Stratasys Reports Third Quarter Financial Results
Q3 Cash Flow from Operations Totals $8.7 Million
MINNEAPOLIS--(BUSINESS WIRE)-- Stratasys, Inc. (Nasdaq:SSYS) today announced third quarter financial results.
Revenue was $24.3 million for the third quarter ended September 30, 2009 versus $30.6 million reported for the same period in 2008. System shipments totaled 454 units for the third quarter of 2009, versus 497 for the same period last year.
The company reported net income of $1.6 million for the third quarter, or $0.08 per share, compared to net income of $3.7 million, or $0.18 per share, for the same period last year.
Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $1.8 million, or $0.09 per share, for the third quarter of 2009 compared to $4.0 million, or $0.19 per share, for the same period last year.
Stock-based compensation expense was approximately $210,000 net of tax, or $0.01 per share, for the third quarter of 2009, and approximately $238,000 net of tax, or $0.01 per share, for the same period last year.
Cash flow from operations totaled $8.7 million for the third quarter. The company had approximately $60 million in cash and investments as of the end of September 2009.
Revenue was $72.1 million for the nine-month period ended September 30, 2009 versus $92.6 million reported for the same period in 2008. System shipments totaled 1,487 units for the nine-month period of 2009, versus 1,614 for the same period last year.
The company reported net income of $1.7 million for the nine-month period of 2009, or $0.09 per share, compared to net income of $11.6 million, or $0.54 per share, for the same period last year.
Non-GAAP net income, which excludes certain discrete items and stock-based compensation expense, was $2.8 million, or $0.14 per share, for the nine-month period of 2009 compared to $12.7 million, or $0.59 per share, for the same period last year.
The nine-month period of 2009 included a discrete item related to a restructuring expense of approximately $512,000 net of tax, or $0.03 per share. This expense was associated with cost-reduction measures the company implemented during the first quarter of 2009.
The nine-month period of 2008 included a discrete item related to an impairment charge of approximately $288,000 net of tax, or $0.01 per share. This non-operating charge was an adjustment to the fair value of an auction rate security taken in 2008.
Stock-based compensation expense was approximately $569,000 net of tax, or $0.03 per share, for the nine-month period of 2009, and approximately $767,000 net of tax, or $0.04 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 impairment charge and restructuring expense, as well as the stock-based compensation expense used to determine non-GAAP financial measures.
"We are pleased with our third quarter performance when considering the unprecedented economic environment and given the seasonal weakness we generally observe during the summer period," said Scott Crump, chairman and chief executive officer of Stratasys. "We are especially pleased with the strong cash flow from operations of $8.7 million for the third quarter, which stemmed from significant improvements in managing our working capital.
"Fortus system sales were consistent with levels in the second quarter, and we observed relatively strong sales of our higher-priced 3D printers. Although our lower-priced 3D printer, the uPrint, remained our best selling printer in the third quarter, our channel partners were often successful in up-selling to 3D printers with more features and system functionality. This trend contributed to a significant sequential improvement in our margins.
"Our resellers continue to observe a recovery in channel activity as economic conditions improve. We are gaining traction for new direct digital manufacturing applications within Fortus, and we remain on track to broaden our distribution strategy within 3D printing. While we are pleased with the sales mix that favored our higher-priced 3D printers, our top priority remains expanding the distribution of our more affordable 3D printing products. We are making progress in implementing a strategy to meet this goal.
"We believe our results over the past nine months suggest a building of positive momentum. This momentum is a combination of our successful go-to-market strategy combined with the incremental improvements in economic conditions, and prudent cost-reduction measures we implemented over the past year. Once again, we have strengthened our financial position substantially following our third quarter and now maintain almost $60 million in cash and investments.
"We believe our competitive position has improved during the economic downturn, as our financial strength has allowed us to remain committed to our long-term goals and objectives. While the near-term economic outlook remains challenging, we are encouraged by the positive signs within our channel, and are cautiously optimistic as we move into the fourth quarter. Most importantly, we are excited about new programs we hope to initiate over the coming quarters, and we remain confident in our long-term growth opportunities," Crump concluded.
The company will hold a conference call to discuss its third quarter financial results on Thursday, October 29, 2009 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 866-783-2143, and the international dial-in is 857-350-1602. The access code is 36423313. 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 website.
(Financial tables follow)
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 250 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," "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) 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; 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 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 SFAS 123R. 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 September Nine Months Ended September 30,
30,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales
Product $ 18,046,184 $ 23,965,510 $ 53,197,716 $ 73,919,081
Services 6,283,212 6,603,918 18,924,759 18,632,957
24,329,396 30,569,428 72,122,475 92,552,038
Cost of goods
sold
Product 9,918,263 12,048,155 30,883,158 34,512,079
Services 2,542,879 2,706,835 8,225,489 7,553,275
12,461,142 14,754,990 39,108,647 42,065,354
Gross profit 11,868,254 15,814,438 33,013,828 50,486,684
Operating
expenses
Research and 1,983,420 2,100,349 5,510,385 6,841,822
development
Selling,
general and 7,481,311 8,415,988 25,257,138 27,004,811
administrative
9,464,731 10,516,337 30,767,523 33,846,633
Operating 2,403,523 5,298,101 2,246,305 16,640,051
income
Other income
(expense)
Interest 230,429 498,831 754,695 1,646,730
income, net
Foreign
currency (5,930 ) (83,794 ) (169,148 ) (299,620 )
transaction
losses, net
Other (9,021 ) (33,560 ) 16,780 (286,592 )
215,478 381,477 602,327 1,060,518
Income before 2,619,001 5,679,578 2,848,632 17,700,569
income taxes
Income taxes 1,040,201 1,970,011 1,124,191 6,096,378
Net income $ 1,578,800 $ 3,709,567 $ 1,724,441 $ 11,604,191
Earnings per
common share
Basic $ 0.08 $ 0.18 $ 0.09 $ 0.56
Diluted $ 0.08 $ 0.18 $ 0.09 $ 0.54
Weighted
average number
of common
shares
outstanding
Basic 20,229,357 20,616,338 20,224,889 20,829,338
Diluted 20,231,033 21,021,417 20,233,234 21,354,073
STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 34,993,140 $ 27,945,799
Short-term investments - held to maturity 12,207,926 4,835,055
Accounts receivable, less allowance for
doubtful accounts of $1,099,442 and 20,887,758 26,539,733
$1,017,521 in 2009 and 2008, respectively
Inventories 15,388,102 19,889,351
Net investment in sales-type leases, less
allowance for doubtful accounts of $199,709 4,064,467 3,870,472
and $324,642 in 2009 and 2008, respectively
Prepaid expenses and other current assets 2,702,167 2,608,080
Deferred income taxes 2,168,000 2,168,000
Total current assets 92,411,560 87,856,490
Property and equipment, net 26,871,099 29,749,921
Other assets
Intangible assets, net 7,886,767 8,347,200
Net investment in sales-type leases 3,560,840 4,545,977
Long-term investments - available for sale 1,109,250 1,109,250
securities
Long-term investments - held to maturity 11,363,730 13,825,981
Other non-current assets 1,613,154 2,308,214
Total other assets 25,533,741 30,136,622
Total assets $ 144,816,400 $ 147,743,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current $ 8,379,196 $ 11,795,238
liabilities
Unearned revenues 10,242,116 12,765,396
Total current liabilities 18,621,312 24,560,634
Non-current liabilities
Deferred tax liabilities 620,000 620,000
Total non-current liabilities 620,000 620,000
Total liabilities 19,241,312 25,180,634
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value, authorized
30,000,000 shares, issued 25,925,503 shares 259,255 259,096
as of September 30, 2009 and 25,909,603
shares as of December 31, 2008
Capital in excess of par value 92,719,350 91,611,078
Retained earnings 71,624,111 69,899,669
Accumulated other comprehensive loss (23,203 ) (203,019 )
Less cost of treasury stock, 5,687,631 (39,004,425 ) (39,004,425 )
shares in 2009 and 2008
Total stockholders' equity 125,575,088 122,562,399
Total liabilities and stockholders' equity $ 144,816,400 $ 147,743,033
STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
Non-GAAP Adjustments for the Three Months Non-GAAP Adjustments for the Three Months Ended
Ended September 30, 2009 September 30, 2008
Consolidated Stock-Based Consolidated Consolidated Stock-Based Auction Consolidated
(unaudited) Compensation (unaudited) (unaudited) Compensation Rate (unaudited)
As Reported (1) Non-GAAP As Reported (1) Security Non-GAAP
(3)
Selling,
general and $ 7,481,311 $ (238,032 ) $ 7,243,279 $ 8,415,988 $ (321,285 ) $ - $ 8,094,703
administrative
expenses
Total
operating 9,464,731 (238,032 ) 9,226,699 10,516,337 (321,285 ) - 10,195,052
expenses
Operating 2,403,523 238,032 2,641,555 5,298,101 321,285 - 5,619,386
income
Other income (9,021 ) - (9,021 ) (33,560 ) - 50,000 16,440
(loss)
Total other 215,478 - 215,478 381,477 - 50,000 431,477
income
Income before 2,619,001 238,032 2,857,033 5,679,578 321,285 50,000 6,050,863
income taxes
Income taxes 1,040,201 28,000 1,068,201 1,970,011 83,000 19,000 2,072,011
Net income $ 1,578,800 $ 210,032 $ 1,788,832 $ 3,709,567 $ 238,285 $ 31,000 $ 3,978,852
Earnings per
common share
Basic $ 0.08 $ 0.01 $ 0.09 $ 0.18 $ 0.01 $ 0.00 $ 0.19
Diluted $ 0.08 $ 0.01 $ 0.09 $ 0.18 $ 0.01 $ 0.00 $ 0.19
Weighted
average number
of common
shares
outstanding
Basic 20,229,357 20,229,357 20,616,338 20,616,338
Diluted 20,231,033 20,231,033 21,021,417 21,021,417
Non-GAAP Adjustments for the Nine Months Ended Non-GAAP Adjustments for the Nine Months Ended
September 30, 2009 September 30, 2008
Consolidated Stock-Based Consolidated Consolidated Stock-Based Auction Consolidated
(unaudited) Compensation Restructuring (unaudited) (unaudited) Compensation Rate (unaudited)
As Reported (1) (2) Non-GAAP As Reported (1) Security Non-GAAP
(3)
Selling,
general and $ 25,257,138 $ (670,959 ) $ (778,840 ) $ 23,807,339 $ 27,004,811 $ (956,503 ) $ - $ 26,048,308
administrative
expenses
Total
operating 30,767,523 (670,959 ) (778,840 ) 29,317,724 33,846,633 (956,503 ) - 32,890,130
expenses
Operating 2,246,305 670,959 778,840 3,696,104 16,640,051 956,503 - 17,596,554
income
Other income 16,780 - - 16,780 (286,592 ) - 440,000 153,408
(loss)
Total other 602,327 - - 602,327 1,060,518 - 440,000 1,500,518
income
Income before 2,848,632 670,959 778,840 4,298,431 17,700,569 956,503 440,000 19,097,072
income taxes
Income taxes 1,124,191 102,000 266,907 1,493,098 6,096,378 189,218 152,000 6,437,596
Net income $ 1,724,441 $ 568,959 $ 511,933 $ 2,805,333 $ 11,604,191 $ 767,285 $ 288,000 $ 12,659,476
Earnings per
common share
Basic $ 0.09 $ 0.03 $ 0.03 $ 0.14 $ 0.56 $ 0.04 $ 0.01 $ 0.61
Diluted $ 0.09 $ 0.03 $ 0.03 $ 0.14 $ 0.54 $ 0.04 $ 0.01 $ 0.59
Weighted
average number
of common
shares
outstanding
Basic 20,224,889 20,224,889 20,829,338 20,829,338
Diluted 20,233,234 20,233,234 21,354,073 21,354,073
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 severance and other related costs associated with the Company's restructuring in the first quarter of 2009.
(3) - Represents a reduction in the assessed fair value of an auction rate security investment that the Company considered to
be other than temporary.
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 October 29, 2009