July 27, 2011

Stratasys Reports Record Quarterly Financial Results

Q2 Generates Record Consumable Revenue and 67% Increase in Fortus System Sales

MINNEAPOLIS, Jul 27, 2011 (BUSINESS WIRE) -- Stratasys, Inc. (NASDAQ:SSYS) today announced second quarter financial results.

The company reported record revenue of $37.6 million for the second quarter ended June 30, 2011, compared to $30.1 million reported for the same period in 2010.

The second quarter results include two months of contribution from the company's acquisition of Solidscape, Inc. The acquisition was completed in April of this year and contributed $2.1 million in revenue to the second quarter results. Excluding the contribution made by Solidscape, revenue was $35.5 million, an 18% increase over the same period last year.

System shipments, excluding Solidscape, totaled a record 690 units for the second quarter of 2011, compared to 682 units for the same period last year.

The company reported net income of $4.0 million for second quarter, or $0.18 per share, compared to net income of $2.3 million, or $0.11 per share, for the same period last year.

Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $5.0 million for the second quarter, or $0.23 per share, representing a 95% increase over the non-GAAP net income of $2.6 million, or $0.12 per share, for the same period last year.

Non-GAAP net income for the second quarter of 2011 excludes discrete items associated with the acquisition of Solidscape. These items amounted to $840,000 net of tax, or $0.04 per share. Non-GAAP net income for the second quarter of 2011 also excludes the impact of stock-based compensation expense, which amounted to $212,000 net of tax, or $0.01 per share.

The company reported revenue of $71.9 million for the six-month period ended June 30, 2011, compared to $53.1 million reported for the same period in 2010.

The six-month period in 2010 included a $5.0 million one-time non-cash charge against revenue. The charge against revenue was taken in the first quarter of 2010 and represents the fair value of a warrant issued to HP in connection with the distribution agreement signed in January 2010. Excluding the warrant charge in 2010 and the revenue generated by the company's acquisition of Solidscape in 2011, revenue for the six-month period was $69.8 million, a 20% increase over the $58.1 million for the same period in 2010.

System shipments, excluding Solidscape, totaled 1,257 units for the six-month period in 2011, compared to 1,291 units for the same period last year.

The company reported net income of $9.0 million for the six-month period, or $0.41 per share, compared to net income of $1.9 million, or $0.09 per share, for the same period last year.

Non-GAAP net income, which excludes the warrant charge, discrete items and stock-based compensation expense, was $9.5 million or $0.44 per share for the six-month period of 2011, compared to non-GAAP net income of $5.5 million or $0.26 per share for the same period last year.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of this press release. The table provides itemized detail of the non-GAAP financial measures.

"Our record second quarter results reflect strong growth in Fortus system sales and consumable revenue," said Scott Crump, chairman and chief executive officer of Stratasys. "The growth in these higher margin products, as well as a continued favorable product mix within 3D printing, contributed to significant margin expansion during the period. These factors combined to generate the highest level of quarterly operating profit in our company's history.

"We continue to make incremental progress in expanding our agreement with HP for the sale and distribution of our proprietary 3D printers. We are pleased to report that we have mutually renewed the agreement for another year. In addition, HP plans to expand into new European markets beyond the five countries they currently serve later this year. Stratasys and HP continue to see a significant market opportunity within 3D printing and both parties remain committed to our collaboration.

"The full potential and ultimate success of our collaboration with HP will require sales and marketing programs that go beyond current commitments. Although we currently have no commitments from HP that the collaboration will expand beyond new European markets later this year, we believe HP can become the ideal partner to grow the sales of our 3D printers. Consequently, while we remain committed to the HP collaboration, we also intend to accelerate independent channel development strategies.

"Fortus system sales sustained strong momentum in the second quarter, expanding by 67% over last year. The growing expertise of our team in marketing the direct digital manufacturing, or DDM, capabilities of our Fortus line have been instrumental in this expansion. We believe the recent launch of the Fortus 250mc will add to this strategy with a product that combines the higher functionality of a Fortus 3D production system with the ease-of-use and affordability of a Dimension 3D printer. Initial bookings of the Fortus 250mc have been strong.

"Consumable revenue grew to a record level in the second quarter, increasing by 20% over last year. Our Fortus line is driving this growth, propelled by an expanding base of systems and the product line's relatively higher utilization rates, particularly within DDM. We believe our recent introduction of a revolutionary new FDM material will create new DDM opportunities within the electronics industry. The new material, called ABS-ESD7, eliminates static electricity, which can be potentially damaging during the manufacture of sensitive electronic components. With our new material, manufacturers can now make static-free assembly aids and fabrication tools that improve the performance of their manufacturing processes.

"The acquisition of Solidscape was accretive to earnings for the second quarter after excluding any one-time charges and non-recurring expenses associated with closing the transaction. The acquisition adds to our strategy of expanding into DDM applications, as the subsidiary is well positioned for manufacturing applications serving the custom jewelry market. However, as we further develop the technology, we are more excited about the new opportunities that Solidscape provides within a broader set of industrial applications.

"We were pleased to see our leadership position within the additive manufacturing industry reconfirmed in the recently released Wohlers Report 2011. The report indicated that Stratasys had a 41 percent unit market share in 2010, and has maintained a market leading position for nine consecutive years. We believe our position within the industry will be strengthened over the coming quarters as we execute on our new product roadmap and further develop our channel with HP and our independent reseller network.

"We remain encouraged by the positive trends within our business and we begin the third quarter with an active pipeline of opportunities. In addition to our distribution agreement with HP, we are moving forward on new product and distribution initiatives, which we believe will greatly expand our sales. We are observing attractive growth opportunities on multiple fronts and look forward to a successful year," Crump concluded.

Stratasys plans to hold a conference call to discuss its second quarter financial results on Wednesday, July 27, 2011 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Web site at http://www.stratasys.com under the "Investors" tab; or directly at the following web address: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=61402&eventID=4139319.

To participate by telephone, the domestic dial-in number is 800-659-1966 and the international dial-in is 617-614-2711. The access code is 57483739. 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.

(Financial tables follow)

Stratasys, Inc., Minneapolis, is a maker of additive manufacturing machines for prototyping and producing plastic parts. The company markets under the brands Dimension 3D Printers and Fortus Production 3D Printers. The company also operates RedEye On Demand, a digital manufacturing service for prototypes and production parts. In 2011 Stratasys acquired 3D printer maker, Solidscape, Inc. According to Wohlers Report 2011, Stratasys had a 41 percent unit market share in 2010, and has been the unit market leader for the ninth consecutive year. Stratasys patented and owns the Fused Deposition Modeling (FDM®) process. The process creates functional prototypes and manufactured goods directly from any 3D CAD program, using high-performance industrial thermoplastics. The company holds more than 285 granted or pending additive manufacturing patents globally. Stratasys products are used in the aerospace, defense, automotive, medical, business and industrial equipment, education, architecture, and consumer-product industries. Online at: http://www.Stratasys.com

This release is also available on the Stratasys Web site at http://www.stratasys.com.

Forward Looking Statements

All statements herein that are not historical facts or that include such words as "expects," "anticipates," "projects," "estimates," "vision," "could," "potential," "planning", "intends", "desires" or "believes" or similar words constitute forward-looking statements covered by the safe harbor protection of the Private Securities Litigation Reform Act of 1995. Except for the historical information herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. These include statements regarding projected revenue and income in future quarters; the size of the 3D printing market; our objectives for the marketing and sale of our Dimension® and uPrint® 3D Printers; our support removal systems; and our Fortus® 3D Production Systems, particularly for use in direct digital manufacturing (DDM); the demand for our proprietary consumables; the expansion of our paid parts service; and our beliefs with respect to the growth in the demand for our products. Other risks and uncertainties that may affect our business include our ability to penetrate the 3D printing market; the success of our distribution agreement with HP; our ability to achieve the growth rates experienced in preceding quarters; our ability to introduce, produce and market consumable materials, and the market acceptance of these materials; the impact of competitive products and pricing; our timely development of new products and materials and market acceptance of those products and materials; the success of our recent R&D initiative to expand the DDM capabilities of our core FDM technology; and the success of our RedEyeOnDemandTM and other paid parts services. They also include statements about future financial and operating results of our company after the acquisition of Solidscape and anticipated benefits of the acquisition. Actual results may differ from those expressed or implied in our forward-looking statements. Such forward-looking statements involve and are subject to certain risks and uncertainties, which may cause our actual results to differ materially from those discussed in a forward-looking statement. Such risk factors include our ability to successfully integrate and market Solidscape products, our ability to retain management and our ability to protect and defend intellectual property. These statements represent beliefs and expectations only as of the date they were made. We may elect to update forward-looking statements, but we expressly disclaim any obligation to do so, even if our beliefs and expectations change. In addition to the statements described above, such forward-looking statements are subject to the risks and uncertainties described more fully in our current report on Form 8-K filed in connection with the completion of our acquisition of Solidscape and in our reports filed or to be filed with the Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly reports on Form 10-Q.

Financial Tables & Non-GAAP Discussion

The information discussed within this release includes financial results that are in accordance with accounting principles generally accepted in the United States (GAAP). In addition, certain non-GAAP financial measures have been provided that excludes 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 provided 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 the warrant charge, restructuring expenses, and expenses associated with stock-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 also available on the Stratasys Web site at http://www.stratasys.com.

STRATASYS, INC. AND SUBSIDIARIES
                 
CONSOLIDATED STATEMENTS OF OPERATIONS
                 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

    2011   2010   2011   2010
    (unaudited)   (unaudited)   (unaudited)   (unaudited)
                 
Net sales                
Product   $ 30,428,508     $ 23,797,952     $ 58,265,673     $ 45,559,570  
Services     7,126,422       6,261,544       13,608,346       12,494,051  
Fair value of warrant related to OEM agreement     -       -       -       (4,987,806 )
      37,554,930       30,059,496       71,874,019       53,065,815  
                 
Cost of sales                
Product     14,552,762       12,432,146       27,778,987       23,110,163  
Services     3,266,762       2,865,346       6,109,174       5,773,572  
      17,819,524       15,297,492       33,888,161       28,883,735  
                 
Gross profit     19,735,406       14,762,004       37,985,858       24,182,080  
                 
Operating expenses                
Research and development     3,725,817       2,550,833       7,073,910       4,949,331  
Selling, general and administrative     9,911,342       8,198,063       18,647,573       15,981,782  
      13,637,159       10,748,896       25,721,483       20,931,113  
                 
Operating income     6,098,247       4,013,108       12,264,375       3,250,967  
                 
Other income (expense)                
Interest income, net     215,515       163,690       421,296       378,890  
Foreign currency transaction losses, net     (80,868 )     (438,551 )     (211,983 )     (797,806 )
Other, net     106,454       (24,225 )     1,503,060       (5,985 )
      241,101       (299,086 )     1,712,373       (424,901 )
                 
Income before income taxes     6,339,348       3,714,022       13,976,748       2,826,066  
                 
Income tax expense     2,345,699       1,381,867       4,993,604       937,010  
                 
Net income   $ 3,993,649     $ 2,332,155     $ 8,983,144     $ 1,889,056  
                 
Earnings per common share                
Basic   $ 0.19     $ 0.11     $ 0.43     $ 0.09  
Diluted   $ 0.18     $ 0.11     $ 0.41     $ 0.09  
                 

Weighted average number of common shares outstanding

               
Basic     21,145,458       20,527,571       21,078,045       20,485,059  
Diluted     21,789,520       21,070,029       21,718,985       21,047,241  
 
STRATASYS, INC. AND SUBSIDIARIES
         
CONSOLIDATED BALANCE SHEETS
         
    June 30,   December 31,
    2011   2010
    (unaudited)    
         
ASSETS        
         
Current assets        
Cash and cash equivalents   $ 12,443,248     $ 27,554,411  
Short-term investments - held to maturity     3,107,440       8,797,878  

Accounts receivable, less allowance for doubtful accounts of $1,106,978 at June 30, 2011 and $1,094,588 at December 31, 2010

    23,503,256       20,051,451  
Inventories     21,218,648       17,880,714  

Net investment in sales-type leases, less allowance for doubtful accounts of $180,279 at June 30, 2011 and $189,338 at December 31, 2010

    3,045,514       3,096,911  
Prepaid expenses and other current assets     3,741,131       3,384,394  
Deferred income taxes     3,830,000       3,447,000  
Total current assets     70,889,237       84,212,759  
         
Property and equipment, net     36,126,154       29,872,945  
         
Other assets        
Intangible assets, net     50,829,157       6,405,714  
Net investment in sales-type leases     3,968,791       3,067,446  
Long-term investments - available for sale     1,160,250       1,185,250  
Long-term investments - held to maturity     40,689,904       52,504,650  
Other non-current assets     1,151,520       1,210,867  
Total other assets     97,799,622       64,373,927  
         
Total assets   $ 204,815,013     $ 178,459,631  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Current liabilities        
Accounts payable and other current liabilities   $ 15,367,791     $ 14,408,628  
Unearned revenues     12,369,335       11,561,521  
Total current liabilities     27,737,126       25,970,149  
         
Non-current liabilities        
Deferred tax liabilities     7,519,500       207,000  
         
Total liabilities     35,256,626       26,177,149  
         
Commitments and contingencies        
         
Stockholders' equity        

Common stock, $.01 par value, authorized 30,000,000 shares; 26,848,801 and 26,509,518 issued as of June 30, 2011 and December 31, 2010, respectively

    268,488       265,095  
Additional paid-in capital     115,962,432       107,781,990  
Retained earnings     92,368,628       83,385,484  
Accumulated other comprehensive loss     (36,736 )     (145,662 )

Treasury stock at cost, 5,687,631 shares as of June 30, 2011 and December 31, 2010

    (39,004,425 )     (39,004,425 )
Total stockholders' equity     169,558,387       152,282,482  
         
Total liabilities and stockholders' equity   $ 204,815,013     $ 178,459,631  
 
STRATASYS, INC. AND SUBSIDIARIES
                                         
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
                                         
    Non-GAAP Adjustments for the Three Months Ended June 30, 2011       Non-GAAP Adjustments for the Three Months Ended June 30, 2010    
    Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
  Solidscape
Acquisition (2)
  Solidscape
Inventory
Revaluation (3)
  Consolidated
(unaudited)
Non-GAAP
      Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
  Consolidated
(unaudited)
Non-GAAP
   
                                         
                                         
Net sales   $ 37,554,930   $ -     $ -     $ -     $ 37,554,930         $ 30,059,496     $ -     $ 30,059,496      
                                         
Cost of sales     17,819,524     -       -       (561,094 )     17,258,430           15,297,492       -       15,297,492      
                                         
Gross profit     19,735,406     -       -       561,094       20,296,500           14,762,004       -       14,762,004      
                                         
Selling, general and administrative expenses     9,911,342     (323,598 )     (615,332 )     -       8,972,412           8,198,063       (310,544 )     7,887,519      
                                         
Total operating expenses     13,637,159     (323,598 )     (615,332 )     -       12,698,229           10,748,896       (310,544 )     10,438,352      
                                         
Operating income     6,098,247     323,598       615,332       561,094       7,598,271           4,013,108       310,544       4,323,652      
                                         
Other income (expense)     241,101     -       -       -       241,101           (299,086 )     -       (299,086 )    
                                         
Income before income taxes     6,339,348     323,598       615,332       561,094       7,839,372           3,714,022       310,544       4,024,566      
Income tax expense     2,345,699     111,438       128,812       208,110       2,794,059           1,381,867       48,712       1,430,579      
                                         
Net income   $ 3,993,649   $ 212,160     $ 486,520     $ 352,984     $ 5,045,313         $ 2,332,155     $ 261,832     $ 2,593,987      
                                         
Earnings per common share                                        
Basic   $ 0.19   $ 0.01     $ 0.02     $ 0.02     $ 0.24         $ 0.11     $ 0.01     $ 0.13      
Diluted   $ 0.18   $ 0.01     $ 0.02     $ 0.02     $ 0.23         $ 0.11     $ 0.01     $ 0.12      
                                         

Weighted average number of common shares outstanding

                                       
Basic     21,145,458                 21,145,458           20,527,571           20,527,571      
Diluted     21,789,520                 21,789,520           21,070,029           21,070,029      
                                         
                                         
                                         
    Non-GAAP Adjustments for the Six Months Ended June 30, 2011     Non-GAAP Adjustments for the Six Months Ended June 30, 2010
    Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
  Sale of Equity
Investment (4)
  Solidscape
Acquisition (2)
  Solidscape
Inventory
Revaluation (3)
Consolidated
(unaudited)
Non-GAAP
    Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
  Fair Value
of Warrant (5)
  Consolidated
(unaudited)
Non-GAAP
                                         
                                         
Net sales   $ 71,874,019   $ -     $ -     $ -     $ -   $ 71,874,019     $ 53,065,815     $ -     $ 4,987,806     $ 58,053,621  
                                         
Cost of sales     33,888,161     -       -       -       (561,094 )   33,327,067       28,883,735       -       -       28,883,735  
                                         
Gross profit     37,985,858     -       -       -       561,094     38,546,952       24,182,080       -       4,987,806       29,169,886  
                                         

Selling, general and administrative expenses

    18,647,573     (647,196 )     -       (615,332 )     -     17,385,045       15,981,782       (621,088 )     -       15,360,694  
                                         
Total operating expenses     25,721,483     (647,196 )     -       (615,332 )     -     24,458,955       20,931,113       (621,088 )     -       20,310,025  
                                         
Operating income     12,264,375     647,196       -       615,332       561,094     14,087,997       3,250,967       621,088       4,987,806       8,859,861  
                                         
Other income (expense)     1,712,373     -       (1,204,408 )     -       -     507,965       (424,901 )     -       -       (424,901 )
                                         
Income before income taxes     13,976,748     647,196       (1,204,408 )     615,332       561,094     14,595,962       2,826,066       621,088       4,987,806       8,434,960  
Income tax expense     4,993,604     287,896       (506,655 )     128,812       208,110     5,111,767       937,010       209,120       1,796,510       2,942,640  
                                         
Net income   $ 8,983,144   $ 359,300     $ (697,753 )   $ 486,520     $ 352,984   $ 9,484,195     $ 1,889,056     $ 411,968     $ 3,191,296     $ 5,492,320  
                                         
Earnings per common share                                        
Basic   $ 0.43   $ 0.02     $ (0.03 )   $ 0.02     $ 0.02   $ 0.45     $ 0.09     $ 0.02     $ 0.16     $ 0.27  
Diluted   $ 0.41   $ 0.02     $ (0.03 )   $ 0.02     $ 0.02   $ 0.44     $ 0.09     $ 0.02     $ 0.15     $ 0.26  
                                         

Weighted average number of common shares outstanding

                                       
Basic     21,078,045                   21,078,045       20,485,059               20,485,059  
Diluted     21,718,985                   21,718,985       21,047,241               21,047,241  
                                                     


These adjustments reconcile the Company's GAAP results of operations to its non-GAAP results of operations. The Company believes that presentation of results adjusted for the non-GAAP items described below provides meaningful supplemental information to both management and investors.

(1) - Represents non-cash stock-based compensation expense.

(2) - Represents expenses for the acquisition of Solidscape, Inc. during the second quarter of 2011.

(3) - Represents the revaluation of Solidscape, Inc. inventory at the time of acquistion.

(4) - Represents gain on sale of an equity investment during the first quarter of 2011.

(5) - Represents the fair value of a warrant issued during the first quarter of 2010 in connection with the Hewlett-Packard Company OEM agreement.

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.

SOURCE: Stratasys, Inc.

Stratasys, Inc.
Shane Glenn, 952-294-3416
Director of Investor Relations
shane.glenn@stratasys.com


Close window | Back to top

Copyright 2016 Stratasys