Stratasys Reports Fourth Quarter and Full Year Financial Results
Q4 Cash Flow from Operations Exceeds $11 Million
Company Begins 2010 With Record System Backlog
MINNEAPOLIS--(BUSINESS WIRE)-- Stratasys, Inc. (Nasdaq:SSYS) today announced fourth quarter and full year financial results.
Revenue was $26.2 million for the fourth quarter ended December 31, 2009 as compared with $31.9 million reported for the same period in 2008. System shipments totaled 431 units for the fourth quarter of 2009, as compared with 570 for the same period last year.
Net income was $2.4 million for the fourth quarter, or $0.12 per share, compared to net income of $2.0 million, or $0.10 per share, for the same period last year.
Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $2.9 million, or $0.14 per share, for the fourth quarter of 2009 compared to $3.2 million, or $0.16 per share, for the same period last year.
Revenue was $98.4 million for the twelve-month period ended December 31, 2009 versus $124.5 million reported for the same period in 2008. System shipments totaled 1,918 units for the twelve-month period of 2009, versus 2,184 for the same period last year.
Net income was $4.1 million for the twelve-month period of 2009, or $0.20 per share, compared to net income of $13.6 million, or $0.65 per share, for the same period last year.
Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $5.7 million, or $0.28 per share, for the twelve-month period ended December 31, 2009 compared to $16.0 million, or $0.76 per share, for the same period last year.
Cash flow from operations totaled $11.3 million and $25.5 million for the fourth quarter and twelve-month periods in 2009, respectively. The company had $70.9 million in cash and investments as of the end of December 2009.
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 impairment charges, restructuring expenses, as well as the stock-based compensation expenses used to determine non-GAAP financial measures.
"We are pleased with our fourth quarter performance considering the difficult economic environment," said Scott Crump, chairman and chief executive officer of Stratasys. "We observed an improvement in business conditions during the quarter as customers have become more confident in an economic recovery and willing to increase spending. System orders in December were notably strong, leading to a record system backlog of $6.3 million.
"Our margins for the fourth quarter improved over the same quarter last year and sequentially, driven by the relatively strong sales of our high-margin consumables. The growth in consumables during the quarter was significant, given that it represents the first positive sales growth for consumables in twelve months. Our margins also benefited from the cost-saving measures we implemented in early 2009, and our successful initiative to lower the manufacturing cost of our uPrint 3D printers.
"Cash flow continues to be exceptionally strong as we generated over $11 million and over $25 million in cash from operations during the fourth quarter and full year, respectively. This was a significant accomplishment considering the difficult year, but is also a credit to the hard work of our finance and operations teams in better managing our working capital. Our total cash and investment position increased to $71 million as of the end of 2009 as compared with $48 million at the end of 2008.
"We finished 2009 encouraged by the positive trends within our markets and emboldened by our new strategic initiatives - we believe that we are well-positioned coming out of the recession. We believe the growth trend in consumables combined with our record year-end backlog suggest a building of positive momentum. Our indirect distribution model for Fortus systems in North America is beginning to generate positive results, and despite the difficult operating environment in 2009, our margins expanded in the fourth quarter and we strengthened our financial position.
"Throughout 2009 we communicated our goal of significantly expanding our distribution footprint within 3D printing. In a major strategic step to meet that goal, we recently announced a game-changing agreement with HP for the worldwide distribution of Stratasys developed and manufactured 3D printers. We believe the agreement represents a major inflection point in advancing our 3D printing strategy worldwide. In addition, we believe HP's decision is confirmation that a significant market opportunity exists among the millions of designers that are using 3D CAD today.
"HP's proven track record in our market as the established sales leader for 2D design plotters makes them an ideal candidate for collaboration within 3D printing. We can now leverage our industry-leading FDM technology with HP's brand awareness and extensive sales and marketing organization. HP will begin the rollout of an HP-brand 3D printer later this year, and we are on track to begin shipment of those products in the coming months. We believe this agreement will ultimately allow us to realize the full sales potential within 3D printing.
"In evaluating our industry, HP concluded that the Stratasys FDM technology represented the best platform for their 3D printing products. A perfect example of FDM's capabilities was recently showcased by Autodesk, the world's leader in design software, at their annual user conference in December. During the conference, Autodesk unveiled a full-scale turbo-prop aircraft engine model, designed in Autodesk's Inventor software, and produced entirely by using Stratasys FDM technology.
"FDM is the core technology that drives all our products, including our Fortus line of 3D production systems. The highly durable and accurate production-grade plastic part output of our Fortus line provides an ideal solution for a broad range of applications, including direct digital manufacturing (DDM), or the production of finished parts. We are excited that our collaboration with an unnamed Fortune 500 company to develop products targeting DDM applications will be continuing in 2010.
"Although business trends are encouraging as we begin 2010, we will continue to conservatively manage our resources given the difficulty in predicting market conditions over the near-term. However, the economy aside, we believe the current long-term opportunities available to us are the most exciting in our company's history and we look forward to successfully executing our plan over the coming months," Crump concluded.
The company plans to hold a conference call to discuss its fourth quarter financial results on Wednesday, February 17, 2010 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://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=61402&eventID=2718530.
To participate by telephone, the domestic dial-in number is 800-299-0433 and the international dial-in is 617-801-9712. The access code is 22588899. 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 at the provided web address.
The company recently produced a video that provides an overview of the turbo-prop displayed by Autodesk (Nasdaq:ADSK) at their annual user conference in December. That video can be accessed at the following web address: http://www.youtube.com/watch?v=ALA2Gp59_IM&feature=related.
Stratasys, Inc., Minneapolis, manufactures additive fabrication machines for prototyping and manufacturing plastic parts. The company also operates a service for part prototyping and production. According to Wohlers Report 2009, Stratasys supplied 43 percent of all additive fabrication systems installed worldwide in 2008, making it the unit market leader for the seventh consecutive year. Stratasys patented and owns the process known as FDM.(R) The process creates functional prototypes and end-use parts directly from any 3D CAD program, using high-performance industrial thermoplastics. The company holds more than 285 granted or pending additive fabrication patents globally. Stratasys products are used in the aerospace, defense, automotive, medical, business and industrial equipment, education, architecture, and consumer-product industries. Online at: 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" 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(R) and uPrint 3D Printers and our FortusTM 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 new materials, such as ABSplus and ABS-M30, and the market acceptance of these and other 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 our distribution agreement with HP; and the success of our RedEyeOnDemandTM and other paid parts services. Actual results may differ from those expressed or implied in our forward-looking statements. 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 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). Certain prior year balance sheet amounts shown in the financial tables have been reclassified to conform to the current year's presentation. In addition, certain non-GAAP financial measures have been provided that exclude certain charges and expenses. 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 an impairment charge for certain auction rate securities, 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 www.Stratasys.com.
STRATASYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December Twelve Months Ended December
31, 31,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited)
Net sales
Product $ 20,012,834 $ 25,050,071 $ 73,210,550 $ 98,969,152
Services 6,220,923 6,892,902 25,145,682 25,525,859
26,233,757 31,942,973 98,356,232 124,495,011
Cost of sales
Product 10,042,286 13,160,364 40,925,443 47,672,443
Services 2,821,727 2,856,974 11,047,217 10,410,249
12,864,013 16,017,338 51,972,660 58,082,692
Gross profit 13,369,744 15,925,635 46,383,572 66,412,319
Operating
expenses
Research and 2,226,740 2,131,381 7,737,125 8,973,203
development
Selling,
general and 7,565,589 9,837,854 32,822,727 36,842,665
administrative
9,792,329 11,969,235 40,559,852 45,815,868
Operating 3,577,415 3,956,400 5,823,720 20,596,451
income
Other income
(expense)
Interest 235,227 390,527 989,922 2,037,257
income, net
Foreign
currency (63,619 ) (535,142 ) (232,767 ) (834,762 )
transaction
losses, net
Other (415,383 ) (778,868 ) (398,603 ) (1,065,459 )
(243,775 ) (923,483 ) 358,552 137,036
Income before 3,333,640 3,032,917 6,182,272 20,733,487
income taxes
Income taxes 941,810 1,021,623 2,066,001 7,118,000
Net income $ 2,391,830 $ 2,011,294 $ 4,116,271 $ 13,615,487
Earnings per
common share
Basic $ 0.12 $ 0.10 $ 0.20 $ 0.66
Diluted $ 0.12 $ 0.10 $ 0.20 $ 0.65
Weighted
average number
of common
shares
outstanding
Basic 20,268,299 20,221,071 20,235,747 20,676,436
Diluted 20,372,274 20,250,483 20,267,999 21,079,265
STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2009 2008
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 48,315,926 $ 27,945,799
Short-term investments - held to 16,073,718 4,835,055
maturity
Accounts receivable, less allowance
for doubtful
accounts of $903,101 at December 19,249,813 26,539,733
31, 2009
and $1,017,521 at December 31, 2008
Inventories 14,608,014 19,889,351
Net investment in sales-type
leases, less allowance
for doubtful accounts of $222,011 3,618,876 3,870,472
at December 31, 2009
and $324,642 at December 31, 2008
Prepaid expenses and other current 2,247,612 2,608,080
assets
Deferred income taxes 2,277,000 2,168,000
Total current assets 106,390,959 87,856,490
Property and equipment, net 26,326,012 29,749,921
Other assets
Intangible assets, net 7,653,269 8,347,200
Net investment in sales-type leases 3,477,039 4,545,977
Deferred income taxes 688,000 -
Long-term investments - available 1,055,750 1,109,250
for sale
Long-term investments - held to 5,467,318 13,825,981
maturity
Other non-current assets 2,078,165 2,308,214
Total other assets 20,419,541 30,136,622
Total assets $ 153,136,512 $ 147,743,033
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Accounts payable and other current $ 12,874,798 $ 11,795,238
liabilities
Unearned revenues 10,678,427 12,765,396
Total current liabilities 23,553,225 24,560,634
Non-current
liabilities
Deferred tax liabilities - 620,000
Total non-current liabilities - 620,000
Total liabilities 23,553,225 25,180,634
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value,
authorized 30,000,000 shares; 260,533 259,096
26,053,318 and 25,909,603 issued as
of 2009 and 2008, respectively
Capital in excess of par value 94,329,398 91,611,078
Retained earnings 74,015,940 69,899,669
Accumulated other comprehensive (18,159 ) (203,019 )
loss
Less cost of treasury stock, (39,004,425 ) (39,004,425 )
5,687,631 shares in 2009 and 2008
Total stockholders' equity 129,583,287 122,562,399
Total liabilities and stockholders' $ 153,136,512 $ 147,743,033
equity
STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
Non-GAAP Adjustments for the Three Months Ended December Non-GAAP Adjustments for the Three Months Ended December 31, 2008
31, 2009
Consolidated Consolidated Consolidated Consolidated
(unaudited) Stock-Based Investment (unaudited) (unaudited) Stock-Based Investment Sales and (unaudited)
Marketing
As Reported Compensation Impairments Non-GAAP As Reported Compensation Impairments Reorganization Non-GAAP
(1)(2) (3)(5) (1) (5) (6)
Selling,
general and $ 7,565,589 $ (229,896 ) $ - $ 7,335,693 $ 9,837,854 $ (360,682 ) $ - $ (545,417 ) $ 8,931,755
administrative
expenses
Total
operating 9,792,329 (229,896 ) - 9,562,433 11,969,235 (360,682 ) - (545,417 ) 11,063,136
expenses
Operating 3,577,415 229,896 - 3,807,311 3,956,400 360,682 - 545,417 4,862,499
income
Other income (415,383 ) - 444,000 28,617 (778,868 ) - 830,750 - 51,882
(loss)
Total other (243,775 ) - 444,000 200,225 (923,483 ) - 830,750 - (92,733 )
income
Income before 3,333,640 229,896 444,000 4,007,536 3,032,917 360,682 830,750 545,417 4,769,766
income taxes
Income 941,810 (13,052 ) 148,296 1,077,054 1,021,623 20,000 319,000 188,169 1,548,792
taxes
Net $ 2,391,830 $ 242,948 $ 295,704 $ 2,930,482 $ 2,011,294 $ 340,682 $ 511,750 $ 357,248 $ 3,220,974
income
Earnings per
common share
Basic $ 0.12 $ 0.01 $ 0.01 $ 0.14 $ 0.10 $ 0.02 $ 0.03 $ 0.02 $ 0.16
Diluted $ 0.12 $ 0.01 $ 0.01 $ 0.14 $ 0.10 $ 0.02 $ 0.03 $ 0.02 $ 0.16
Weighted
average number
of common
shares
outstanding
Basic 20,268,299 20,268,299 20,221,071 20,221,071
Diluted 20,372,274 20,372,274 20,250,483 20,250,483
Non-GAAP Adjustments for the Twelve Months Ended December 31, 2009 Non-GAAP Adjustments for the Twelve Months Ended December 31, 2008
Consolidated Consolidated Consolidated Consolidated
(unaudited) Stock-Based Investment (unaudited) (unaudited) Stock-Based Investment Sales and Workforce (unaudited)
Marketing
As Reported Compensation Impairments Restructuring Non-GAAP As Reported Compensation Impairments Reorganization Reductions (7) Non-GAAP
(1)(2) (3)(5) (4) (1) (5) (6)
Selling,
general and $ 32,822,727 $ (900,855 ) $ - $ (778,840 ) $ 31,143,032 $ 36,842,665 $ (1,317,185 ) $ - $ (545,417 ) $ (181,416 ) $ 34,798,647
administrative
expenses
Total
operating 40,559,852 (900,855 ) - (778,840 ) 38,880,157 45,815,868 (1,317,185 ) - (545,417 ) (181,416 ) 43,771,850
expenses
Operating 5,823,720 900,855 - 778,840 7,503,415 20,596,451 1,317,185 - 545,417 181,416 22,640,469
income
Other income (398,603 ) - 444,000 - 45,397 (1,065,459 ) - 1,270,750 - - 205,291
(loss)
Total other 358,552 - 444,000 - 802,552 137,036 - 1,270,750 - - 1,407,786
income
Income before 6,182,272 900,855 444,000 778,840 8,305,967 20,733,487 1,317,185 1,270,750 545,417 181,416 24,048,255
income taxes
Income 2,066,001 88,948 148,296 266,907 2,570,152 7,118,000 209,218 488,000 188,169 62,589 8,065,976
taxes
Net $ 4,116,271 $ 811,907 $ 295,704 $ 511,933 $ 5,735,815 $ 13,615,487 $ 1,107,967 $ 782,750 $ 357,248 $ 118,827 $ 15,982,279
income
Earnings per
common share
Basic $ 0.20 $ 0.04 $ 0.01 $ 0.03 $ 0.28 $ 0.66 $ 0.05 $ 0.04 $ 0.02 $ 0.01 $ 0.77
Diluted $ 0.20 $ 0.04 $ 0.01 $ 0.03 $ 0.28 $ 0.65 $ 0.05 $ 0.04 $ 0.02 $ 0.01 $ 0.76
Weighted
average number
of common
shares
outstanding
Basic 20,235,747 20,235,747 20,676,436 20,676,436
Diluted 20,267,999 20,267,999 21,079,265 21,079,265
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) - Income taxes for stock-based compensation expense included a favorable impact from incentive stock options exercised during the fourth quarter of 2009.
(3) - Represents a $350,000 reduction in the assessed fair value of an equity investment that the Company considered to be other than temporary.
(4) - Represents severance and other related costs associated with the Company's restructuring in the first quarter of 2009.
(5) - Represents a reduction in the assessed fair value of an auction rate security investment that the Company considered to be other than temporary.
(6) - Represents reorganization costs associated with the Company's North American sales and marketing operations.
(7) - Represents severance and other related employee costs associated with the Company's workforce reduction in the third quarter of 2008.
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.
Released February 17, 2010