Good day, ladies and gentlemen and welcome to the Materialise NV Second Quarter 2015 Financial Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jody Burfening. Please begin.

Thank you, LaToya and thank you everyone for joining us today for Materialise second quarter earnings conference call. With us on the call are Fried Vancraen, Founder and Chief Executive Officer of Materialise, Peter Leys, Executive Chairman; and Frederic Merckx, Chief Financial Officer. Today’s call and webcast are being accompanied by a slide presentation that reviews Materialise strategic operational and financial performance for the second quarter. To access the slides, if you have not done so already done so, please go to the Investors section of the Company’s website at www.materialise.com. The earnings press release, that was issued earlier this morning, can also be found on this page. Before we get started, I would 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 our 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 may impact the Company’s future business or financial results can be found in the 20-F for fiscal year ended December 31, 2014 filed with the SEC on April 30, 2015. Finally, management will discuss certain non-IFRS measures on today’s conference call. A reconciliation table is contained in the earnings release and at the end of the slide presentation. With that, I would now like to turn the call over to Fried. Fried, good morning.

Thank you, Jody thank you everyone for joining us today. The Agenda for our call is on Slide 3. I will begin with a brief recap of our results for the quarter, after which Frederic will take you through the numbers in more detail. Peter will then run through our operational performance for the past quarter and our priorities for Q3. After we have completed our prepared remarks, we will be happy to answer your questions. So, let’s take a look at the highlights of our second quarter results, which are summarized on slide 4. Our second quarter marks the anniversary of our IPO in June last year. We have been consistently executing on our strategy of offering a unique combination of software and printing services to high ends of segments or the additive manufacturing industry. This focus produced another quarter of strong revenue growth; in fact, this was the second consecutive yield for which we posted top line growth of more than 20%, both organically and non-organically. Including OrthoView, revenue increased 29% and on an organic basis revenue grew 23%. Like last quarter, we had a strong contribution from software sales. This time, aggregate software sales accounted for 37% of total revenue, up 600 basis points over last year on the strength of a 45% increase in 3D printing software sales. If anything, this number actually understates the growing importance of our software activities since it doesn’t factor in their contribution to our end-parts manufacturing process such as for our guide business. As you know, we have been investing heavily in the short term by expanding our global sales force and growing our new product portfolio. In total, sales of marketing and research and development expenses increased 44% compared to last year. This is however a smaller rate of…

Thank you, Fried. I’ll start with a brief review of our consolidated results on slide 5. Following a strong first quarter we generated double digit revenue increases in each of our segments for the second quarter, led once again by our software revenue segment. As a percent of revenue industrial production accounted for 42% of our revenue in Q2, Medical 33% and Software 25%. Together, revenue from Software sales and End parts contributed 70% of total revenue. Breaking down our top-line performance by type of business, revenue from software sales including both 3D printing and medical software accounted for 37% of our total Q2 revenue, compared to 31% in the same quarter of last year. Revenue from end-part manufacturing, including medical end-parts represented approximately 33% of Q2 revenues. The remaining 30% was generated through the production of prototypes. As a result of the investments we have been making in expanding our sales coverage and new covered development, sales and marketing and research and development expenses were up 44% higher than last year. Similar to the first quarter this investment resulted in a small adjusted EBITDA loss of €179,000 for the quarter bringing the margin down from 7.1% to minus 0.7%. As a reminder, we fully expand R&D spending for the second quarter. Please turn to slide 6 for details about the Q2 performance of our 3D printing software segment. Revenue grew 45% fueled by our expanded product portfolio, which now includes our build processors. For the third consecutive quarter, we delivered a year-over-year increase in sales from new software licenses of at least 80% on the strength of solid execution across all regions and particularly in Asia. Revenue generated from and through printed OEM accelerated as the process increase of 124% following a first quarter gain of 94%. Sales in…

Thank you, Frederic. If you could all please turn to slide 11 where we have summarized our operational performance for the second quarter and where we’ve also listed our top priorities for the current period. Following our usual format, I would like to begin with our 3D printing software segments As you know, enhancing our already strong position with the industrial uses of 3D printers is and a key strategic objective for Materialise. To that end, during the second quarter we continued to roll out our build processor program, collaborating with two new machine manufacturers in that quarter. Moving to the second point, some of you have been asking if we planned to join the 3mf consortium, the industry association formed this spring to develop and promote a new file format for 3D printing. As we share the consortiums goal of improving where necessary or appropriate the transfer of data to an ever expanding variety of machines we did join the consortium in June of this year. Now turning to the right side of the first row on slide 11, I would like to run you through our operating priorities for the third quarter in our software segments. As Frederic mentioned, sales from our build processor program have been contributing nicely to our revenue growth throughout this year. So you can be sure that this program will be an ongoing priority for us. Although not necessarily one that we will continue to discuss in each quarterly conference call going forward. We intend to announce the launch of further build processors with certain partners as for the bright laser build processor we launched in July, so that you can keep track of our process in that way. Moving now to another initiative, our additive manufacturing control platform. You may recall that…

Thank you. [Operator Instructions] The first question is from Troy Jensen of Piper. Your line is open.

Hey, gentlemen, congrats on another solid quarter.

Thanks, Troy.

So, appear for you that you touched on expanded relationships with Biomet and Zimmer, do you feel like now we could see those two customers growing on an absolute basis or is it still they are expose to the segment that’s pretty saturated?

Troy, what we are doing now is shortly after the closing of the merger end of June is engage in discussions with the team that is in-charge of the knee guides program within the newly formed Biomet and Zimmer group. Those discussions are ongoing and it is really too early to anticipate on the outcome of this discussions or to start second guessing what the outcome would be. I mean, all I can say today is that we have been waiting for quite some time to be able to engage in those discussions. We could not do so legally as long as the merger was not consummated. Those discussions are now ongoing and we hope to be reporting on the outcome of these discussions in the coming months or quarters.

Okay, understood. And second with medical here, what’s the next milestone for the X-ray product?

As we – and I will then pass the floor to Fried, but as we explained in earlier calls, so that the 510-K has been introduced with the FDA and we’re basically now waiting for feedback from the authorities to then bring that process to the gross.

I can only add that, the clinical rollout is happening without any adverse indication. At this very moment we are in this method own, so like better indicated depending on the FDA and as it is a very innovative product, yes, we are looking forward for their questions and trying to answer them.

Right. Understood. My final question here, maybe a congratulations goes to BARC for the industrial success here, but actually and the focus is been on end parts, but it seems like every service bureaus focus on end parts, so how we guys been able to do so well for a new service bureau faster than the industry?

I’m taking the floor, but actually I’m taking the credit of fleet here. I mean, this is the result of building a company over 25 years and building the company we as you know we did not just focus on the core competence of 3D printing, we added the core competences of engineering, process engineering as well as software development, and when you seek to print more than just a prototype but then actual end parts then you need more than just a 3D printer. You need a process engineer that will stand by your sides and watch over the process and you need software that will capture that experience and that your customer will eventually be able to take home if and when he decides to take that 3D printing in house. So I think we are viewed as a very reliable partner but to kick up 3D printing of end parts together with the OEMs out there both in the industrial and in the medical market.

Understood, gentlemen. Good luck in the second half.

Thank you.

Thank you. The next question is from Ben Hearnsberger of Stephens. Your line is open.

Hey, thanks for taking my question. I wanted to ask about the expectation around operating expenses in 3Q and 4Q. It looks like guidance implied that operating expenses were down on an absolute basis. Is this a right way to look at it?

Ben, it’s good that you ask for clarification. What we actually said is that it is our ambition that operating expenses will in absolutely terms grow at a slower pace than our revenues. And when we indicated that we believe that these operating expenses have reach that peak. We added that we believe they have reached that peak when express as a percentage of our revenues. So going forward the spread between our operating expenses and revenues the latter is growing quicker should broader.

Got it. Okay. Thanks for the…

Hence our comfort to maintain our guidance.

Okay. Thanks for clarifying that. I know it’s early but as we look out on 2016 can you give us a sense for how much leverage you have or maybe you give us a sense for the spread?

Hey, Ben, can I say a nice try. We intend to give guidance for 2016 towards the end of our Q4 conference call.

Okay. Okay. Well, maybe another question around 60 but maybe not asking more so around specifics, but we’ve seen kind of an air pocket in systems sales and obviously software sales lag system sales. With the expectation that we see a similar air pocket in your software business or do you expect the recent sales hires to kind of combat this or offset this?

Well, when there is truly a longer term decline in system sales all through the market then we cannot deny that we will suffer from it. But yes, overall we still see growing amount of opportunities with the many different printer manufacturers that are in the market and that are still appearing in the market.

Ben, our software contributes significantly in metal printing as you know and as you also know most of these metal printer manufacturers are publicly listed, so it is more difficult to get an insight and what their growth rates are, expect of course if indirectly you look our good performance of our software segment.

Okay. That’s helpful. And then I’ve got one last question on the growth businesses in the industrial production segment. I’m sorry if I miss this, but can you tell us how much those businesses grow in the quarter and whether the expectation is as you get those to breakeven on EBITDA margin basis, EBITDA basis by year end?

In the aggregate and Frederic you can correct me if I’m wrong. The growth was 40% of the two grow of businesses quarter over quarter. When will these businesses reach their breakeven points, Ben, is a good and valid question. Frankly it is difficult to puts an exact date on that and I’ll briefly explain why, because those two businesses kind of have their own dynamic. We had a good assessment of where our Materialise was going, but then I think very rightfully decided to add a strategic layer to that grow of business of franchising out the platform, so actually that brings the new dynamic in that grow of business. On the other there is RapidFit, there’s actually where we actually are having good traction and very good results in the sales and where lot will depend on our ambition as to when and how we’re going to further rollout the successful sales that we have now.

Okay. That’s helpful. Thank you, gentlemen.

Thank you. The next question is from Bobby Burleson of Canaccord. Your line is open.

Yes. Thanks for taking my questions. Fried, congratulations on the strong organic growth.

Thank you.

Probably couple of different things referring back at software and that disconnects between what we’re seeing for machine sales, from some other big guides from the U.S. and you have a strong year-over-year growth you’re seeing. I’m wondering when we look at the metal, your Build Processor part of that revenue stream, do you guys have more significant revenue opportunity in that category, let say on a machine by machine basis or particular program with customers given the greater potential complexity with critical metal part?

The deals around Build Processors have different natures depending on added value they bring for certain machines manufacturers. So it’s very difficult to give a unified answer on this. But I think our result show that they really tighten the relationships that we have with the OEMs and that they truly link Materialise to in a most structural way to the different machines manufacturers. And we expect this to increase even further if we can move to the AMCP platform that really is a part of the machine. So, the impact is one of stabilization of our revenue streams for the future.

Great. And then a follow-on to that, wondering in the past your yields, your mammoth machines and other internal productions needs drove in kind of fostered your development of your software for yourselves in order to optimize what you’re dealing with your service bureau. I’m wondering with metal, didn’t seem like you have the same leadership in terms of other service bureaus that might out there already running metal machines. I’m wondering what it you’re dealing with your OEMs and there are customers in order to make sure that you are intimately OEM evolved in that process of optimizing the software and wondering how comfortable they are giving you access to the types of designs and challenges that you are faced with?

Well, it’s true that we have not being investing in metal machines before the IPO, but on the other hand we have been involved with the variety of research institutes that has metal machines already for many, many years. And actually in the very early phase of the metal printing industry one of the challenges for us was that there was such a wide variety of different systems being developed at so many different places that made us decide that in that context having just a few machines from one or two of the many manufacturers would not give us the same insight as collaborating with many different research institutes and having interactions on our software development at many different places. Now that a metal part is a bit maturing, we have decided that it was time for us to step into this industry and the advantage that we have at this moment as we have grown ourselves as a company that we can do this at a larger scale for quite a variety of different machines and of different applications, which truly take this experience now even to a deeper level in house. So that is a history of our decision making process. But I dare to say that we have a very strong background for many years and we will be making probably more announcements later in this quarter on this topic.

Okay, great. And then just lastly Lima is an important European manufacturers deals, it’s a hip [ph] in plant system and I’m wondering how broad that relationship is starting with surgical guides to get in terms of you’re actually making some of their hiccups et cetera?

Lima is definitely, I fully agree, but it’s definitely a partner with further potential, which is our actually older partners that we’re talking to or that we already signed deals with recently. So when I hinted during my prepared remarks that our clinical team is very enthusiastically talking to new and existing relationships it is definitely part of our strategy to try and expand the scope of our existing collaboration, some of our rather new collaboration. The way we got involved with Lima is they purchase the partial knee implant business form Biomet, Zimmer which Zimmer was force to divest as part of the Biomet merger. They immediately decided that they could not just buy this business without actually joining the knee guide platform that has supported this business so successfully when it was still owned by Zimmer. So that is how we got involved with Lima. I must say, the relationship is excellent and yes, we definitely have the ambition to further expand that relationship where it possible.

Okay, great. Thank you.

Thank you. And the next question is from Julian Mitchell of Credit Suisse. Your line is open.

Hi. This is Brian Gibbons for Julian today. I was just wondering if we get a quick update on the timing of some of the rollout of these metals in the industrial segment possibly you kind of following up maybe how that might be offsetting some of the costs in these rapid growth businesses to get EBITDA back to positive? Thanks.

Yes. Like I indicated in the presentation for instance our own products are now old [Indiscernible] in-house and they are now rolling out which will have a positive impact on EBITDA in the context of customers that we are signing contracts with in regulatory approved markets like the medical and aerospace industry. After signing the contract its still takes half year, up to a year before all the regulatory requirements are being met and before the product can really grow to the market. So this is indeed one of the reasons why we – our EBITDA level will increase gradually and not jump to a much better level because while we have already some lines that are generating better margins we will have to keep investing with the new contacts we signed in start up costs. So this will explain that Materialise top and bottom line both will evolve positively but gradually over the following years.

Great. Thanks a lot. That’s very helpful.

[Operator Instructions]

If we have no further questions operator…

There are no further questions in queue at this time; I will turn the call back over to Peter for closing remarks.

Excellent. Thank you. The weather is very nice here, so I mean the sooner we can close the call the better. Thank you all for joining. I hope this gives me a good overview of the way the 3D manufacturing sector is progressing in general and the key role that Materialise is playing and intend to continue to play in advancing the development of that market. Johan and myself will be in New York in early September for financial conference and I hope some of you will have a change to meet Johan there. Materialise will be represented at both euro modes in September and [Indiscernible] in November so we look forward to catching up with many of you person at the latest in the fall. Thank you again for your time and good bye for now.

Thank you. Ladies and gentlemen, this concludes today’s conference. You may now disconnect. Good day.