Net other operating income increased by 304 kEUR to 1,778 kEUR, compared to 1,474 kEUR for the second quarter of 2015. Net other operating income consists primarily of withholding tax exemptions for qualifying researchers, development grants, partial funding of R&D projects and currency exchange results on purchase and sales transactions.

Net financial result was 207 kEUR, compared to (938) kEUR for the prior-year period, reflecting the variance in the currency exchange rate, primarily on the portion of the company’s IPO proceeds held in U.S. dollars versus the euro, a reported but mostly unrealized exchange gain.

Net loss for the second quarter of 2016 was (436) kEUR, compared to a net loss of (3,013) kEUR for the same period in the prior year: an improvement of 2,577 kEUR, as a result of an increase of 786 kEUR of operating profit, an improvement of the financial result of 1,077 kEUR, and an improvement in income tax income of 714 kEUR primarily due to a decrease of tax liabilities. Total comprehensive loss for the second quarter of 2016, which reflects exchange differences on translation of foreign operations, was (911) kEUR compared to (2,850) kEUR for the same period in the prior year.

At June 30, 2016, we had cash and equivalents of 51,304 kEUR compared to 50,726 kEUR at December 31, 2015. Cash flow from operating activities in the second quarter of 2016 was 4,405 kEUR, compared to 543 kEUR in the same period last year.

Net shareholders’ equity at June 30, 2016 was 78,247 kEUR, a decrease of 4,708 kEUR since December 31, 2015.

Facility Expansion

To position Materialise for long-term growth based on expected continued adoption of additive manufacturing, we are planning to expand our production facilities in Poland and our corporate facilities in Belgium. Accordingly, we plan to invest approximately 17,000 kEUR in capital expenditures over approximately the next 12 months. We intend to finance the two new buildings entirely with debt and have received a conditional commitment letter from a bank for a 15-year term loan at fixed interest rates below 1.5%, and with amortization deferred until 2023 and 2019 for the Belgium and Poland portions of the loan, respectively. The closing of the loan is contingent on a number of conditions and there is no assurance we will be able to enter into the loan on the terms contemplated by the commitment letter or at all.

2016 Guidance

The company’s outlook for fiscal year 2016 remains within our previous guidance range, which was that management expects to report consolidated revenue between 115,000 - 120,000 kEUR; Adjusted EBITDA between 7,000 - 9,000 kEUR; and an increase of deferred revenue generated from annual licenses and maintenance by between 3,000 - 4,000 kEUR from 13,136 kEUR as of December 31, 2015.

Non-IFRS Measures

Materialise uses EBITDA and Adjusted EBITDA as supplemental financial measures of its financial performance. EBITDA is calculated as net profit plus income taxes, financial expenses (less financial income), shares of loss in a joint venture and depreciation and amortization. Adjusted EBITDA is determined by adding non-cash stock-based compensation expenses and non-recurring IPO related expenses to EBITDA. Management believes these non-IFRS measures to be important measures as they exclude the effects of items which primarily reflect the impact of long-term investment and financing decisions, rather than the performance of the company's day-to-day operations. As compared to net profit, these measures are limited in that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's business, or the charges associated with impairments. Management evaluates such items through other financial measures such as capital expenditures and cash flow provided by operating activities. The company believes that these measurements are useful to measure a company's ability to grow or as a valuation measurement. The company's calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. EBITDA and Adjusted EBITDA should not be considered as alternatives to net profit or any other performance measure derived in accordance with IFRS. The company's presentation of EBITDA and Adjusted EBITDA should not be construed to imply that its future results will be unaffected by unusual or non-recurring items.

Exchange Rate

This press release contains translations of certain euro amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from euros to U.S. dollars in this press release were made at a rate of EUR 1.00 to USD 1.1102, the 12:00 noon ET buying rate of the Federal Reserve Bank of New York for the euro on June 30, 2016.

Conference Call and Webcast

Materialise will hold a conference call and simultaneous webcast to discuss its financial results for the second quarter of 2016 today, August 11, 2016, at 8:30 a.m. ET/14:30 CET. Company participants on the call will include Wilfried Vancraen, Founder and Chief Executive Officer; Peter Leys, Executive Chairman; and Johan Albrecht, Chief Financial Officer. A question-and-answer session will follow management’s remarks.