Hello, everyone. I welcome you to the presentation of Prodways Group's results. I am Michaël Ohana, CEO of Prodways Group, and I'm here with our CFO, Laurent Cardin, to present our full year 2023 results. I will start with a few comments on the activity, which will be followed by a presentation of the financial results by Laurent, and we'll conclude with some comments on our perspectives. As usual, we leave some time for a Q&A session at the end of the presentation. So let's start with the key figures. We had announced 12 months ago that the year 2023 will be a year of transition, and it has been more challenging than expected. We are disappointed by the overall performance compared to what we expected initially, but we managed to generate a decent profitability and are still generating a positive cash flow.
Turnover stands at EUR 75 million, impacted essentially by a change in classification under accounting standards. Without this change, revenues would have been stable compared to 2022. The current EBITDA margin stands at 8%, EUR 6 million. Finally, a cash generation of EUR 4 million, which demonstrates Prodways' capacity to maintain financial discipline. In this year of transition, it is a relatively good set of results for Prodways compared to other players in the 3D industry, and we expect better results in 2024. Just a quick reminder for those who have recently discovered us about the structure of our offer. We are structured into two divisions: the systems division, where we provide our customers who wish to produce 3D parts on their own with printers, materials, and software to design their own parts.
The product division, where we offer all customers who wish to have high-level, varied, and high-quality printing parts produced for them. We have simplified this division early 2024, with the disposal of our Cristal brand, which was not strategic for the group. It is now composed of digital manufacturing and 3D audiology business. We are a fully integrated player with a complete offer and possessing advanced skills across the entire 3D printing value chain. Let's now move on the presentation of our activity over the year. Our main challenge this year was the slow activity in new printer sales. The slowdown in the clear aligner market, with CapEx coming to a pause, led to a lower volume of printers sold. The sales of small printers for the jewelry market also decreased. However, Prodways continued to generate robust revenues from 3D material sales.
Existing clients of the group kept on producing, even if they did not increase their production capacities. I have to say that this performance was not satisfactory, and we took measures to address those challenges and come back to a growth trajectory. We announced early 2024 that we decided to discontinue the jewelry application. The sales of these small printers generated a turnover of around EUR 5 million in 2023 and a significant operating loss. This operation will be finalized by the summer 2024. Our objective is to focus on the segment of large, high-value-added printers and associated 3D materials, in particular, the Moving Light range. This focus translates into the organization of the sales and marketing teams already initiated during 2023, and a stronger R&D roadmap to update our offer for industrial clients.
These actions will have short-term results in 2024, especially with a better profitability, and should lead to higher volumes. I'm very confident that this strategy will pay off, and we are already seeing some concrete results with new printers sold in the first quarter, 2024. This is a very positive signal for us. The R&D roadmap I mentioned for printers and materials is built around three axes of development. First, by improving our printers to enhance their productivity. Our teams work both on the hardware, especially with the projector of our MovingLight printers, and the software. This will improve our value proposition to dental players. Secondly, we are working to integrate into the whole production flow of our customers, offering a fully automated workflow with 3D printing. This is a key element with high added values for our industrial clients of various sectors.
We are also working on new materials for new application, and I hope to be able to share good news with you in the coming quarters. On the products division, revenues kept on growing in 2023. First, in our digital manufacturing activity. This activity grew by 9% in 2023 and even accelerated in Q4 with 11%. This performance was driven mainly by our growing business with large accounts and by the activity in Germany for prestigious authoritative customers. Here as well, we undertook some actions in 2023 to go beyond our current performance. I'm confident that the organization of the sales team, with business development managers dedicated to key sectors, will be rewarded. Already in January, we identified significant new opportunities within our reach. We expect more volume increases and more recurring business.
The audiology activity was quite dynamic also in 2023, with a 20% growth. Auditech contributed over the full year and is now fully integrated. The organic growth was driven by our industrial customers equipping their people with custom ear protection. We expect this trend to continue and took actions to boost this activity as well. Overall, in 2023, I'm pleased to say that we reinforced Prodways team. The headcount increase was relatively limited compared to what we had announced, but many new team members of quality joined us and are already delivering results. You see here some examples. Many of them joined in newly created positions that were needed at Prodways. I take this opportunity to thank all our teams and employees, and welcome again the newcomers. And now, I leave the floor to Laurent to comment the financial results.
Thank you, Michaël. I will start with a few comments on the system division. The revenues stood at EUR 40 million, decreasing compared to last year, essentially due to change in classification under IFRS 15 standard in the software business. Since July 2023, Prodways is classified as agent versus principal before, and recognize the gross margin directly as revenue. Due to this change, the revenue decreased by EUR 6.5 million in 2023. For sure, this has no impact on the absolute value of the EBITDA, nor on the cash generated. The current EBITDA margins stood at 9%, driven by the materials and software businesses, and impacted by the weak activity in printer sales. The transition to the SaaS model in software also had a negative impact in 2023.
The product division is performing well, with revenue up 11%, of which +5% organic growth. This is the result of the strong activity in digital manufacturing, the steady and structural growth in audiology, and the successful integration of Auditec. The only negative element is the decreasing revenues of our small dental laboratory Cristal, which we sold early 2024. This division is posting a current EBITDA margin of 11%, down 400K EUR compared to 2022. This small decrease is notably due to the strengthening of the sales team to boost the revenue growth in 2024. On a consolidated scope, revenues are down EUR 6 million due to the change in, in IFRS classification mentioned earlier. Without this change, they would have been flat versus 2022.
The decrease in EBITDA, EUR 5 million lower than last year, is the result of four main factors. First, an exceptional debt waiver in 2022 for EUR 900 K, EUR 400 K from the strengthening of sales and marketing team, EUR 1 million on the small printer activity, and finally, EUR 1.5 million from lower industrial printer sales. As explained, all the issues are being addressed to come back to a better profitability in 2024. One of the measures, the discontinuation of the jewelry application, has significant effect on the other element of the operating income. This item is negative by EUR 14 million, including -EUR 7 million from depreciation. It concerns tangible assets, intangibles, and goodwill. This has no cash impact.
Additionally, there is a EUR 3 million positive contribution for the disposal of the minority participation in Smilers, sold in Q1 2023. This had a cash effect in 2023 as well. At the bottom line, the net result is negative, minus 14 million. This year, 2023, as mentioned by Michael, showed the healthy financial profile of Prodways, once again demonstrating its financial discipline. We generated 4.1 million of cash from operations out of 6 million of EBITDA. In addition, we cash in 4 million from the disposal of our minority stakes in Smilers. This strong performance was strengthened by the improvement in working capital. We expect more improvement going forward. Investment in R&D and CapEx stood at a normal level, around EUR 3 million.
They should maintain around this level in the future. As a result, Prodways has EUR 60 million of cash available at end of December, and net debt improved compared to end 2022, standing now at -EUR 2.9 million. I'll now let Michaël conclude on the perspectives.
Thank you, Laurent, for these results. Now, let's move on to the outlook. On a market perspective, we see more positive signal, which gives us confidence in the future of Prodways. The investment decision in the dental market seems to be unlocking, and some players are looking again to increase and improve their production capacities. Some opportunities are already identified in March. In the aerospace sector, some R&D project launched before COVID are back on track and are moving forward. There is also some adoption in the electrical vehicles industry, which requires new designs and complex components. Finally, we saw in 2023, mass market players adopting 3D printing in their production, such as Apple, Meta, or the phone manufacturer, Honor. This is a sign that the market is moving in the right direction.
The benefit from these supporting trends. We are taking steps to improve our operating leverage. As mentioned earlier, we are refocusing some activities. In addition, the consolidation of some production sites and the optimization of the sales team will enable us to reduce fixed costs. As a result, our head count will decrease by the end of the year, and we will save EUR 5 million of fixed cost on an annual basis. Before I conclude, I will just remind you to follow our upcoming results, that the various operations are changing the revenue profile of the group. As an indication, on the current scope, Prodways would have generated EUR 59 million of revenues in 2023. We aim to do more in 2024. Our objective is to generate more revenue on a comparable basis, with a higher EBITDA margin and increase our cash generation.
Thank you for listening, and we will now leave some time for Q&A. Thanks.
Ladies and gentlemen, if you would like to ask a question or make a contribution on today's conference, please press star one now on your telephone keypad, and to withdraw your question, please press star two. The first question comes from the line of Aurélien Savy, calling from ODDO BHF. Please go ahead.
Yes, thank you. Good evening. Thanks for taking my questions. I've got some first on top line. So you're guiding on a growing top line for the full year. Should we expect the growth coming from the product division only? Or do you think that the better, let's say, selling momentum you're currently seeing on the system division could contribute as well on the growth for the full year? Then second question, it was on slide eight. I was quite curious about the new industrial project you just mentioned. Maybe can you elaborate a little bit more on that?
Should we expect, let's say, some news in the coming months, or maybe some volumes ramp up on those projects that could contribute to 2024 as well? Then third question on profitability, slide 19. So you just mentioned -EUR 5 million of fixed cost on a full year basis. So I guess maybe related to the reduction of head count. But I guess this is an estimate for the full year basis, so what will be the impact on the 2024 fiscal year standalone? And maybe if we have some time, can you, let's say, do an update on M&A? Are you still, let's say, very active? I guess there are some opportunities, let's say, in a context that is quite tough for the sector currently.
That's it. Thank you.
Okay, thank you very much for your questions. So, I propose to share on your four questions between Laurent and myself. Maybe, Laurent, you can take the first one on the top line between products and system.
Yes, sure. We expect growth in the two divisions. The main reason is that the reason in which we implement the new sales organization is not the same. It's more earlier in the product division, so we should have more benefit in the system. But on the product division, the market is much more positive-oriented, so we expect growth in the two division. You want me to take the.
Yes.
Question about the EUR 5 million?
Please.
Five million, yes, you're right. This is on a yearly basis. We expect, depending the reason of the restructuring, operations that we are still doing now, which are in progress between EUR 3 million and EUR 4 million for this year.
Thank you. I will take the question on the new industrial project that you raised. Yes, we have good projects ongoing. So, several aspects. First one is on the dental sector. As you know, we are historically very strong on dental, and as we said during the presentation, we see some customer who had a little slowdown in 2023 coming back to increase their capacities and also to improve the quality in terms of productivity of their machines. So they come back to us, and we are working with them on the possibility to replace some of their big industrial printers or also to buy new. And our technology is today seen as one of the best, as you know, on the dental sector.
In addition to the printer only, on those industrial projects, we also see some interesting projects about automation, and the capacity to help the customers to produce 24 hours a day. Which mean that we have some products ongoing now in order to help and support our customers to be able to very quickly make automation if they have several big industrial printers. So we're really in a phase now where our customer are in a high maturity of using 3D, and they need to have productivity, and productivity means speed at high quality. And for that, we have many projects where we have solutions to help them optimizing the number of printers they are using. We also have this kind of industrial projects in other areas than dental that are, for the moment, quite confidential.
Unfortunately, I'm sorry for that, but I hope that we'll be soon ready to communicate what is going on. But we have here also very exciting and positive challenges coming in other industries than the dental. According to your last question about M&A, of course, we are still looking at opportunities when they come to us. We are also looking for some opportunities, and this is still in our plan to look at potential M&A acquisitions. I already said many times the kind of company we are looking for, but there is no obligation for that. But usually, we are looking for company which are profitable, around EUR 10 million revenue, and of course, where we can create very quick synergies with our actual organization.
Okay. Thanks a lot for the answer. Just a final one, if I may. On, I mean, R&D with Prisca Tech, it was about EUR 3 million last year. Should we expect that number to grow or to be rather stable in 2024?
Yes. So here, an important point is that we have already some projects which are financed by customers. So here, the three point one or three point two R&D project we're talking about are really project only R&D by Prodways, but this amount is much bigger when we see what we're already doing with customers who are financing developments for their needs. That is not in R&D, but it's also a very interesting product developments and future. And to answer your question, yes, this amount should be quite stable in 2024.
Okay, that's it. Thanks a lot. That's it for me. Thank you.
Thank you.
We currently have no question coming through, so as a final reminder, if you'd like to ask a question, please press star one now. Well, there are no further question from the telephone, so I will hand you back to your host to take question from the webcast. Thank you.
Okay, thank you. So we have a question here from the webcast. I read the question: "So can we explain again the calculation of the EUR 59 million comparable sales base for 2023?
It's for me.
It's for you.
In 2023, we have the impact of the change in the software division due to the fact that we are now agent and no more principal for only half year, so we will have the full impact in 2024. So I mean, again, an impact around EUR 6.5 million, first. And second, we dispose of Cristal, and we stop the jewelry business. And the sum of these two is the gap between the EUR 68 million and the EUR 59 million.
Okay. Thank you, Laurent. We don't see any other questions for the moment. We can wait a few seconds in case of receiving one. No more questions, so thank you very much for your presence and hope to see you soon for the next communication of Prodways Group.