2021 HALF-YEAR FINANCIAL REPORT

including

  • 2021 half-year activity report
  • Condensed consolidated financial statements at 30 June 2021
  • Statutory Auditors' report on the half-year financial information for 2021
  • Statement by the person responsible for the 2021 half-year financial report

PRODWAYS GROUP

30 RUE DE GRAMONT

75002 PARIS

www.prodways-group.com

2021 HALF-YEAR ACTIVITY REPORT

Excerpt from the press release issued on 16 September 2021

Results for the first half of 2021

  • Successful transformation of PRODWAYS GROUP
    • New site in Annecy bringing together teams and achieving operational synergies
    • Revenue growth of 27% per year on average since 2015
    • Share of recurring revenue of around 60% compared to 25% in 2015
    • Solid balance sheet thanks to a disciplined financial policy
  • … Generating record financial results
    • Revenue growth of 27% in the first half-year to reach €34 million
    • EBITDA(1) growth of 214%, with a margin of 13%, the highest ever
    • Positive operating income for the first time in the history of PRODWAYS, at €0.9 million
  • Solid outlook supported by promising trends
    • The rise of 3D printing contributes to more responsible production methods
    • Dental and orthodontic aligners players, PRODWAYS' main market, achieved record performances
    • Acceleration of the development of the Products division: integration of CREABIS well under way
    • Accuracy of the 2021 guidance: growth in revenue and profitability of 20% in line with the first half of the year

Successful transformation of PRODWAYS GROUP

New site in Annecy bringing together operational teams and creating synergies

As part of the operational transformation plan launched in 2020, in the first half of 2021 the teams and technologies of five different sites in France joined forces at their new site in Annecy (France).

This new 4,500 m² building houses the PRODUCTS division's printers, the parts design office, and the manufacture of SLS (powder sintering technologies) printers. This new organization is already generating operational synergies, promotes the development of new products and services and enables PRODWAYS to meet the growing demands of its customers.

The new site also illustrates PRODWAYS' desire to contribute to more responsible production methods: the Group has opted for a renovation project to avoid unnecessary land use and to protect the environment as much as possible. This project was undertaken with the assistance of a very large majority of local companies. The former industrial site has been transformed into an efficient building, incorporating a network to recover the heat released by the equipment to heat the workshop.

Strong recurring revenue growth

Slowed by the health crisis, the revenue growth trajectory recovered well in 2021. PRODWAYS' revenue has increased by 27% per year on average since 2015 and reached €34 million this half-year (compared with €8 million in the first half of 2015). This sustained increase over time is the result of the good rate of organic growth as well as the external growth dynamic, which has enabled the revenue profile to be transformed.

While in 2015 the share of recurring revenue in revenue was only around 25% it now represents nearly 60%. This solid revenue base consists first and foremost in sales of materials, which increase all the more as our customers use their machines more and more intensively. The software integration activity also benefits from a high recurrence rate, as does sales of personalized medical devices (audiology, dentistry, chiropody).

Solid balance sheet thanks to a disciplined financial policy

PRODWAYS is positioned as one of the few profitable companies in the 3D printing sector and has been able to consolidate its statement of financial position to support the foundations of sustainable growth. The Group's cash flow, already positive in 2019 (+€4.6 million) and close to breakeven in 2020 despite the health situation, reached +€2.1 million in the first half of 2021.

In addition, PRODWAYS has demonstrated its controlled investment policy while making focused efforts in R&D. These represent around 10% of the revenue generated by sales of machines and materials, the only activities requiring R&D. Overall, investments (R&D and capex) represent between €2 million and €3 million per year at full speed. Their financing is optimized in part by means of various subsidies or tax credits.

Best-ever financial results

Change

Change

(in millions of euros)

H1 2020

H1 2021

(in millions of

(%)

euros)

Revenue

26.8

34.1

+7.3

+27%

EBITDA (1)

1.4

4.5

+3.1

+214%

EBITDA margin

5.3%

13.2%

n/a

+7.9 pts

Operating result (2)

-2.9

2.2

+5.1

n/a

Operating income

-10.0

0.9

+10.8

n/a

Financial result, taxes and minority interests

1.3

-1.2

-2.5

n/a

Profit (loss) for the period attributable to the

-8.7

-0.3

+8.3

n/a

owners of the parent

Revenue up by 27% in the first half of the year

PRODWAYS GROUP generated consolidated revenue of €34.1 million in the first half of 2021, up by 27% thanks to the performance of the two divisions SYSTEMS and PRODUCTS. This performance is the combined result of:

  • a favorable base effect,
  • an acceleration in the pace of recovery, and
  • outperformance of the activities in which PRODWAYS has strengthened itself in recent years, including materials, integration of 3D design software and audiology.

Detailed comments on the revenue for the first half and the second quarter are available in the press release published in July 2021 (link to the press release).

Record level of profitability

As a direct result of the operational transformation plan and the efforts made to consolidate the acquired companies, the profitability profile of PRODWAYS has improved significantly. EBITDA(1) was up by 214% and presented a margin of 13.2%, a level never reached in the past, thus making PRODWAYS one of the most profitable companies in the 3D printing sector among listed companies in the world.

Change in PRODWAYS' EBITDA margin since 2015

This significant improvement is primarily the result of a significant decrease in the operating cost base, down by 13% compared to the first half of 2019. This improvement is reflected in the two divisions SYSTEMS and PRODUCTS. This half-year, PRODWAYS also benefited from the positive impact of a subsidy granted in the United States for an amount of €0.9 million.

In the first half of 2021, PRODWAYS generated the first positive operating result(2) in its history, in the amount of €2.2 million (compared to -€2.9 million in the first half of 2020 and -€1.5 million in the first half of 2019). This change in profitability profile confirms the successful transformation of the Group and reflects the operational efficiency achieved by the company.

The operating income was also at a record level of +€0.9 million, despite the exceptional restructuring costs amounting to €0.4 million this half-year, related to the finalization of the transformation plan.

The consolidated financial statements and operating income by division are available in the notes at the end of this press release.

Solid outlook supported by promising trends

3D printing, a positive impact on the industrial sector

Driven by the rise of Industry 4.0 and the digitization of production processes, 3D printing is considered to be an ecological technology thanks to its additive process that allows the use of only the raw material necessary to manufacture a product. By the nature of its activity, PRODWAYS GROUP contributes to reducing the consumption of raw materials and rebuilding a social and sustainable industrial ecosystem in France.

The virtues of the production model made possible by 3D printing technology are numerous: firstly, for certain applications, this process makes it possible to reduce the CO2 emissions generated by the production of a part by around 80%. In addition, the flexibility and responsiveness of the 3D production processes eliminate the need for large inventories of parts, thus limiting the use of storage warehouses, inventory management and obsolete inventory waste. This production model is also a vehicle for the relocation of industrial activities, bringing consumers and production closer together and limiting the impact of transport, sometimes over several thousand kilometers.

Dental and orthodontic aligners players, PRODWAYS' main market, achieved record performances

The manufacture of medical equipment for orthodontics is today the most mature application in the 3D printing sector. PRODWAYS GROUP is a major player in this segment thanks to MOVINGLight® technology and its expertise in materials to develop and supply high-quality liquid resins.

The very strong growth of companies in the dental sector and in particular of players that market transparent aligners is an important growth driver for the Group, both in Europe and in the United States. The revenue generated by alignment specialists have increased by an average of 24% per year since 2015 due to a very strong increase in volumes. This growth will accelerate sharply in 2021, with forecasts announcing growth of around 140%.

The success of this market and the good positioning of PRODWAYS on this application will fuel future revenue growth, on the one hand thanks to the ever-increasingsales of materials as customers use their printer fleets more and more intensively, and on the other hand due to new sales of machines to existing customers increasing their production and to new partners.

Acceleration of the development of the Products division: integration of CREABIS well under way

In early July 2021, the Group announced the acquisition of CREABIS, a German specialist in 3D printing services for plastics, marking an acceleration of the development strategy with the return of the external growth dynamic (link to the dedicated press release). With this acquisition, PRODWAYS GROUP now has one of the largest 3D printing services in Europe with a fleet of 52 printers offering a wide variety of technologies and materials to its customers.

The integration of CREABIS is well under way and will continue in the second half of the year. The sales and operational teams have already integrated the offerings of both companies and will be able to offer new technologies and services from the end of September. In the continuation of the external growth operations of recent years, PRODWAYS once again confirms its ability to integrate new companies effectively and to realize the potential for synergies.

Outlook and clarification of the guidance for 2021

The transformation of the company, the significant share of recurring revenues, the improvement in profitability and the good positioning of PRODWAYS in key markets are solid foundations for generating sustainable growth. Development opportunities in new applications for the SYSTEMS division, leveraging the Group's existing technologies, as well as the increase in the size of the PRODUCTS division will further fuel the performance of the coming years.

For the year 2021, subject to changes in the healthcare context and within the current scope, PRODWAYS GROUP is targeting revenue growth of around 20%, supported by the recovery momentum and the good performance of the Group's markets. The level of profitability, the result of the transformation plan, should also remain around the current level.

Operating result (2) by division

Change

Change

(in millions of euros)

H1 2020

H1 2021

(in millions of

(%)

euros)

Revenue

16.8

21.6

+4.8

+28%

EBITDA(1)

1.4

3.5

+2.1

+157%

Systems

8.1%

16.3%

8.2 pts

-

EBITDA margin (%)

EBIT

-1.4

2.5

+3.9

-

Revenue

9.9

12.6

+2.7

+27%

EBITDA(1)

0.6

1.4

+0.8

+125%

Products

6.3%

11.2%

4.9 pts

-

EBITDA margin (%)

EBIT

-1.0

0.0

+1.0

-

Definition of alternative performance indicators

  1. EBITDA:Operating income before "Depreciation, amortization and provisions", "Non-recurring items in operating income" and "Group share of the earnings of affiliated companies".
  2. Operating result:Operating income before "Non-recurring items in operating income" and "Group share of the earnings of affiliated companies".

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Prodways Group SA published this content on 25 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 October 2021 08:23:02 UTC.