Jacob Stephan: Okay. And just one last one for me here on Software. You could talk a little bit about your strategy, maybe how has your distribution strategy changed, are you kind of sticking with a direct sort of sales force, are you using a reseller model here? Just curious how you’ve kind of adapted over the last six months to 12 months here?
Brigitte de Vet: And that is on the Software segment specifically?
Jacob Stephan: Yeah.
Brigitte de Vet: Yeah. So the software segment specifically, we’ve always used a multitude of channels. So we have a direct sales model combined with a channel model, and obviously, a close partnership with our OEM partners as well will help us put the products in the market. And we have continuously been doing that over the last couple of years and I expect us to follow that same mix of strategies going forward.
Jacob Stephan: Okay. Great. Thanks for all the color. Best of luck going forward here.
Brigitte de Vet: Thank you, Jacob.
Operator: Please stand by for the next question. The next question comes from Alexander Craeymeersch with Kepler Cheuvreux. Your line is open.
Alexander Craeymeersch: Hi. Hello. Alexander speaking here. Congratulations, Koen and Brigitte, and the whole team on the nice profit this year. I was just interested in — I have had two questions. So one was on the capacity expansion in the U.S. and ACTech. On the ACTech facility, don’t you think that the capacity that is coming on live in H2 this year, at least it was planned that way originally, will not — will that not put extra pressure on the margins? And then next to that, I would also ask how much capacity we need to foresee for these plans both in the U.S. and ACTech in 2024? And then maybe in the extension of that question, maybe how we need to look at the free cash flow generation this year, including the working cap developments? Thank you for that.
Brigitte de Vet: Okay. So that’s a lot of questions. I’ll take the first one talking about the ACTech investments specifically. So, Alexander, you’re obviously right on the short-term, that any additional investment always adds on the short-term some pressure on the margin. At the same time, we — I think you all know us as a player that invests in the long-term. So we believe in the potential of that business. We actually see that we have missed opportunities because of lack of capacity in the past and that’s what we want to rectify with that additional investment. So beyond the startup phase, the pressure on the margins should be equalized or neutralized. So that was for the first question.
Koen Berges: Maybe I can pick up on your second part of the question, Alexander, and I’m going to split it into two parts, the free cash flow impacts of the facility expansions and then coming back to the working capital evolution. As to answer the question with regards to free cash flow evolution, indeed, in the year 2024, we will see a heavy investment phase, especially with the ACTech plants that we will bring into production. There is already a part of the investments that we have taken in 2023 and even before. But indeed, a fair chunk of the amount will come in the first half of 2024 and that will indeed impact our overall free cash flow generation this year, which, based on the current numbers, will be negative temporarily, just because we do this huge investment, and then we will see as of the second half of the year, we will see the cash flow coming in gradually from startup of the facility.
Now, as to the metals U.S. plant, that investment was already taken in the past. There is, as Brigitte indicated, we’re contemplating to do further investments in the plant, but that will be to a minor amount compared to the initial investment and certainly compared to ACTech. Second question with regards to working capital evolution, that is certainly something that we will be monitoring more closely going forward. As we are growing, we see an increased need for working capital requirements. But we do want to focus further on this in order to keep a healthy operating cash flow and support further our free cash flow generation in the coming months and years ahead of us. I hope that answers your question.
Alexander Craeymeersch: Yeah. Okay. Thank you very much.
Brigitte de Vet: Thanks, Alexander.
Operator: Please stand by for the next question. The next question comes from Troy Jensen with Cantor Fitzgerald. Your line is open.
Troy Jensen: Hey. Thank you for letting me ask the question and congrats on the nice results here. Maybe start with Brigitte here. So I know you’ve been on board now for three months. Had some time to look at different aspects of the business here. I’m just curious, what would you change now or potentially do better versus what Fried was doing — Fried and Peter’s leadership? And I know they’re listening, so be careful what you say.
Brigitte de Vet: I know. Thank you, Troy, and thanks for joining the call today. So, well, first of all, I want to stress that it’s been six weeks in the new role. So it’s still very early days. I knew you were going to ask the question, which is why I also added some remarks on how I look at things. And I also clearly highlighted the priorities for us in 2024 after my first look at how things are going. And it’s clear that the three priorities clearly are Medical growth that, we want to keep the momentum in Medical. So the growth potential is there and we want to make sure that we realize that. On the Software and the Manufacturing side, I mentioned that, we want to focus on capturing the opportunities and it’s maybe to answer your question a bit more specifically, what is the biggest change?
It’s maybe a bit more of a focused approach, focusing on there where we do see growth opportunities, despite the environment that we see. And with that focus generating or driving the growth in revenue and that will be critical that we stay focused on that, because our growth ambition is there and is real, and I think it’s based on the potential that we have in the market. So I hope that answers your question.
Troy Jensen: Yeah. No. Very good. So let me get just the Medical business too. So if you look at total guidance, you have 4% kind of at the midpoint, but you said all three segments are going to grow. I mean, Medical has just been killing it, right? So you just had record revenues, you had record EBITDA margins. Yeah, I’d be curious to know, the applications that are driving it currently, and then, if you’ve been growing 15%, 18%, 20% of the last three years in this Medical business, it seems like you’re forecasting it to slow down. So is that just conservative guidance or some thoughts, please?
Brigitte de Vet: Yeah. So it’s really two questions, if I understand you correctly. One is the mix of markets in which we grow, and the second is, more specifically towards, our guidance going forward. Now let me answer the second one — the second part of your question first, because I’ll help us on the first part of your question. So I highlighted in our current results or in the 2023 results that we saw Software sales to medical device companies, which is an important segment for us and that will weigh on our revenues in 2024. So, that plays into our guidance for 2023 — for 2024, specifically for the Medical segment. The same obviously accounts for our Software segment, but that has an impact on the Medical segment. Now, when it comes to a couple of the segments in which we see the growth, the nice thing for us is that it’s really a healthy mix of different segments, which makes it balanced, and therefore, takes a bit of risk, hopefully, out of the equation as well and we really see a combination of our mature segments playing a very important role there.
The orthopedic segment is still a very important segment for us. The CMS segment is playing an important role there. And despite the fact that we saw softness in our medical sales, as Koen highlighted in his remarks, we’re still seeing growth there as well, less than previous years, but we’re still seeing growth there towards the research and engineering markets in a broader way. So it’s a healthy mix.
Troy Jensen: Perfect. All right. Thank you for the explanation and good luck going forward.
Brigitte de Vet: Thank you.
Operator: I show no further questions at this time. I would now like to turn the call back to Brigitte for closing remarks.
Brigitte de Vet: Thank you and thank you all for joining us today. As you’ve heard, Materialise has many initiatives underway to leverage and accelerate the growing adoption of additive manufacturing. And we all look forward to continuing our dialogue with you throughout the upcoming investor conferences or our one-on-one virtual meetings or calls. Now if you do have any other questions, please feel free to reach out to us. Thank you all and goodbye for now.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
