Materialise NV (NASDAQ:MTLS) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 08:30 am ET
several actions from an operational and financial perspective to guarantee efficient back office and supply chain continuity. Finally, we continue to closely monitor the COVID-19 impact on our businesses in order to plan timely and appropriate measures to align costs and expenditures such that our balance sheet remains healthy and strong and to have a solid platform for future growth after the crisis. Peter?
Thank you, Johan. As I indicated earlier, before giving the floor to you for questions, we do want to give you some qualitative insights about what we believe the third quarter of 2020 may bring. As you know, certain regions in the world, in particular the Americas, are still in the midst of the first wave of the corona pandemic. In other regions, including certain parts of Asia and Europe, there are threats of a second wave. As a result, there is much economic uncertainty about how long this crisis will effectively last. Uncertainty implies that people do not only freeze budgets for normal course of business investments, but also that they delay investments in innovative supply chain solutions that are necessary to address the new post-corona normal.
For Materialise, we currently expect that this prolonged uncertainty will translate into a slower than previously expected pickup of our software and manufacturing sales. As a matter of fact, for both units, we expect that the third quarter will be more difficult than the second quarter. On the other hand, we currently see that our medical business rebounds reasonably well as soon as and as long as hospitals and surgeons can reorient some of their attention to the elective surgeries that we support. So on the basis of what we know and see today, we do expect a gradual, albeit, potentially not sustainable recovery of our medical business already in the third quarter. Our visibility beyond the third quarter remains fairly limited.
So in response to this unclear and uncertain outlook, we intend to continue to manage our cost structure in a balanced way. This means that we will not cut costs as much as possible, but there's as much as necessary. We believe that Materialise remains very well positioned to support many of the digitized, localized and personalized solutions that we expect will thrive in the post-corona area. It is therefore crucial that we keep our software and hardware infrastructure in place and up-to-date. And more importantly, that we get and keep the right people onboard to address the needs of the market as soon as the crisis makes place for the new normal. So because we will continue to monitor our costs with one eye focusing on the presence and with the other looking into the future, we do expect our short-term Q3 EBITDA will be heavily impacted and will in fact be lower than the EBITDA that we reported for the second quarter of this year.
This concludes our prepared remarks. Operator, you may now open the floor for questions.