July 30, 2015

Stratasys Reports Second Quarter 2015 Financial Results

Company reports $182.3 million in revenue for the second quarter

Second quarter non-GAAP net income of $8 million, or $0.15 per diluted share; and GAAP net loss of $23 million, or ($0.55) per diluted share

Company provides update to financial guidance

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)-- Stratasys Ltd. (NASDAQ:SSYS) today announced financial results for the second quarter of 2015.

Q2-2015 Financial Results Summary:

  • Revenue for the second quarter of 2015 was $182.3 million, compared to $178.5 million for the same period last year;
  • GAAP net loss for the second quarter was $22.9 million, or ($0.55) per diluted share, compared to GAAP net loss of $173,000, or ($0.00) per diluted share, for the same period last year.
  • Non-GAAP net income for the second quarter was $8 million, or $0.15 per diluted share, compared to non-GAAP net income of $28.0 million, or $0.55 per diluted share, reported for the same period last year.
  • The Company invested a net amount of $22.5 million in R&D projects (non-GAAP basis) during the second quarter, representing 12% of revenues.
  • The Company used $15.6 million in cash for operations during the second quarter, and currently holds approximately $502.6 million in cash and cash equivalents, and short term bank deposits. The cash balance includes a $175 million drawdown on the Company's revolving credit facility.
  • Non-GAAP EBITDA for the second quarter amounted to $12.1 million.
  • The Company sold 6,731 3D printing and additive manufacturing systems during the second quarter, and has sold a total of 135,928 systems worldwide as of June 30, 2015, on a pro forma combined basis.

"The merger between Stratasys and Objet in 2012 created synergies that combined with the heightened level of mainstream media attention within our industry, have contributed to a period of extraordinary growth for our company and industry over the past two years," said David Reis, chief executive officer of Stratasys. "We believe our industry is transitioning through a period of slower growth, as users digest their investments in 3D printing and expand the utilization of recently acquired capacity. Despite these headwinds, and certain ongoing macroeconomic challenges in Asia, we are encouraged by sequential improvement in areas of our business, and remain optimistic about our longer-term growth prospects."

Business Highlights:

  • Strengthened presence in Germany, Switzerland, and Austria through the acquisition of a key German channel partner, RTC Rapid Technologies GmbH; and made additional North American channel enhancements with the addition of W.D. Distributing, WYNIT, and Sam's Club.
  • Partnered with CAD industry leader PTC, to provide improved integration between PTC Creo product design software and Stratasys 3D Printing Solutions.
  • Enhanced high-end system capabilities with release of the Objet1000 Plus 3D Production System, providing significant speed improvements; as well as introduced a new high-volume filament packaging solution for Fortus 3D Production Systems.
  • Observed significant expansion within the dental vertical, including the further adoption of our Stratasys PolyJet based solutions for the production of custom-made orthodontic products.
  • Announced a multi-year collaboration with the Kangshua Group that includes providing up to 1,000 Solidscape high precision 3D printers to equip multiple new service bureaus and innovation centers in China; as well as the opening of a manufacturing facility, by Kangshua, to locally assemble Solidscape 3D printers for the Chinese market.
  • Reorganized the MakerBot channel in Europe and Asia to help leverage the existing Stratasys go-to-market infrastructure within those regions.
  • Completed a customer event for Stratasys Direct Manufacturing (SDM) that reached 239 customers and introduced the combined SDM organization as a total solution provider that focuses on applications from prototype to production.

"We are observing positive indicators and are beginning to see tangible results that reaffirm our strategy of developing targeted solutions within key market verticals," continued Reis. "Short-term, we will continue to make adjustments to our expenses to align with current market conditions. Long-term, we remain committed to our growth initiatives that include enhancing vertical solution capabilities, expanding customer support services, accelerating product development, and growing the sales and marketing infrastructure - all of which are designed to drive future growth."

2015 Guidance

Due to the Company's limited visibility regarding the timing of improvements in growth, the Company has withdrawn its previously delivered full year 2015 financial guidance, and instead has provided financial guidance for the third quarter of 2015 as follows:

  • Total revenue in the range of $175 to $190 million, with non-GAAP net income in the range of $1.5 to $7.0 million, or $0.03 to $0.13 per diluted share.
  • GAAP net loss of $27.0 million to $22.5 million, or ($0.52) to ($0.43) per share.
  • Non-GAAP earnings guidance excludes $18 million of projected amortization of intangible assets; $9.5 million to $10.0 million of share-based compensation expense; $7 million to $8 million in non-recurring expenses related to acquisitions; and includes $6.0 million to $6.5 million in tax expenses related to non-GAAP adjustments.

Stratasys Ltd. Q2-2015 Conference Call Details

Stratasys will hold a conference call to discuss its second quarter financial results on July 30, 2015 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Web site at www.stratasys.com under the "Investors" tab; or directly at the following web address: http://edge.media-server.com/m/p/izi2aqma.

To participate by telephone, the domestic dial-in number is 800-901-5241 and the international dial-in is 617-786-2963. The access code is 55067799.

Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for 90 days on the "Investors" page of the Stratasys Web site or by accessing the provided web address.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are characterized by the use of forward-looking terminology such as "will," "expects," "anticipates," "continues," "believes," "should," "intended," "projected," "guidance," "preliminary," "future," "planned," "committed," and other similar words. These forward-looking statements include, but are not limited to, statements relating to the company's objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the company's ability to efficiently and successfully integrate the operations of Stratasys, Inc. and Objet Ltd. after their merger as well as MakerBot, Solid Concepts, and Harvest Technologies after their acquisitions and to successfully put in place and execute an effective post-merger integration plans; the overall global economic environment; the impact of competition and new technologies; general market, political and economic conditions in the countries in which the company operates; projected capital expenditures and liquidity; changes in the company's strategy; government regulations and approvals; changes in customers' budgeting priorities; litigation and regulatory proceedings; the company's ability to satisfy the financial covenants under its revolving credit facility; and those factors referred to under "Risk Factors", "Information on the Company", "Operating and Financial Review and Prospects", and generally in the company's annual report on Form 20-F for the year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission (the "SEC"), and in other reports that the company has filed with or furnished to the SEC on the date hereof. Readers are urged to carefully review and consider the various disclosures made in the company's SEC reports, which are designed to advise interested parties of the risks and factors that may affect its business, financial condition, results of operations and prospects. Any guidance and other forward-looking statements in this press release are made as of the date hereof, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Discussion Disclosure

The information discussed within this release includes financial results and projections that are in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition, certain non-GAAP financial measures have been provided excluding certain charges, expenses and income. The non-GAAP measures should be read in conjunction with the corresponding GAAP measures and should be considered in addition to, and not as an alternative or substitute for, the measures prepared in accordance with GAAP. The non-GAAP financial measures are included in an effort to provide information that investors may deem relevant to evaluate results from the company's core business operations and to compare the company's performance with prior periods. The non-GAAP financial measures primarily identify and exclude certain discrete items, such as merger-related expenses, amortization of intangible assets, one time write off of deferred tax assets, impairment charges, reorganization and other related costs, and expenses associated with share-based compensation required under ASC 718. The company uses these non-GAAP financial measures for evaluating comparable financial performance against prior periods.

This release is available on the Stratasys web site at www.stratasys.com

Stratasys Ltd. (Nasdaq:SSYS), headquartered in Minneapolis, Minnesota and Rehovot, Israel, is a leading global provider of 3D printing and additive manufacturing solutions. The company's patented FDM® and PolyJet™ 3D Printing technologies produce prototypes and manufactured goods directly from 3D CAD files or other 3D content. Systems include 3D printers for idea development, prototyping and direct digital manufacturing. Stratasys subsidiaries include MakerBot and Solidscape, and the company operates the digital parts manufacturing service Stratasys Direct Manufacturing. Stratasys has more than 2,900 employees, holds over 800 granted or pending additive manufacturing patents globally, and has received more than 30 awards for its technology and leadership. Online at: http://www.stratasys.com or http://blog.stratasys.com.

 
Stratasys Ltd.
 
Consolidated Balance Sheets
 
(in thousands)
    June 30,     December 31,
2015 2014
 
ASSETS
 
Current assets
Cash and cash equivalents $ 352,268 $ 442,141
Short-term bank deposits 150,370 595
Accounts receivable, net 136,970 150,806
Inventories 137,394 123,385
Net investment in sales-type leases 10,091 8,170
Prepaid expenses 9,898 7,931
Deferred income taxes 30,567 25,697
Other current assets   31,420     37,903  
 
Total current assets   858,978     796,628  
 
Non-current assets
Goodwill 1,172,125 1,323,502
Other intangible assets, net 517,085 597,903
Property, plant and equipment, net 185,992 157,036
Net investment in sales-type leases - long term 19,093 14,822
Other non-current assets   10,960     9,216  
 
Total non-current assets   1,905,255     2,102,479  
 
Total assets $ 2,764,233   $ 2,899,107  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 40,687 $ 37,359
Short term debt 175,000 50,000
Accrued expenses and other current liabilities 50,990 47,760
Accrued compensation and related benefits 45,230 42,332
Obligations in connection with acquisitions 12,003 28,092
Deferred revenues   48,821     45,023  
 
Total current liabilities   372,731     250,566  
 
Non-current liabilities
Obligations in connection with acquisitions - long term 12,761 26,461
Deferred tax liabilities 36,293 55,835
Deferred revenues - long-term 6,069 5,946
Other non-current liabilities   26,677     25,091  
 
Total non-current liabilities   81,800     113,333  
 
Total liabilities   454,531     363,899  
 
Redeemable non-controlling interests 2,564 3,969
 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000
shares; 51,669 and 50,923 shares issued and outstanding
at June 30, 2015 and December 31, 2014, respectively 140 139
Additional paid-in capital 2,587,168 2,568,149
Accumulated deficit (273,090 ) (33,871 )
Accumulated other comprehensive loss   (7,429 )   (3,647 )
Equity attributable to Stratasys Ltd. 2,306,789 2,530,770
Non-controlling interest 349 469
 
Total equity   2,307,138     2,531,239  
 
Total liabilities and equity $ 2,764,233   $ 2,899,107  
 
 
Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)
               
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
(unaudited)   (unaudited) (unaudited)   (unaudited)
Net sales
Products $ 134,490 $ 154,090 $ 261,157 $ 283,342
Services   47,832     24,375     93,896     46,064  
182,322 178,465 355,053 329,406
 
Cost of sales
Products 67,666 73,394 166,037 134,416
Services   31,748     13,437     60,020     25,628  
99,414 86,831 226,057 160,044
       
Gross profit 82,908 91,634 128,996 169,362
 
Operating expenses
Research and development, net 25,506 18,957 52,744 35,728
Selling, general and administrative 97,581 77,929 200,189 145,546
Goodwill impairment - - 150,400 -
Change in the fair value of obligations in connection with acquisitions   (6,680 )   628     (19,936 )   (6,867 )
116,407 97,514 383,397 174,407
       
Operating loss (33,499 ) (5,880 ) (254,401 ) (5,045 )
 
Financial income (expense) (711 ) 337 (5,835 ) (999 )
       
Loss before income taxes (34,210 ) (5,543 ) (260,236 ) (6,044 )
 
Income tax benefit   (11,066 )   (5,370 )   (20,688 )   (9,958 )
 
Net income (loss) (23,144 ) (173 ) (239,548 ) 3,914
 
Net loss attributable to non-controlling interest   (213 )   -     (329 )   -  
 
Net income (loss) attributable to Stratasys Ltd. $ (22,931 ) $ (173 ) $ (239,219 ) $ 3,914  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.48 ) $ (0.00 ) $ (4.71 ) $ 0.08
Diluted (0.55 ) (0.00 ) (4.77 ) 0.08
 
Weighted average ordinary shares outstanding
Basic 51,405 49,373 51,181 49,323
Diluted 51,870 49,373 51,413 51,238
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
                       
Three Months Ended June 30, 2015 Three Months Ended June 30, 2014
 
GAAP Non-GAAP GAAP Non-GAAP
(unaudited)     Adjustments*     (unaudited) (unaudited)     Adjustments*     (unaudited)
Net sales
Products $ 134,490 $ - $ 134,490 $ 154,090 $ - $ 154,090
Services   47,832     -     47,832     24,375     -     24,375
182,322 - 182,322 178,465 - 178,465
 
Cost of sales
Products 67,666 (15,975 ) 51,691 73,394 (14,739 ) 58,655
Services   31,748     (841 )   30,907     13,437     (340 )   13,097
99,414 (16,816 ) 82,598 86,831 (15,079 ) 71,752
           
Gross profit 82,908 16,816 99,724 91,634 15,079 106,713
 
Operating expenses
Research and development, net 25,506 (3,016 ) 22,490 18,957 (1,318 ) 17,639
Selling, general and administrative 97,581 (24,020 ) 73,561 77,929 (17,617 ) 60,312
Change in the fair value of obligations in connection with acquisitions   (6,680 )   6,680     -     628     (628 )   -
116,407 (20,356 ) 96,051 97,514 (19,563 ) 77,951
           
Operating income (loss) (33,499 ) 37,172 3,673 (5,880 ) 34,642 28,762
 
Financial income (expense) (711 ) - (711 ) 337 - 337
           
Income (loss) before income taxes (34,210 ) 37,172 2,962 (5,543 ) 34,642 29,099
 
Income taxes (benefit)   (11,066 )   6,279     (4,787 )   (5,370 )   6,475     1,105
 
Net income (loss) (23,144 ) 30,893 7,749 (173 ) 28,167 27,994
 
Net loss attributable to non-controlling interest   (213 )   -     (213 )   -     -     -
 
Net income (loss) attributable to Stratasys Ltd. $ (22,931 ) $ 30,893   $ 7,962   $ (173 ) $ 28,167   $ 27,994
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.48 ) $ 0.15 $ (0.00 ) $ 0.57
Diluted (0.55 ) 0.15 (0.00 ) 0.55
 
Weighted average ordinary shares outstanding
Basic 51,405 51,405 49,373 49,373
Diluted 51,870 52,705 49,373 51,196
 
 

The Company considers these non-GAAP measures to be indicative of its core operating results and facilitates a comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes, however these measures should not be viewed as a substitute for the Company's GAAP results.

 

* Refer to the "Reconciliation of Non-GAAP Adjustments" herein for further information regarding adjustments.

 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
                       
Six Months Ended June 30, 2015 Six Months Ended June 30, 2014
 
 
GAAP     Adjustments*     Non-GAAP GAAP     Adjustments*     Non-GAAP
Net sales
Products $ 261,157 $ - $ 261,157 $ 283,342 $ 235 $ 283,577
Services   93,896     -     93,896     46,064     -     46,064  
355,053 - 355,053 329,406 235 329,641
 
Cost of sales
Products 166,037 (61,887 ) 104,150 134,416 (28,468 ) 105,948
Services   60,020     (2,250 )   57,770     25,628     (774 )   24,854  
226,057 (64,137 ) 161,920 160,044 (29,242 ) 130,802
           
Gross profit 128,996 64,137 193,133 169,362 29,477 198,839
 
Operating expenses
Research and development, net 52,744 (5,833 ) 46,911 35,728 (2,813 ) 32,915
Selling, general and administrative 200,189 (56,864 ) 143,325 145,546 (31,140 ) 114,406
Goodwill impairment 150,400 (150,400 ) - - - -
Change in the fair value of obligations in connection with acquisitions   (19,936 )   19,936     -     (6,867 )   6,867     -  
383,397 (193,161 ) 190,236 174,407 (27,086 ) 147,321
           
Operating income (loss) (254,401 ) 257,298 2,897 (5,045 ) 56,563 51,518
 
Financial expense (5,835 ) - (5,835 ) (999 ) - (999 )
           
Income (loss) before income taxes (260,236 ) 257,298 (2,938 ) (6,044 ) 56,563 50,519
 
Income taxes (benefit)   (20,688 )   8,093     (12,595 )   (9,958 )   11,884     1,926  
 
Net income (loss) (239,548 ) 249,205 9,657 3,914 44,679 48,593
 
Net loss attributable to non-controlling interest   (329 )   -     (329 )   -     -     -  
 
Net income (loss) attributable to Stratasys Ltd. $ (239,219 ) $ 249,205   $ 9,986   $ 3,914   $ 44,679   $ 48,593  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (4.71 ) $ 0.20 $ 0.08 $ 0.99
Diluted (4.77 ) 0.19 0.08 0.95
 
Weighted average ordinary shares outstanding
Basic 51,181 51,181 49,323 49,323
Diluted 51,413 52,524 51,238 51,221
 
 

The Company considers these non-GAAP measures to be indicative of its core operating results and facilitates a comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes, however these measures should not be viewed as a substitute for the Company's GAAP results.

 

* Refer to the "Reconciliation of Non-GAAP Adjustments" herein for further information regarding adjustments.

 
 
Stratasys Ltd.
 
Reconciliation of Non-GAAP Adjustments
 
(in thousands)
               
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Net sales, products
Deferred revenue step-up $ - $ - $ - $ 235
 
Cost of sales, products
Acquired intangible assets amortization (12,301 ) (14,029 ) (27,206 ) (27,254 )
Other intangible assets impairment - - (29,782 ) -
Non-cash stock-based compensation expense (1,237 ) (710 ) (2,462 ) (1,214 )
Reorganization and other related costs   (2,437 )   -     (2,437 )   -  
(15,975 ) (14,739 ) (61,887 ) (28,468 )
Cost of sales, services
Non-cash stock-based compensation expense (560 ) (324 ) (1,168 ) (732 )
Reorganization and other related costs (75 ) - (75 ) -
Merger and acquisition related expense   (206 )   (16 )   (1,007 )   (42 )
(841 ) (340 ) (2,250 ) (774 )
Research and development, net
Non-cash stock-based compensation expense (1,506 ) (885 ) (3,374 ) (1,823 )
Reorganization and other related costs (617 ) - (617 ) -
Merger and acquisition related expense   (893 )   (433 )   (1,842 )   (990 )
(3,016 ) (1,318 ) (5,833 ) (2,813 )
 
Selling, general and administrative
Acquired intangible assets amortization (5,684 ) (5,507 ) (12,140 ) (10,871 )
Non-cash stock-based compensation expense (6,261 ) (5,159 ) (12,320 ) (10,045 )
Merger and acquisition related expense (5,937 ) (6,951 ) (12,842 ) (10,224 )
Reorganization and other related costs (6,138 ) - (6,139 ) -
Impairment charges   -     -     (13,423 )   -  
(24,020 ) (17,617 ) (56,864 ) (31,140 )
 
Goodwill impairment - - (150,400 ) -
 
Change in the fair value of obligations in connection with acquisitions
Change in the fair value of obligations in connection with acquisitions 6,680 (628 ) 19,936 6,867
 
Income taxes
Tax expense related to non-GAAP adjustments 6,279 6,475 8,093 11,884
 
       
Net income $ 30,893   $ 28,167   $ 249,205   $ 44,679  
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Three Months Ended September 30, 2015
 
(in millions, except per share data)
   
GAAP net loss ($27) to ($22.5)
 

Adjustments

Stock-based compensation expense $9.5 to $10
Intangible assets amortization expense $18
Merger related expense $7 to $8
Tax expense related to Non-GAAP adjustments ($6) to ($6.5)
 
Non-GAAP net income $1.5 to $7
 
GAAP loss per share ($0.52) to ($0.43)
 
Non-GAAP diluted earnings per share $0.03 to $0.13
 

Stratasys Ltd.
Shane Glenn, 952-294-3416
VP Investor Relations
shane.glenn@stratasys.com

Source: Stratasys Ltd.

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