Stratasys Reports Record Third Quarter Financial Results
Operating Profit Increases 30%
MINNEAPOLIS--(BUSINESS WIRE)--
Stratasys, Inc. (Nasdaq:SSYS) today announced record third quarter revenue and earnings.
Revenue rose to $30.6 million for the third quarter ended September 30, 2008 over the $26.5 million reported for the same period in 2007, an increase of 16%. Revenue from proprietary products and services for the third quarter increased by 20% over the same period last year. System shipments totaled 497 units for the third quarter of 2008, versus 521 for the same period last year.
Operating profit increased 30% to $5.3 million for the third quarter, compared to operating profit of $4.1 million for the same period in 2007.
Net income increased 15% to $3.7 million for the third quarter, or $0.18 per share, compared to net income of $3.2 million, or $0.15 per share, for the same period last year. The 2007 results are adjusted to reflect the two-for-one stock split completed in August, 2007.
Stock-based compensation expense required under Financial Accounting Standard (SFAS) 123R was approximately $238,000 net of tax, or $0.01 per share for the third quarter of 2008, and approximately $203,000 net of tax, or $0.01 per share, for the same period last year.
Revenue rose to $92.6 million for the nine-month period ended September 30, 2008 over the $82.0 million reported for the same period last year, an increase of 13%. Revenue from proprietary products and services for the nine-month period increased by 16% over the same period last year. System shipments totaled 1,614 units for the nine-month period, versus 1,633 for the same period last year.
Operating profit increased 23% to $16.6 million for the nine-month period, compared to operating profit of $13.6 million for the same period in 2007.
Net income increased 16% to $11.6 million for the nine-month period, or $0.54 per share, compared to net income of $10.0 million, or $0.47 per share, for the same period last year.
Stock-based compensation expense required under SFAS 123R was approximately $767,000 net of tax, or $0.04 per share for the nine-month period of 2008, and approximately $546,000 net of tax, or $0.03 per share, for the same period in 2007.
"We are very pleased with our third quarter results considering the current global economic environment," said Scott Crump, chairman and chief executive officer of Stratasys. "Our strong third quarter performance was driven by an impressive 68% increase in our proprietary high-end system revenue, which resulted from the positive momentum of our new high-end products. Operating profit in the third quarter grew by 30% over last year, the fastest year-over-year growth since the first quarter of 2007.
"While the growth in our high-end system business may seem to defy conventional expectation given the current economic environment, this performance reflects our successful new product and marketing strategies which target new applications for direct digital manufacturing (DDM). Given that the positive momentum within this business has continued into the first part of the fourth quarter, we remain cautiously optimistic.
"Consumable revenue for the third quarter grew by 20% over last year, a result of our growing installed base of systems. In addition, we believe that our consumable sales are benefiting from the recent growth in our high-end systems, which traditionally operate at significantly higher rates of consumable usage. For example, the FDM 900mc, our largest and fastest high-end system, will annually consume over 10 times the material consumed by the average 3D printer in a year.
"Our paid parts business continued to improve in the third quarter, with quarterly revenue expanding by 22% over last year. The improved performance is attributable to the changes we have made within our sales and marketing activities, as well as to the growth from new opportunities for architectural and direct digital manufacturing applications. We believe this positive momentum will lead to another strong performance for this business in the fourth quarter.
"3D printer system revenue for the third quarter was flat over last year, a continuation of the trend we observed in the second quarter, and reflective of our expectations. The business continues to be negatively impacted by customers that are less inclined to make innovative investments within a weak manufacturing environment. While we expect these trends will continue into the fourth quarter, we believe that our planned initiatives should accelerate 3D printer unit growth in the coming periods.
"While the impact of the current economic crisis is difficult to predict, we are generating positive cash flow from operations and our current expectations and outlook are for a strong finish in 2008. In addition, we are well positioned for economic uncertainty given our strong cash position and no long-term debt.
"Despite a potential downturn in the capital equipment market, our innovative products and services are helping our manufacturing customers to reduce development costs, shorten product release schedules, and provide alternatives to traditional manufacturing processes. We believe these factors will continue to drive strong demand growth for our products, and we remain optimistic about our future," Crump concluded.
Stratasys provided the following information regarding its financial guidance for the fiscal year ending December 31, 2008:
-- Maintaining revenue guidance of $125 million to $130 million.
-- Maintaining non-GAAP earnings guidance, which excludes
stock-based compensation expenses required under SFAS 123R, of
$0.79 to $0.84 per share.
-- Maintaining GAAP earnings guidance of $0.75 to $0.80 per
share.
-- Stock-based compensation expenses required under SFAS 123R are
estimated at $0.04 to $0.05 per share.
Appropriate reconciliations between non-GAAP and GAAP financial measures are provided in a table at the end of this press release.
The Company will hold a conference call to discuss its third quarter financial results on Monday, November 3, 2008 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. To participate by telephone, the domestic dial-in number is 888-680-0890, and the international dial-in is 617-213-4857. The access code is 27205667. Investors are advised to dial into the call at least ten minutes prior to the call to register.
Participants may pre-register for the call at www.theconferencingservice.com/prereg/key.process?key=PR7FXLFVV.
Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection.
The webcast will be available for 90 days on the "Investors" page of the Stratasys website.
Stratasys, Inc., Minneapolis, manufactures office-based rapid prototyping and direct digital manufacturing systems and 3D printers and offers rapid prototyping and manufacturing parts services. According to Wohlers Report 2008, Stratasys supplied 44 percent of all systems installed worldwide in 2007, making it the unit market leader, for the sixth consecutive year. Stratasys developed the rapid prototyping process known as fused deposition modeling (FDM). The process creates functional prototypes and end-use parts directly from any 3D CAD program using ABS plastic, polycarbonate, PPSF, and blends. The company holds over 180 granted or pending rapid prototyping patents globally. Stratasys products are used in the aerospace, defense, automotive, medical, education, electronic, architecture and consumer product industries. For more information on the company, go to www.Stratasys.com; www.DimensionPrinting.com; www.RedEyeRPM.com; www.RedEyeARC.com.
Forward Looking Statements
All statements herein that are not historical facts or that include such words as "expects", "anticipates", "projects", "estimates", "vision", "planning" or "believes" or similar words are forward-looking statements that we deem to be covered by and to qualify for the safe harbor protection covered by the Private Securities Litigation Reform Act of 1995. Our belief that we have the largest part-building service is based on the number of dedicated machines. Except for the historical information herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties; these include the continued market acceptance and growth of our Dimension(TM) 3D printer line and our FDM 200mc(TM), 360mc(TM), 400mc(TM), 900mc(TM), Maxum(TM), Titan(TM), and Vantage(TM) productivity lines; the size of the 3D printing market; our ability to penetrate the 3D printing market; our ability to maintain the growth rates and positive momentum experienced in this and preceding quarters; our ability to introduce, produce and market new materials such as ABS-Plus and ABS-M30; and the market acceptance of these and other materials; the impact of competitive products and pricing; the timely development and acceptance of new products and materials; the success of our recent R&D initiative to expand the direct digital manufacturing capabilities of our core FDM technology; the success of our RedEyeRPM(TM) and other paid parts services; and the other risks detailed from time to time in our SEC Reports, including the quarterly reports to be filed on Form 10-Q throughout 2008; and our annual report on Form 10-K filed for the year ended December 31, 2007.
Non-GAAP Discussion
The information discussed within this release includes financial results and forward-looking financial guidance that are in accordance with U.S. generally accepted accounting principles (GAAP). In addition, certain non-GAAP financial measures and guidance have been included that excludes certain expenses. The non-GAAP financial measures are provided in an effort to give information that investors may deem relevant to the company's operations and comparative performance, primarily the identification and exclusion of expenses associated with stock-based compensation required under SFAS 123R. In addition, 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 www.Stratasys.com.
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2008 2007 2008 2007
(unaudited) (unaudited) (unaudited) (unaudited)
------------------------------- ------------ ------------ ------------
Net sales
Product $23,965,510 $20,690,590 $73,919,081 $64,579,560
Services $ 6,603,918 $ 5,772,882 $18,632,957 $17,452,266
------------ ------------ ------------ ------------
$30,569,428 $26,463,472 $92,552,038 $82,031,826
------------ ------------ ------------ ------------
Cost of goods
sold
Product $12,048,155 $ 9,787,018 $34,512,079 $29,145,219
Services $ 2,706,835 $ 3,187,655 $ 7,553,275 $ 9,091,199
------------ ------------ ------------ ------------
$14,754,990 $12,974,673 $42,065,354 $38,236,418
------------ ------------ ------------ ------------
Gross profit $15,814,438 $13,488,799 $50,486,684 $43,795,408
------------ ------------ ------------ ------------
Operating
expenses
Research and
development $ 2,100,349 $ 1,964,619 $ 6,841,822 $ 5,571,254
Selling,
general and
administrative $ 8,415,988 $ 7,435,325 $27,004,811 $24,667,240
------------ ------------ ------------ ------------
$10,516,337 $ 9,399,944 $33,846,633 $30,238,494
------------ ------------ ------------ ------------
Operating income $ 5,298,101 $ 4,088,855 $16,640,051 $13,556,914
------------ ------------ ------------ ------------
Other income
(expense)
Interest
income, net $ 498,831 $ 629,074 $ 1,646,730 $ 1,730,733
Foreign
currency
transaction
losses $ (83,794) $ (101,250) $ (299,620) $ (346,518)
Other $ (33,560) $ (2,651) $ (286,592) $ 35,330
------------ ------------ ------------ ------------
$ 381,477 $ 525,173 $ 1,060,518 $ 1,419,545
------------ ------------ ------------ ------------
Income before
income taxes $ 5,679,578 $ 4,614,028 $17,700,569 $14,976,459
Income taxes $ 1,970,011 $ 1,377,038 $ 6,096,378 $ 4,948,472
------------ ------------ ------------ ------------
Net income $ 3,709,567 $ 3,236,990 $11,604,191 $10,027,987
------------ ------------ ------------ ------------
Earnings per
common share
Basic $ 0.18 $ 0.15 $ 0.56 $ 0.48
------------ ------------ ------------ ------------
Diluted $ 0.18 $ 0.15 $ 0.54 $ 0.47
------------ ------------ ------------ ------------
Weighted average
number of common
shares
outstanding
Basic 20,616,338 20,939,735 20,829,338 20,693,597
------------ ------------ ------------ ------------
Diluted 21,021,417 21,813,829 21,354,073 21,519,903
------------ ------------ ------------ ------------
STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
September 30, December 31,
2008 2007
(unaudited)
----------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 16,914,916 $ 16,211,771
Short-term investments $ 6,058,366 $ 27,257,592
Accounts receivable, less allowance for
returns and doubtful accounts of
$1,259,973 in 2008 and $1,205,621 in
2007 $ 31,493,285 $ 26,307,053
Inventories, net $ 19,770,800 $ 12,771,235
Net investment in sales-type leases $ 5,417,846 $ 3,256,953
Prepaid expenses $ 2,801,944 $ 2,507,316
Deferred income taxes $ 711,000 $ 711,000
------------- -------------
Total current assets $ 83,168,157 $ 89,022,920
------------- -------------
Property and equipment, net $ 29,154,778 $ 26,577,362
------------- -------------
Other assets
Intangible assets, net $ 8,411,960 $ 8,063,319
Net investment in sales-type leases $ 2,609,972 $ 4,101,682
Deferred income taxes $ 786,000 $ 719,000
Long-term investments - available for
sale securities $ 1,940,000 $ -
Long-term investments $ 17,444,352 $ 17,965,489
Other $ 1,623,873 $ 2,307,250
------------- -------------
Total other assets $ 32,816,157 $ 33,156,740
------------- -------------
$145,139,092 $148,757,022
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current
liabilities $ 12,834,173 $ 13,959,022
Unearned revenues $ 12,093,827 $ 10,964,471
------------- -------------
Total current liabilities $ 24,928,000 $ 24,923,493
------------- -------------
Stockholders' equity
Common stock, $.01 par value, authorized
30,000,000 shares, issued 25,906,026
shares in 2008 and 25,610,654 shares in
2007 $ 259,060 $ 256,108
Capital in excess of par value $ 91,232,771 $ 87,023,541
Retained earnings $ 67,888,374 $ 56,284,182
Accumulated other comprehensive loss $ (164,688) $ 172,073
Less cost of treasury stock, 5,687,631
shares in 2008 and 4,600,056 shares in
2007 $(39,004,425) $(19,902,375)
Total stockholders' equity $120,211,092 $123,833,529
------------- -------------
$145,139,092 $148,757,022
------------- -------------
STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
----------------------------------------------------------------------
Three Months Ended September 30,
-----------------------------------
2008 2008
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments Non-GAAP
(1)
----------------------------------------------------------------------
Selling, general and
administrative expenses $ 8,415,988 $(321,285) $ 8,094,703
-----------------------------------
Total operating expenses 10,516,337 (321,285) 10,195,052
-----------------------------------
Operating income 5,298,101 321,285 5,619,386
-----------------------------------
Income before income taxes 5,679,578 321,285 6,000,863
Income taxes 1,970,011 83,000 2,053,011
-----------------------------------
Net income $ 3,709,567 $ 238,285 $ 3,947,852
Earnings per common share
Basic $ 0.18 $ 0.01 $ 0.19
-----------------------------------
Diluted $ 0.18 $ 0.01 $ 0.19
-----------------------------------
Weighted average number of common
shares outstanding
Basic 20,616,338 20,616,338
-----------------------------------
Diluted 21,021,417 21,021,417
-----------------------------------
Nine Months Ended September 30,
-----------------------------------
2008 2008
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments Non-GAAP
(1)
----------------------------------------------------------------------
Selling, general and
administrative $27,004,811 $(956,503) $26,048,308
-----------------------------------
Total operating expenses $33,846,633 $(956,503) $32,890,130
-----------------------------------
Operating income $16,640,051 $ 956,503 $17,596,554
-----------------------------------
Income before income taxes $17,700,569 $ 956,503 $18,657,072
Income taxes $ 6,096,378 $ 189,218 $ 6,285,596
-----------------------------------
Net income $11,604,191 $ 767,285 $12,371,476
Earnings per common share
Basic $ 0.56 $ 0.04 $ 0.60
-----------------------------------
Diluted $ 0.54 $ 0.04 $ 0.58
-----------------------------------
Weighted average number of common
shares outstanding
Basic 20,829,338 20,829,338
-----------------------------------
Diluted 21,354,073 21,354,073
-----------------------------------
Three Months Ended September 30,
-----------------------------------
2007 2007
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments Non-GAAP
(1)
----------------------------------------------------------------------
Selling, general and
administrative expenses $ 7,435,325 $(241,000) $ 7,194,325
------------------------------------
Total operating expenses 9,399,944 (241,000) 9,158,944
------------------------------------
Operating income 4,088,855 241,000 4,329,855
------------------------------------
Income before income taxes 4,614,028 241,000 4,855,028
Income taxes 1,377,038 38,124 1,415,162
------------------------------------
Net income $ 3,236,990 $ 202,876 $ 3,439,866
Earnings per common share
Basic $ 0.15 $ 0.01 $ 0.16
------------------------------------
Diluted $ 0.15 $ 0.01 $ 0.16
------------------------------------
Weighted average number of common
shares outstanding
Basic 20,939,735 20,939,735
------------------------------------
Diluted 21,813,829 21,813,829
------------------------------------
Nine Months Ended September 30,
-----------------------------------
2007 2007
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments Non-GAAP
(1)
----------------------------------------------------------------------
Selling, general and
administrative $24,667,240 $(723,000) $23,944,240
------------------------------------
Total operating expenses $30,238,494 $(723,000) $29,515,494
------------------------------------
Operating income $13,556,914 $ 723,000 $14,279,914
------------------------------------
Income before income taxes $14,976,459 $ 723,000 $15,699,459
Income taxes $ 4,948,472 $ 176,812 $ 5,125,284
------------------------------------
Net income $10,027,987 $ 546,188 $10,574,175
Earnings per common share
Basic $ 0.48 $ 0.03 $ 0.51
------------------------------------
Diluted $ 0.47 $ 0.03 $ 0.50
------------------------------------
Weighted average number of common
shares outstanding
Basic 20,693,597 20,693,597
------------------------------------
Diluted 21,519,903 21,519,903
------------------------------------
(1) These adjustments reconcile the Company's GAAP results of
operations to its non-GAAP results of operations. The Company
believes that presentation of results excluding non-cash stock-based
compensation provides meaningful supplemental information to both
management and investors that is indicative of the Company's core
operating results and facilitates 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. These non-GAAP measures should
not be viewed as a substitute for the Company's GAAP results.
STRATASYS, INC.
FISCAL YEAR 2008
RECONCILIATION OF NON-GAAP FORWARD LOOKING GUIDANCE
Earnings Per Diluted Share Range
----------------------------------------------------------------------
U.S. GAAP measure $0.75 to $0.80
Adjustments to exclude the effects of
expenses related to stock-based
compensation under SFAS 123R $0.04 - $0.05
Non-GAAP estimates $0.79 to $0.84
Source: Stratasys, Inc.
Released November 3, 2008