLS printed more than 500,000 medical devices, prototypes, production parts, and consumer products during 2013.

Team

As of March 31, 2014, MTLS's team consisted of 997 FTEs and fully dedicated consultants, holding 410 masters degrees, of whom 48 had PhDs. MTLS's portfolio of intellectual property features 62 patents and 101 pending patent applications as of March 31, 2014.

Income statement summary

For the year ended December 31, 2013, MTLS generated €68.7 million of revenue, representing 16.3% growth over the prior year, EBITDA of €7.6 million and net profit of €3.4 million. For the three months ended March 31, 2014, MTLS generated €18.7 million of revenue, representing 20.4% growth over the same period in the prior year, EBITDA of €1.4 million and net profit of €0.1 million.

Seasonality

Although end markets such as healthcare, automotive, aerospace and consumer products may experience some seasonality, the historical impact on MTLS's Medical and Industrial Production segments has not been material.

Historically, the revenue of MTLS's 3D Printing Software segment have been stronger in the fourth quarter of the calendar year (which is also its fiscal year) as compared to the revenue of each of the other quarters.

A number of MTLS's customers have purchased their first release in the fourth quarter and tend to renew, extend and/or broaden the scope of their license on the anniversary date of their first purchase.

In addition, MTLS has in the past often released new software products and versions in the third quarter of the calendar year, which may also have an impact on sales in the subsequent quarter.

Dividend Policy

No dividends are planned.

Intellectual Property

As of March 31, 2014, MTLS's portfolio of intellectual property features 62 issued patents and an additional 101 pending patent applications primarily in the United States, the EU and Japan.

Of these, MTLS's issued patents expire between approximately 2014 and 2031, while its currently pending patent applications will generally remain in effect for 20 years from the date of the initial applications. MTLS believes that, while its patents provide it with a competitive advantage, MTLS success depends primarily on MTLS business development, applications know-how and ongoing research and development efforts.

Accordingly, MTLS believes that the expiration of any single patent, or the failure of any single patent application to result in an issued patent, would not be material to MTLS business or financial position.

Competition

In its 3D Printing Software segment, MTLS faces indirect competition from the software developed by 3D printing OEMs, which are often more "closed ecosystem"-oriented (i.e., only focused on their own machines), and from companies that offer software that addresses one or more specific functional areas covered by MTLS software solutions, such as providers of traditional CAD solutions.

MTLS competes directly with other providers of additive manufacturing management and machine control software, including open source software providers.

5% stockholders

Wilfried Vancraen 85.6%

Ailanthus NV, represented by Hilde Ingelaere 34.4%

Use of proceeds

MTLS expects to net $96 million from its IPO. Proceeds are allocated as follows:

to expand its 3D printing service center capacity, including the addition of new printers and additional technologies (between $14.0 million and $28.0 million);

to increase its sales and marketing teams worldwide (between $7.0 million and $14.0 million);

to fund additional research and development activities (between $7.0 million and $14.0 million); and

the remainder for general corporate purposes (including, but not limited to, potential acquisitions or partnerships).

Disclaimer: This MTLS IPO report is based on a reading and analysis of MTLS's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: Materialise NV