Stratasys Reports Record Second Quarter Financial Results
Company Raises Financial Guidance
MINNEAPOLIS--(BUSINESS WIRE)--
Stratasys, Inc. (Nasdaq:SSYS) today announced record second quarter results.
Revenues rose to $28.2 million for the second quarter ended June 30, 2007 over the $26.7 million reported for the same period in 2006. Revenue from proprietary products and services increased by 22% in the second quarter over the same period last year. Total system shipments increased to a record 564 units for the second quarter of 2007 compared with 527 units for the same period in 2006.
GAAP net income increased 24% to $3.6 million for the second quarter, or $0.34 per share, compared to net income of $2.9 million, or $0.28 per share, for the same period in 2006.
Non-GAAP net income increased 19% to $3.8 million for the second quarter, or $0.35 per share, compared to Non-GAAP net income of $3.2 million, or $0.30 per share, for the same period in 2006. Non-GAAP net income excludes the impact of stock-based compensation expense required under Financial Accounting Standard (SFAS) 123R. This expense, net of tax, amounted to approximately $131,000 or $0.01 per share, for the second quarter of fiscal 2007, and $227,000 or $0.02 per share for the same period in 2006.
Revenues rose 14% to $55.6 million for the six months ended June 30, 2007 over the $48.9 million reported for the same period of the previous year. Revenue from proprietary products and services increased by 29% in the six month period over the same period last year. Total system shipments increased 20% to 1,112 units for the six month period of 2007 compared with 930 units for the same period in 2006.
GAAP net income increased 37% to $6.8 million for the six month period, or $0.64 per share, compared to net income of $5.0 million, or $0.48 per share, for the same period in 2006.
Non-GAAP net income increased 30% to $7.1 million for the six month period, or $0.67 per share, compared to Non-GAAP net income of $5.5 million, or $0.53 per share, for the same period in 2006. Non-GAAP net income excludes the impact of stock-based compensation expense required under Financial Accounting Standard (SFAS) 123R. This expense, net of tax, amounted to approximately $343,000 or $0.03 per share, for the six month period, and $528,000 or $0.05 per share for the same period in 2006.
The reconciliation between non-GAAP and GAAP financial measures is provided in a table at the end of this press release.
"We are pleased with our record second quarter performance, particularly given the strong second quarter comparison we faced from fiscal 2006," said Scott Crump, chairman and chief executive officer of Stratasys. "Our results reflect sustained positive momentum from our growing businesses, but are made more impressive when considering the incremental growth we generated from direct digital manufacturing applications, or the manufacture of end-use parts.
"While 3D printing, paid parts and proprietary consumables all maintained their strong growth trajectory, our proprietary high-end system sales grew by an impressive 40% during the quarter. This growth was driven by an improved focus on proprietary products in North America, but also reflects the recent sale of six FDM Titans to a Fortune 500 company for direct manufacturing applications. It's worth noting that the Titan sale preceded our recent introduction of the FDM 400mc, a system we believe will improve upon our value proposition for direct manufacturing and directly targets these applications.
"Following the successful launch of the Dimension Elite in January, the performance of our 3D printing business continues to exceed our expectations. Demand for the higher-priced and higher-functioning Elite has been strong, which contributed to an increase in average printer prices and improved margins during the quarter. 3D printer sales to educational customers in North America grew by 57 percent during the first six months of 2007, driven in part by initiatives like the Extreme Redesign Contest, which promote our technology among university and high school students.
"Once again, our paid parts business grew impressively, expanding by 40% during the second quarter, and 53% for the first six months, over last year. We continue to maintain high expectations for this business, driven by our customer-friendly part quoting and ordering service, RedEyeRPM.com. We recently added a premium Overnight Build option to our RedEye parts service that gives customers next day shipment on parts ordered by 4 p.m. eastern time. In addition, we added machine capacity to our paid parts business during the quarter to support this growing operation.
"Strong growth in our proprietary consumables business is following our expanding base of installed systems, particularly within 3D printing. Total proprietary consumable sales grew by 23% during the quarter, but expanded by an impressive 42% for our Dimension 3D printers. We expect this trend will continue, and could be augmented by incremental demand from direct manufacturing customers. Given that consumables represent our highest margin product, we are pleased with this trend.
"Looking forward, new product introductions should augment the positive trends in our high-end system business, and we continue to believe the opportunity presented by direct manufacturing could provide a significant incremental growth opportunity. We will continue to capitalize on the proven market for 3D printing. We believe the opportunity could reach 500,000 systems to serve the over 5 million CAD seats worldwide. Regardless of the application, we continue to see strong growth in our high-margin consumables and paid parts businesses.
"We are pleased that our strong performance over the first six months of 2007 has allowed us to increase our financial guidance, and we are looking forward to continued success in 2007," Crump concluded.
Stratasys provided the following information regarding its financial guidance for the fiscal year ending Dec. 31, 2007:
-- Revenue guidance of $107 million to $112 million, versus
previous guidance of $105 million to $110 million.
-- Non-GAAP earnings guidance of $1.40 to $1.50 per share, versus
previous guidance of $1.37 to $1.49 per share, which both
exclude the impact of stock-based compensation required under
SFAS 123R.
-- GAAP earnings guidance of $1.31 to $1.41 per share, versus
previous guidance of $1.28 to $1.40 per share.
The reconciliation between non-GAAP and GAAP financial guidance is provided in a table at the end of this press release.
The company will hold a conference call to discuss second quarter financial results on August 1, 2007 at 8:30 a.m. EDT. To access the call, dial 877-407-0778 (or 201-689-8565 internationally). A recording of the call will be available for two weeks. To access the recording, dial 877-660-6853 (or 201-612-7415 internationally) and enter account 286 and conference I.D. 249231.
A live webcast will be available through the Investors section of the Stratasys Web site (www.stratasys.com). A replay of the webcast will be made available on the Stratasys Web site for 90 days.
(Financial tables follow)
Stratasys Inc., Minneapolis, manufactures office-based rapid prototyping and manufacturing systems and 3D printers and offers rapid prototyping and manufacturing parts services. According to Wohlers Report 2007, Stratasys supplied 41 percent of all systems installed worldwide in 2006, making it the unit market leader, for the fifth consecutive year. Stratasys patented the rapid prototyping process known as fused deposition modeling (FDM). The process creates functional models 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, and consumer product industries. The company's systems are also used for direct digital manufacturing (DDM) and rapid tooling applications. For more information on the company, go to www.Stratasys.com; www.RedEyeRPM.com; or www.DimensionPrinting.com.
Forward Looking Statements
All statements herein that are not historical facts or that include such words as "expects", "anticipates", "projects", "estimates" 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) line, FDM 200mc(TM) , FDM Maxum(TM), FDM Vantage(TM), Titan(TM) and FDM 400mc(TM) product lines; the size of the 3D printing market; our ability to penetrate the 3D printing market; our ability to maintain the growth rates experienced in this and preceding quarters; our ability to introduce and market new materials such as ABS-Plus and ABS-M30; and the market acceptance of this and other materials; the impact of competitive products and pricing; the timely development and acceptance of new products and materials; our ability to effectively and profitably market and distribute the Arcam product line; 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 parts services; and the other risks detailed from time to time in our SEC Reports, including the annual report on Form 10-K for the year ended December 31, 2006 and our quarterly reports which will be filed on Form 10-Q throughout 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 Six Months Ended
June 30, June 30,
------------------------- -------------------------
2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (unaudited)
-------------------------------------------- -------------------------
Net Sales
Product $22,198,715 $21,677,819 $43,888,970 $39,221,145
Services 6,024,779 5,021,466 11,679,384 9,701,235
------------------------- -------------------------
28,223,494 26,699,285 55,568,354 48,922,380
------------------------- -------------------------
Cost of goods sold
Product 9,692,932 10,555,355 19,358,201 19,588,928
Services 2,929,973 2,529,418 5,903,544 4,897,777
------------------------- -------------------------
12,622,905 13,084,773 25,261,745 24,486,705
------------------------- -------------------------
Gross profit 15,600,589 13,614,512 30,306,609 24,435,675
------------------------- -------------------------
Costs and expenses
Research and
development 1,804,574 1,857,945 3,606,635 3,291,521
Selling, general
and
administrative 8,759,067 7,622,261 17,231,915 14,187,153
------------------------- -------------------------
10,563,641 9,480,206 20,838,550 17,478,674
------------------------- -------------------------
Operating income 5,036,948 4,134,306 9,468,059 6,957,001
------------------------- -------------------------
Other income
(expense)
Interest income 610,366 389,683 1,101,659 749,183
Other (85,811) (62,027) (207,287) (181,590)
------------------------- -------------------------
524,555 327,656 894,372 567,593
------------------------- -------------------------
Income before
income taxes 5,561,503 4,461,962 10,362,431 7,524,594
Income taxes 1,927,944 1,525,991 3,571,434 2,573,413
------------------------- -------------------------
Net income $ 3,633,559 $ 2,935,971 $ 6,790,997 $ 4,951,181
========================= =========================
Earnings per
common share
Basic $ 0.35 $ 0.29 $ 0.66 $ 0.49
========================= =========================
Diluted $ 0.34 $ 0.28 $ 0.64 $ 0.48
========================= =========================
Weighted average
number of common
shares
outstanding
Basic 10,371,397 10,161,391 10,284,246 10,142,479
========================= =========================
Diluted 10,808,454 10,463,490 10,670,764 10,390,091
========================= =========================
STRATASYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------------------------
June 30, December 31,
2007 2006
(unaudited)
----------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 14,027,500 $ 12,509,861
Short-term investments 27,675,780 21,367,316
Accounts receivable, less allowance for
returns and doubtful accounts of
$1,905,259 in 2007 and $1,265,837 in
2006 27,547,863 25,035,665
Inventories 11,440,688 9,925,217
Net investment in sales-type leases 3,078,467 2,858,054
Prepaid expenses 3,145,505 3,368,586
Deferred income taxes 426,524 459,000
---------------------------
Total current assets 87,342,327 75,523,699
---------------------------
Property and equipment, net 24,139,190 20,412,719
---------------------------
Other assets
Intangible assets, net 5,426,038 4,868,923
Net investment in sales-type leases 3,490,204 3,271,015
Deferred income taxes 915,000 915,000
Long-term investments 12,883,514 10,747,689
Other 2,417,184 2,265,200
---------------------------
Total other assets 25,131,940 22,067,827
---------------------------
$136,613,457 $118,004,245
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and other current
liabilities $ 11,121,778 $ 10,335,607
Unearned revenues 11,654,389 9,876,719
---------------------------
Total current liabilities 22,776,167 20,212,326
---------------------------
Stockholders' equity
Common stock, $.01 par value, authorized
15,000,000 shares, issued 12,747,475
shares in 2007 and 12,444,880 shares in
2006 127,474 124,449
Capital in excess of par value 84,985,800 75,726,716
Retained earnings 48,751,120 41,960,124
Accumulated other comprehensive loss (124,729) (116,995)
Less cost of treasury stock, 2,300,029
shares in 2007 and 2006 (19,902,375) (19,902,375)
---------------------------
Total stockholders' equity 113,837,290 97,791,919
---------------------------
$136,613,457 $118,004,245
===========================
STRATASYS, INC.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
----------------------------------------------------------------------
Three Months Ended June 30,
---------------------------------------
2007 2007
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments (1) Non-GAAP
----------------------------------------------------------------------
Selling, general and
administrative $ 8,759,067 $(178,949) $ 8,580,118
----------------------------------------
Total operating expenses 10,563,641 (178,949) 10,384,692
Operating income 5,036,948 178,949 5,215,897
----------------------------------------
Income before income taxes 5,561,503 178,949 5,740,452
Income taxes 1,927,944 47,546 1,975,490
Net income $ 3,633,559 $ 131,403 $ 3,764,962
Earnings per common share
Basic $ 0.35 $ 0.01 $ 0.36
========================================
Diluted $ 0.34 $ 0.01 $ 0.35
========================================
Weighted average number of
common shares outstanding
Basic 10,371,397 10,371,397
========================================
Diluted 10,808,454 10,808,454
========================================
Six Months Ended June 30,
---------------------------------------
2007 2007
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments (1) Non-GAAP
----------------------------------------------------------------------
Selling, general and
administrative $17,231,915 $(482,000) $16,749,915
----------------------------------------
Total operating expenses 20,838,550 (482,000) 20,356,550
Operating income 9,468,059 482,000 9,950,059
----------------------------------------
Income before income taxes 10,362,431 482,000 10,844,431
Income taxes 3,571,434 138,688 3,710,122
Net income $ 6,790,997 $ 343,312 $ 7,134,309
Earnings per common share
Basic $ 0.66 $ 0.03 $ 0.69
========================================
Diluted $ 0.64 $ 0.03 $ 0.67
========================================
Weighted average number of
common shares outstanding
Basic 10,284,246 10,284,246
========================================
Diluted 10,670,764 10,670,764
========================================
Three Months Ended June 30,
---------------------------------------
2006 2006
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments (1) Non-GAAP
----------------------------------------------------------------------
Selling, general and
administrative $ 7,622,261 $(284,282) $ 7,337,979
---------------------------------------
Total operating expenses 9,480,206 (284,282) 9,195,924
Operating income 4,134,306 284,282 4,418,588
---------------------------------------
Income before income taxes 4,461,962 284,282 4,746,244
Income taxes 1,525,991 57,356 1,583,347
Net income $ 2,935,971 $ 226,926 $ 3,162,897
Earnings per common share
Basic $ 0.29 $ 0.02 $ 0.31
=======================================
Diluted $ 0.28 $ 0.02 $ 0.30
=======================================
Weighted average number of
common shares outstanding
Basic 10,161,391 10,161,391
=======================================
Diluted 10,463,490 10,463,490
=======================================
Six Months Ended June 30,
---------------------------------------
2006 2006
(unaudited) Non-GAAP (unaudited)
As Reported Adjustments (1) Non-GAAP
----------------------------------------------------------------------
Selling, general and
administrative $14,187,153 $(696,992) $13,490,161
---------------------------------------
Total operating expenses 17,478,674 (696,992) 16,781,682
Operating income 6,957,001 696,992 7,653,993
---------------------------------------
Income before income taxes 7,524,594 696,992 8,221,586
Income taxes 2,573,413 169,310 2,742,723
Net income $ 4,951,181 $ 527,682 $ 5,478,863
Earnings per common share
Basic $ 0.49 $ 0.05 $ 0.54
=======================================
Diluted $ 0.48 $ 0.05 $ 0.53
=======================================
Weighted average number of
common shares outstanding
Basic 10,142,479 10,142,479
=======================================
Diluted 10,390,091 10,390,091
=======================================
(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. The Company adopted the fair-value recognition provisions of SFAS No. 123 revised (123R) to expense stock-based compensation effective January 1, 2006 . Prior to the adoption of SFAS No. 123R, the Company accounted for employee stock-based compensation using the intrinsic value method prescribed by APB No. 25.
STRATASYS, INC.
FISCAL YEAR 2007
RECONCILIATION OF NON-GAAP FORWARD LOOKING GUIDANCE
Earnings Per Diluted Share Range
----------------------------------------------------------------------
U.S. GAAP measure $1.31 to $1.41
Adjustments to exclude the effects of
expenses related to stock-based
compensation under SFAS 123R 0.06 - 0.09
Non-GAAP estimates $1.40 to $1.50
Source: Stratasys, Inc.
Released August 1, 2007