Good day, ladies and gentlemen and welcome to the Materialise Fourth Quarter 2015 Financial Results Conference Call. At this time, all participant lines 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 introduce your host for today conference, Ms. Harriet Fried of LHA. Ma'am you may begin.

Thank you for joining us today for Materialise’s conference call. With us on the call are Fried Vancraen, Founder and Chief Executive Officer of Materialise, Peter Leys, Executive Chairman; and Johan Albrecht, 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 fourth quarter and full year. To access the slides if you have not already done so, please go to the Investors Relations 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 that page. Before we get started, 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 our estimates as of any subsequent day. Management disclaims any duty to update or revise 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. And now, I would like to turn the call over to Peter Leys. Peter, go ahead please?

Thank you, Harriet and thank you everyone for joining us today. The agenda for our call is always on slide 3. I will begin with a brief recap of our results for the quarter, after which Fried will give you some insights on our new product positioning and brand architecture which we launched just yesterday. After that, Johan will go through our numbers in detail and then I’ll come back on to take you through our operational performance for 2015 and some of strategic imperatives for the current year. After we’ve completed our prepared remarks, we will be happy to answer your questions. Before I begin, let me point out that as you probably saw in this mornings earnings announcements, we renamed our business segments this quarter, as part of our rebranding exercise that Fried will address shortly. Our three segments are now called Materialise Software, Materialise Medical and Materialise Manufacturing, except for the name nothing changed from a functional reporting perspective. Turning to slide 4, you'll see the highlights of our fourth quarter results. They show yet another quarter of successful execution on our strategy of offering a unique combination of high end software and printing services. We achieved top line growth of 19% in the fourth quarter of 2015. Our total revenue for 2015 was €102 million, as compared to €81.4 million in 2014. This represents a top line growth of 25.4% or €20.6 million. This does not take into accounts deferred revenue from annual software sales and maintenance contracts, which rose by another €3.6 million from €9.5 million last year to €13.1 million in 2015. Importantly, in this years fourth quarter each of our three segments contributed positively both to our top and to our bottom line. As you will recall, since the fourth quarter of 2014 we have been investing heavily in expanding our global sales force and in growing our product portfolio, which inevitably impacted our profitability in the short term. While we intend to continue to invest in sales and marketing and R&D, we believe we now have the potential to gradually start growing our adjusted EBITDA going forward. Our fourth quarter performance definitely underscores this potential. With an adjusted EBITDA of €3 million which is more than three times higher than the €0.9 million of adjusted EBITDA that we realized in the fourth quarter of last year. So to sum up, we are pleased with the quarter and very confident about our future growth prospects. I will now turn the call over to Fried, who will give you a brief description of some recent developments in our product positioning, and branding. Fried?

Good morning, everybody. We are coming out of our 25th anniversary year, closing another five years of our extending growth in the history of Materialise, while we are very proud of the achievements of the entire team here at Materialise, we never standstill and our focus is already fully on the next five year period. Yesterday, we launched our new corporate branding at AOS, the American Academy of Orthopedic Surgeons. The new branding is accompanied by an updated graphical styling as you can see on our slide. But the key of the exercise is to provide a clearer and more comprehensive positioning of our technology and products. The goal of our new product architecture is to be better able to tailor our products to different customer groups, while at the same time we guarantee that all our solutions remain part of one cohesive technology platform, a platform that constitutes the backbone for 3D printing applications. As 3D printing applications are maturing, they have the potential to reach more and more diversified customer groups. As a result, customization and ease of use will become key factors to reach the growing market of users over those 3D printing applications. The key advantage of our new product architecture is that we can provide customers with solutions that are on one hand, more tailored to their specific needs, and much more user friendly, but on the other hand, they will not make any concessions on quality and their liability where Materialise is known for. In our medical segment, for instance, we now offer the Materialise Mimics Care Suite. In addition, to the Materialise Mimics Innovation Suite, a Care Suite is a platform that is dedicated to in-hospital use. It includes the new Mimics in-print software that can be used by radiologist to prepare 3D…

Thank you, Fried. I'll start with a brief review of consolidated revenue on slide 6. In each of the seven slides I cover, I will focus on our results for the quarter, although certain data for the year are also shown for reference. For clarity, please note that when we refer to sales, this means revenues, plus deferred revenues. Following our strong first three quarters, we again generated significant revenue increases in each of our segments for the fourth quarter, in the process increasing revenue by 19% quarter-over-quarter. Materialise Manufacturing accounted for somewhat over 41% of our revenue in the fourth quarter, Materialise Medical 34% and Materialise Software 25%. Across all segments, revenue from software sales and end-parts together contributed 75% 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 Q4 revenue compared to 35% in the same quarter of last year. Revenue from our end-parts manufacturing, including medical end-parts represented approximately 38% of the fourth quarter revenue. The remaining 25% was generated through the production of prototypes. Moving to slide 7, consolidate adjusted EBITDA more than tripled to €2,979,000 from €927,000 over the fourth quarter of 2014, as a result of the combination of continued strong revenue growth and a moderate increase in operational expenses. Our adjusted EBITDA margin increased from 3.9% in last years fourth quarter to 10.6% in this year’s period. Slide 8 summarizes the results of our medical software - of Materialise Software segment. There following in the footsteps of the years first three quarters, revenue grew 35%, fueled by our expanded product portfolio, strong growth in OEM revenue and new license sales. We delivered a year-over-year increase in sales from new software licenses of 30%…

Thank you, Johan. If you could please turn to slide 13, where we have summarized our operational achievements for the year and also listed some of our priorities for 2016. As always, there are far too many efforts underway to go into too great detail, so allow me to just touch on the most important items in each segment. In 2015 Materialise successfully rolled out our backbone of 3D printing software and services, enabling many 3D printing applications and supporting even more 3D printing operations. While certain parts of the additive manufacturing markets did have a hard time last year, our continued growth shows that the industry's backbone stayed very robust. This year we intend to continue to build and rollout our technology platform throughout the 3D printing ecosystem, both directly and indirectly. Looking first at Materialise Software, in 2015 we strengthened our leadership position into traditional 3D printing markets, through a balanced combination of structured partnerships and direct sales. Simultaneously, Materialise Software expanded its technology platform in order to meet the high demands of end part manufacturing. We launched a broad framework of build processors, introduced control panels that are dedicated to additive manufacturing and developed a new version of Magics that is both voxel-based and .3MF compatible. In 2016, Materialise Software will continue to execute on its backbone strategy, through a further expansion of our direct and indirect sales footprint and through continuous innovation of our technology platform. Moving to Materialise Medical. Last year we successfully implemented the switch from perpetual to annual licenses, opened up our surgical guide platform, and increased the sales reach of our complex surgery solutions. This year Materialise Medical intends to further execute and accelerate that strategy through the launch of the Materialise Mimics Care Suite in the hospital markets, the further implementation…

Thank you. [Operator Instructions] And our first question comes from the line of Troy Jensen of Piper Jaffray. Your line is now open. Please go ahead.

Hey, gentlemen congrats on a really solid fourth quarter.

Thank you, Troy.

So Peter, or maybe Johan, just to challenge you guys a little bit on your guidance. If you look at your business here, you ended the year on a strong note, software grew 42% last year and accelerated up for '14, medical seemed to turn the corner; it also accelerated and you did 16% growth, and the manufacturing business also accelerated to 24% growth. So can you balance the strength you've seen recently and throughout the year with kind of the mid point of your guidance being only 15% growth for next year?

Yes. First and not unimportantly, Troy, when you really look at our guidance on revenue, and the way we look at it, in the company, we look at revenue as such, but we really should add deferred revenue. And as we intend to continue to grow stronger in our software sales, than in our product sales and services, this will impact our revenue as such, which hence we believe will land somewhere between 115 and 120. But we do believe that growth - operational growth for the company as such will be stronger, as we believe that 2016 will bring another additional amount of deferred revenues in the range of 3 million to 4 million. So with the combination of those two, I think shows that we are very confident that we would be able to continue to walk along the path that we walked through 2015.

All right, that's fair, I guess. I mean, I will follow-up on that. But how about - I'd like to hit a few of the questions, so I'll start with Stryker. They announced some internal 3D printing capabilities in the quarter here, my assumption is its just metals. So can you give us an update with that partnership, and then, to that point, can you talk about how much or where are you guys now with your internal metal production capability?

Yes. Its Fried here. Well, Stryker is one of the many orthopedic companies we are working with and for sure all of those companies are now seriously investing in 3D printing as one of their key production technologies. So indeed they bring to the market now several metal components, but in the future its fair expect that more materials will be added to the range. So I've always expressed my belief in the fact that 3D printing would become one of the main production technologies even for orthopedic companies and what you see is that this is happening step by step. Maybe you also saw the announcement that Biomet Zimmer has announced and – or launched a new 3D printed ankle implant as well and you will see several announcements from many other orthopedic companies on top of that.

Okay. And your metal - internal metal capabilities, did that materialized?

Yes. Our metal production lines are to some extent working, I think to some extent because the certification processes are still ongoing. As you know we aim especially at certified manufacturing, in medical this not only means that the line as such need to be certified, but that every product that goes on to those lines needs to receive its certification. And the same is true for the metal in the aerospace industry. So we have our metal line operational and we do operate it for manufacturing outside of certified business already, but our real aim is to get aerospace certification as we have for plastic also, for metals by middle of this year.

All right. Last question and I'll cede the floor. Can you just let us know what the next milestone will be for your x-ray product and, best case scenario when do you think that can be commercialized now?

Well, certainly we have incurred a serious delay there. We are currently in negotiating – in negotiations with the FDA to come to a new methodology to submit the 510(k) because we were not able to convince the FDA with the previous methodology. So – and this is going to delay us at least one year.

Okay. All right, gentlemen, good luck in 2016.

Thank you very much Troy.

Thank you.

Thank you. And our next question comes from the line of Julian Mitchell of Credit Suisse. Your line is now open. Please go ahead.

Hi. This is Lee Sandquist on for Julian Mitchell. On a total company basis you mentioned we were at a point where we could now start growing adjusted EBITDA in the medical segment. EBITDA margins increased in Q4 after several quarters of decline. So do you think that we are at an inflection point for margins in this segment?

In the medical segment, yes, we are at an inflection point, though I want to explain that investments in the medical segment are more long-term. So do not expect this to jump high immediately, simply because there are – at this moment so many opportunities that needs to be developed. I was very positive in my answer to Troy about the prospect in the orthopedic market, but all of these are in start-up phase. So they still require investments at this moment and we do not expect that we will have a very high jump in EBITDA already on short notice, while in longer term we keep believing that medical is just one of the highest value components of Materialise.

Great. Thank you. Could you also please touch on a top line trend you’ve seen in January and February?

It’s early to really – and we typically give guidance on the full year and then wait until we close a quarter to report on our results for the quarter. So if you allow us, I'd rather not give just numbers to the Street that have not been internally verified and reviewed to give any reasonable comfort.

Okay. That’s fine.

In the guidance we explained this kind of seasonality, but which has nothing to do with the expectation that we have or see in market. And that’s information that we passed already in the call before, that is something that we should take into account.

Yes, we were a bit soft on Q1, it’s basically because of seasonality and not because of things that we have seen over the last weeks or so.

Okay. Thank you. I'll pass it on.

Thank you. And our next question comes from the line of Ben Hearnsberger of Stephens Incorporated. Your line is now open. Please go ahead.

Hey. Thanks for taking my question. I wanted to ask a higher-level question first on what you are seeing in the industry. We know that systems growth stimulates your software growth, so I guess if you could kind of talk through what you are seeing in the systems industry and how you're thinking about growth for that piece in '16?.

Well, there is a mix message in the system sales, especially metal machines being still reporting very healthy growth rates. On the plastic side, the situation is of course, much different as you'll know. So it’s a mix bag. But I think there, as I have expressed in previous calls, the best indicator remains the increase in consumable products where we still see a positive trend – tendency also in the plastics.

Okay. As a follow-up to that, are you - this is kind of the message we've heard from the industry and from you guys over the past year in terms of this kind of bifurcation between metals and plastics. It sounds like that commentary remains at this point as you look out on 2016.

Well, we hope for a revitalization of the plastics business, but not to the point where we were in 2014, while metals will continue to do good we think.

Yes, we should also bear in mind, I mean, plastics is just a business that is more mature than the metal, so that metals grow stronger than plastics should, as such, not come as a surprise.

Sure, sure. I think everyone is just looking for where we see plastics stabilize, so that was kind of the spirit of the question, but I will move on and ask a question about your medical segment. It looks like several areas grew double digits; software, direct sales, and then partner sales grew double-digit, and I know segment growth was around 8%. So what was the drag or what piece of that business dragged on the segment growth?

It’s a good catch Ben, and what Johan explained as part of his prepared remarks, is that when we gave you growth numbers of three parts of the business, the sales of software, the direct sales of our surgery products and then the partner sales of our guides, those were sales numbers, revenue and deferred revenue. The aggregate number that we always give for each segment is a revenue number after deduction of deferreds. Now our medical software continues to grow very significantly, but obviously as you know we have made the switch there from annual sales to – from perpetual sales to annual sales. So there is quite a bit of revenue that we are deferring there.

Okay. That’s helpful clarification.

A single digit number for the entire segment.

Right. Okay. One last one. On the rebranding, I guess what ultimately drove kind of this vertical group rebranding or focus? And are you realigning the sales force along these same lines?

Yes. So – over the last two years we have developed several products and even acquired some like OrthoView that fits hospitals for instance. But yes, we announced it when we acquired OrthoView that we would start integrating the sales force with our own sales force. And the rebranding is a kind of external confirmation that is accompanied by a lot of internal work, like reorganizing some groups, but also even at a product level better and better integrating our different product, so that they can collaborate well in a suite. So we not want to be a company that has three sales forces that each go and visit the same hospital on a separate day, one with a software package, then the others with the guide solution and then at the end of that day, month, a third team comes around to explain about our complex surgery implants. But the rebranding expresses as that they are really all part of one suite and our sales force will now go to the hospitals and explain the full technology platform that we have and offer and then we can tailor a solution for the hospital where they first start their software solutions, integrate maybe some of the CMF applications that certainly of their CMF surgeons want, so very flexibly we will now offer the full suite of our products. And other reason why we do this, is while we have some competition on the software side and we have some competition on the guide side, there is as far as we know no competitor out there that has the full suite of integrated products like we have. So now our sales force will be able to re-stress on that very strong competitive edge that we have by offering this new integrated suite of products to the market.

Okay, gentlemen. Thank you very much.

Thank you.

Thank you. [Operator Instructions] And our next question comes from the line of Bobby Burleson of Canaccord Genuity. Your line is now open. Please go ahead.

Hi. Thanks for taking my question.

Hey, Bobby.

Hi. So I guess the first one is can you give us some color on the top-line guidance in terms of maybe tiering strongest to weakest in terms of your expected growth for manufacturing software and medical this year?

Well, I think if you look at the trends that you’ve seen in all the quarters that we have reported on since we started our public life, that trend will not change. So we expect that we will continue to see the strongest growth at Materialise Software, followed by a strong consistent growth within Materialise Manufacturing and what we expect is that Materialise Medical will gradually continue to catch up now that it has really made its turnaround a couple of quarters ago. But that’s going to be the order of magnitude that we expect in 2016.

Okay. Great. And then you're obviously planning on adding machine capacity, it sounds like, in 2016. Can you give a little bit of color just in terms of the mix of processes that you plan on investing in? And how heavily skewed towards metal capacity is your investment this year?

Actually on the metal side, we may add a little bit of capacity, but as I said earlier, the capacity we installed up to now is not yet used to its full extent, because we are still in the process of certifying certain products or certifying certain production lines. So that explains why only a few machines will be added in metals this year, maybe in following years there can be an acceleration once the certified lines are fully up and running. The biggest investment will thus come in the plastics line where we continue to see a 39% rise in end parts manufacturing, that’s quite significant. And we truly believe that even more and more companies will discover additive manufacturing or 3D printing as manufacturing technology.

Great. And that brings me to my last question. Clearly, you see a need to invest in plastics capacity, but if you look more broadly at the industry, it seems like maybe your customers aren't investing at the same rate. And I'm wondering are there challenges in terms of some of your customers being able to run the machines effectively? And is that - are those challenges maybe leading to more business for Materialise? Why is that dichotomy, I guess, between service bureau investment and, say, maybe slower investment directly at customers for plastic capacity? Thanks.

It has cost Materialise in the past quite some efforts to make the leap from being a prototype service provider to become a liable manufacturer and that’s still a challenge for the entire industry, most of the machines are still developed truly for prototyping and the kinds of reliabilities and repeatabilities that are needed in a manufacturing area are still a challenge for the individual machines and for the organizations around it. Materialise has I think invested quite heavily to design the systems that allow us to compensate or some of the effects of the current generation of machines, and that’s a little bit correct approach to do challenging manufacturing projects. But I want to mention here that actually in my opinion that is one challenge, but the biggest challenge remains that education of the designers at the end customers and there Materialise has an extended engineering team that co-creates with customers on a continuous basis every day and helps them change their products from being designed for plastic manufacturing technologies to really redesign products, so that are suitable for 3D printing and that is in my opinion, the biggest impediment that we will still face a few years, this reeducation of the customer base.

Great. Thanks for answering my questions.

Sure.

Thank you. And I am showing no further questions at this time. I will now like to turn the call over to Mr. Peter Leys for closing remarks.

Thank you, operator. And thank you all for joining the call. I hope we've given you a good overview of our plans to further strengthen our position as the backbone of the 3D printing industry going forward. Please note that Fried will be in New York to attend an Investor Conference at the end of this month. And we will issue an advisory release with details of Fried's traveling plans in the next two weeks or so. Thank you all again for joining and have a good day. Bye.

Good bye.

Bye.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes today's program. You may all disconnect. Everyone have a great day.