Exhibit 99.1

 

 

NEWS RELEASE

 

STRATASYS REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS

 

Company reports $167.6 million in revenue for the third quarter

 

Third quarter non-GAAP net income of $0.7 million, or $0.01 per diluted share; and GAAP net loss of $938.0 million, or ($18.06) per basic share

 

Company provides financial guidance for fourth quarter of 2015

 

Minneapolis & Rehovot, Israel, November 4, 2015 — Stratasys Ltd. (Nasdaq:SSYS), the 3D printing and additive manufacturing solutions company, today announced financial results for the third quarter of 2015.

 

Q3-2015 Financial Results Summary:

 

·                  Revenue for the third quarter of 2015 was $167.6 million, compared to $203.6 million for the same period last year.

·                  GAAP net loss for the third quarter was $938.0 million, or ($18.06) per basic share, compared to GAAP net loss of $31.3 million, or ($0.62) per basic share, for the same period last year.

·                  Non-GAAP net income for the third quarter was $0.7 million, or $0.01 per diluted share, compared to non-GAAP net income of $30.1 million, or $0.58 per diluted share, reported for the same period last year.

·                  The Company invested a net amount of $25.1 million in R&D projects (non-GAAP basis) during the third quarter, representing 15% of revenues.

·                  The Company used $17.9 million in cash for operations during the third quarter, and currently holds approximately $262.4 million in cash and cash equivalents, and short term bank deposits.

·                  Non-GAAP EBITDA for the third quarter amounted to a loss of $1.5 million.

·                  The Company sold 5,467 3D printing and additive manufacturing systems during the third quarter, and has sold a total of 141,395 systems worldwide as of September 30, 2015, on a pro forma combined basis.

 

The Company updated the goodwill impairment analysis of all of its reporting units. On the basis of its preliminary analysis, the Company recognized a non-cash goodwill and other intangible assets impairment expense of $910 million in the third quarter, primarily as a result of changes to the Company’s near-term cash flows projections which reflect, among other things, the increased uncertainty in the 3D printing environment. The impairment expense is subject to

 

 

further adjustments pursuant to conclusion of the preliminary impairment test, which is expected to be completed within the next week and disclosed in the Company’s third quarter financial statements to be filed on Form 6-K.  Finalization of the impairment analysis is expected to occur later in the fourth quarter.

 

“Our third quarter results are a reflection of the difficult global macro-economic environment we have observed throughout the year that is negatively impacting most of our product lines,” said David Reis, chief executive officer of Stratasys. “We believe the current environment is primarily a result of weak investment in capital equipment, which has combined with the negative impact of excess capacity that we believe was created during a period of extraordinary growth for Stratasys, and the overall industry, during 2013 and 2014. Additionally, although we believe that overall penetration in the prototyping market remains low, the segment has matured to an extent that our customers now have a wide selection of technology offerings to evaluate, resulting in lengthened sales cycles. Despite these near-term challenges, we continue to observe significant market potential, and remain confident in our long-term growth prospects.”

 

Business Highlights:

 

·                  Launched a new branding initiative which reinforces Stratasys’ status as the leader within the additive manufacturing and 3D printing market.

·                  Released an in-depth industry survey, conducted through Stratasys Direct Manufacturing, which supports the Company’s longer-term growth opportunities.

·                  Further developed Go-to-Market strategies that focus on providing specialized expertise and tailored 3D printing solutions, including expansion of the Vertical Solutions and Strategic Accounts Management programs.

·                  Progressed in the ongoing reorganization of MakerBot, which include organizational enhancements and initiatives designed to improve operational efficiencies.

·                  Announced plans to showcase the Stratasys additive manufacturing ecosystem at the Formnext 2015 exhibition in Frankfurt, Germany this November.

 

“We are focused on long-term objectives and remain confident we will overcome near-term challenges,” continued Reis. “We will respond to the current market environment by implementing adjustments to our costs and operating structure, while remaining committed to a plan that we believe will help unlock the significant potential within our industry for our innovative solutions. In addition to transforming our brand and go-to-market strategies, we are working on significant advancements for existing platforms, as well as the development of new capabilities and business models. We are positioning our Company for the future, and remain confident of the significant opportunity ahead.”

 

 

2015 Guidance:

 

The Company provided financial guidance for the fourth quarter of 2015 as follows:

 

·                  Total revenue in the range of $160 to $175 million, with non-GAAP net loss in the range of $9 to $3 million, or ($0.17) to ($0.06) per diluted share.

·                  GAAP net loss of $35.3  to $28.3 million, or ($0.68) to ($0.54) per basic share.

·                  Non-GAAP earnings guidance excludes $17 million of projected amortization of intangible assets; $7 to $7.5 million of share-based compensation expense; $2.5 million in non-recurring expenses related to acquisitions; $4 to $5 million in reorganization and other related costs; and includes $5.2 to $5.7 million in tax expenses related to non-GAAP adjustments.

 

The Company is reviewing its long term operating model, and will provide an update when visibility has improved.

 

Stratasys Ltd. Q3-2015 Conference Call Details

 

The Company plans to hold a conference call to discuss its third quarter results on November 4, 2015 at 7:00 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://edge.media-server.com/m/p/svoedx39.

 

To participate by telephone, the domestic dial-in number is 866-270-6057 and the international dial-in is 617-213-8891.The access code is 66906702.

 

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.

 

For more than 25 years, Stratasys Ltd. (NASDAQ:SSYS) has been a defining force and dominant player in 3D printing and additive manufacturing — shaping the way things are made. Headquartered in Minneapolis, Minnesota and Rehovot, Israel, the Company empowers customers across a broad range of vertical markets by enabling new paradigms for design and manufacturing. The Company’s solutions provide customers with unmatched design freedom and manufacturing flexibility — reducing time-to-market and lowering development costs, while improving designs and communications. Stratasys subsidiaries include MakerBot and Solidscape and the Stratasys ecosystem includes 3D printers producing prototypes and parts; a wide range of 3D printing materials; parts on-demand via Stratasys Direct Manufacturing; strategic consulting and professional services; and Thingiverse/GrabCAD communities with 5+ million free design components, printable files. With approximately 3,000 employees and 800 granted or pending additive manufacturing patents, Stratasys has received more than 30

 

 

technology and leadership awards. Visit us online at: www.stratasys.com or http://blog.stratasys.com

 

Stratasys is a registered trademark of Stratasys Ltd. and/or its subsidiaries or affiliates.

 

Stratasys Investor Relations Contacts
Shane Glenn

Vice President — Investor Relations
+1-952-294-3416
shane.glenn@stratasys.com

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are characterized by the use of forward-looking terminology such as “will,” “expects,” “anticipates,” “continues,” “believes,” “should,” “intended,” “projected,” “guidance,” “preliminary,” “future,” “planned,” “committed,”  and other similar words. These forward-looking statements include, but are not limited to, statements relating to the Company’s objectives, plans and strategies, statements of preliminary or projected results of operations or of financial condition and all statements that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. The Company has based these forward-looking statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the Company’s ability to efficiently and successfully integrate the operations of its acquired subsidiaries; the overall global economic environment; the impact of competition and new technologies; general market, political and economic conditions in the countries in which the Company operates; projected capital expenditures and liquidity; changes in the Company’s strategy; government regulations and approvals; changes in customers’ budgeting priorities; litigation and regulatory proceedings; further charges to non-cash goodwill and other intangible assets impairment expenses and those factors referred to under “Risk Factors”, “Information on the Company”, “Operating and Financial Review and Prospects”, and generally in the Company’s annual report on Form 20-F for the year ended December 31, 2014, filed with the U.S. Securities and Exchange Commission (the “SEC”), and in other reports that the Company has filed with or furnished to the SEC from time to time. Readers are urged to carefully review and consider the various disclosures made in the Company’s SEC reports, which are designed to advise investors as to the risks and other factors that may affect its business, financial condition, results of operations and prospects. Any guidance and other forward-looking statements in this press release are made as of the date hereof, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

 

Non-GAAP Discussion Disclosure

 

The information provided within this press release includes financial results and projections that have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition, certain non-GAAP financial measures have been provided, which exclude 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 have been included 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 merger-related expenses, amortization of intangible assets, impairment charges, reorganization and other related costs, one time write off of deferred tax assets, and expenses associated with share-based compensation required under ASC 718. The Company uses these non-GAAP financial measures for evaluating comparable financial performance against prior periods.

 

(Financial tables follow)

 

 

Stratasys Ltd.

 

Consolidated Balance Sheets

 

(in thousands)

 

		September 30,			December 31,
		2015			2014
ASSETS
Current assets
Cash and cash equivalents		$	232,219		$	442,141
Short-term bank deposits		30,208			595
Accounts receivable, net		130,699			150,806
Inventories		140,783			123,385
Net investment in sales-type leases		10,702			8,170
Prepaid expenses		6,895			7,931
Deferred income taxes		30,366			25,697
Other current assets		19,108			37,903
Total current assets		600,980			796,628
Non-current assets
Goodwill		308,549			1,323,502
Other intangible assets, net		459,112			597,903
Property, plant and equipment, net		209,432			157,036
Net investment in sales-type leases - long term		17,769			14,822
Other non-current assets		32,129			9,216
Total non-current assets		1,026,991			2,102,479
Total assets		$	1,627,971		$	2,899,107
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	38,497		$	37,359
Short term debt		—			50,000
Accrued expenses and other current liabilities		42,189			47,760
Accrued compensation and related benefits		36,130			42,332
Obligations in connection with acquisitions		5,949			28,092
Deferred revenues		49,273			45,023
Total current liabilities		172,038			250,566
Non-current liabilities
Obligations in connection with acquisitions - long term		4,784			26,461
Deferred tax liabilities		38,466			55,835
Deferred revenues - long-term		6,908			5,946
Other non-current liabilities		22,350			25,091
Total non-current liabilities		72,508			113,333
Total liabilities		244,546			363,899
Redeemable non-controlling interests		2,472			3,969
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 shares; 52,301 and 50,923 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		141			139
Additional paid-in capital		2,600,286			2,568,149
Accumulated deficit		(1,211,048		)	(33,871		)
Accumulated other comprehensive loss		(8,699		)	(3,647		)
Equity attributable to Stratasys Ltd.		1,380,680			2,530,770
Non-controlling interest		273			469
Total equity		1,380,953			2,531,239
Total liabilities and equity		$	1,627,971		$	2,899,107

 

 

Stratasys Ltd.

 

Consolidated Statements of Operations

 

(in thousands, except per share data)

 

		Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales
Products		$	118,473		$	160,200		$	379,630		$	443,542
Services		49,107			43,410			143,003			89,474
		167,580			203,610			522,633			533,016
Cost of sales
Products		80,796			85,437			246,833			219,853
Services		34,045			30,326			94,065			55,954
		114,841			115,763			340,898			275,807
Gross profit		52,739			87,847			181,735			257,209
Operating expenses
Research and development, net		35,398			23,353			88,142			59,081
Selling, general and administrative		106,512			110,803			306,701			256,349
Goodwill impairment		868,101			—			1,018,501			—
Change in the fair value of obligations in connection with acquisitions		(3,022		)	5,578			(22,958		)	(1,289		)
		1,006,989			139,734			1,390,386			314,141
Operating loss		(954,250		)	(51,887		)	(1,208,651		)	(56,932		)
Financial expense		(3,505		)	(1,384		)	(9,340		)	(2,383		)
Loss before income taxes		(957,755		)	(53,271		)	(1,217,991		)	(59,315		)
Income tax benefit		(19,633		)	(21,919		)	(40,321		)	(31,877		)
Net loss		(938,122		)	(31,352		)	(1,177,670		)	(27,438		)
Net loss attributable to non-controlling interest		(164		)	(24		)	(493		)	(24		)
Net loss attributable to Stratasys Ltd.		$	(937,958	)	$	(31,328	)	$	(1,177,177	)	$	(27,414	)
Net loss per ordinary share attributable to Stratasys Ltd.
Basic		$	(18.06	)	$	(0.62	)	$	(22.92	)	$	(0.55	)
Diluted		(18.06		)	(0.62		)	(22.92		)	(0.55		)
Weighted average ordinary shares outstanding
Basic		51,941			50,490			51,437			49,717
Diluted		51,941			50,490			51,437			49,717

 

 

Stratasys Ltd.

 

Reconciliation of GAAP to Non-GAAP Results of Operations

 

(in thousands, except per share data)

 

		Three Months Ended September 30, 2015									Three Months Ended September 30, 2014
		GAAP						Non-GAAP			GAAP						Non-GAAP
		(unaudited)			Adjustments*			(unaudited)			(unaudited)			Adjustments*			(unaudited)
Net sales
Products		$	118,473		$	—		$	118,473		$	160,200		$	—		$	160,200
Services		49,107			—			49,107			43,410			—			43,410
		167,580			—			167,580			203,610			—			203,610
Cost of sales
Products		80,796			(31,892		)	48,904			85,437			(26,760		)	58,677
Services		34,045			(572		)	33,473			30,326			(4,236		)	26,090
		114,841			(32,464		)	82,377			115,763			(30,996		)	84,767
Gross profit		52,739			32,464			85,203			87,847			30,996			118,843
Operating expenses
Research and development, net		35,398			(10,324		)	25,074			23,353			(4,178		)	19,175
Selling, general and administrative		106,512			(36,400		)	70,112			110,803			(42,936		)	67,867
Goodwill impairment		868,101			(868,101		)	—			—			—			—
Change in the fair value of obligations in connection with acquisitions		(3,022		)	3,022			—			5,578			(5,578		)	—
		1,006,989			(911,803		)	95,186			139,734			(52,692		)	87,042
Operating income (loss)		(954,250		)	944,267			(9,983		)	(51,887		)	83,688			31,801
Financial income (expense)		(3,505		)	2,705			(800		)	(1,384		)	—			(1,384		)
Income (loss) before income taxes		(957,755		)	946,972			(10,783		)	(53,271		)	83,688			30,417
Income taxes (benefit)		(19,633		)	8,350			(11,283		)	(21,919		)	22,269			350
Net income (loss)		(938,122		)	938,622			500			(31,352		)	61,419			30,067
Net loss attributable to non-controlling interest		(164		)	—			(164		)	(24		)	—			(24		)
Net income (loss) attributable to Stratasys Ltd.		$	(937,958	)	$	938,622		$	664		$	(31,328	)	$	61,419		$	30,091
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic		$	(18.06	)				$	0.01		$	(0.62	)				$	0.60
Diluted		(18.06		)				0.01			(0.62		)				0.58
Weighted average ordinary shares outstanding
Basic		51,941						51,941			50,490						50,490
Diluted		51,941						53,108			50,490						52,261

 

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.

 

* Refer to the “Reconciliation of Non-GAAP Adjustments” herein for further information regarding adjustments.

 

 

Stratasys Ltd.

 

Reconciliation of GAAP to Non-GAAP Results of Operations

 

(in thousands, except per share data)

 

		Nine Months Ended September 30, 2015									Nine Months Ended September 30, 2014
		GAAP			Adjustments*			Non-GAAP			GAAP			Adjustments*			Non-GAAP
Net sales
Products		$	379,630		$	—		$	379,630		$	443,542		$	235		$	443,777
Services		143,003			—			143,003			89,474			—			89,474
		522,633			—			522,633			533,016			235			533,251
Cost of sales
Products		246,833			(93,778		)	153,055			219,853			(55,228		)	164,625
Services		94,065			(2,823		)	91,242			55,954			(5,010		)	50,944
		340,898			(96,601		)	244,297			275,807			(60,238		)	215,569
Gross profit		181,735			96,601			278,336			257,209			60,473			317,682
Operating expenses
Research and development, net		88,142			(16,157		)	71,985			59,081			(6,991		)	52,090
Selling, general and administrative		306,701			(93,265		)	213,436			256,349			(74,076		)	182,273
Goodwill impairment		1,018,501			(1,018,501		)	—			—			—			—
Change in the fair value of obligations in connection with acquisitions		(22,958		)	22,958			—			(1,289		)	1,289			—
		1,390,386			(1,104,965		)	285,421			314,141			(79,778		)	234,363
Operating income (loss)		(1,208,651		)	1,201,566			(7,085		)	(56,932		)	140,251			83,319
Financial income (expense)		(9,340		)	2,705			(6,635		)	(2,383		)	—			(2,383		)
Income (loss) before income taxes		(1,217,991		)	1,204,271			(13,720		)	(59,315		)	140,251			80,936
Income taxes (benefit)		(40,321		)	16,444			(23,877		)	(31,877		)	34,153			2,276
Net income (loss)		(1,177,670		)	1,187,827			10,157			(27,438		)	106,098			78,660
Net loss attributable to non-controlling interest		(493		)	—			(493		)	(24		)	—			(24		)
Net income (loss) attributable to Stratasys Ltd.		$	(1,177,177	)	$	1,187,827		$	10,650		$	(27,414	)	$	106,098		$	78,684
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic		$	(22.92	)				$	0.21		$	(0.55	)				$	1.58
Diluted		(22.92		)				0.20			(0.55		)				1.53
Weighted average ordinary shares outstanding
Basic		51,437						51,437			49,717						49,717
Diluted		51,437						52,715			49,717						51,573

 

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.

 

* Refer to the “Reconciliation of Non-GAAP Adjustments” herein for further information regarding adjustments.

 

 

Stratasys Ltd.

 

Reconciliation of Non-GAAP Adjustments

 

(in thousands)

 

		Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Net sales, products
Deferred revenue step-up		$	—		$	—		$	—		$	235
Cost of sales, products
Acquired intangible assets amortization		(12,317		)	(14,328		)	(39,523		)	(41,582		)
Impairment charges		(18,338		)	(11,635		)	(48,120		)	(11,635		)
Non-cash stock-based compensation expense		(372		)	(797		)	(2,833		)	(2,011		)
Reorganization and other related costs		(865		)	—			(3,302		)	—
		(31,892		)	(26,760		)	(93,778		)	(55,228		)
Cost of sales, services
Acquired intangible assets amortization		—			(536		)	—			(537		)
Non-cash stock-based compensation expense		(367		)	(485		)	(1,536		)	(1,217		)
Reorganization and other related costs		(49		)	—			(124		)	—
Merger and acquisition related expense		(156		)	(3,215		)	(1,163		)	(3,256		)
		(572		)	(4,236		)	(2,823		)	(5,010		)
Research and development, net
Non-cash stock-based compensation expense		(985		)	(1,098		)	(4,359		)	(2,921		)
Impairment charges		(7,546		)	(3,000		)	(7,546		)	(3,000		)
Reorganization and other related costs		(728		)	—			(1,345		)	—
Merger and acquisition related expense		(1,065		)	(80		)	(2,907		)	(1,070		)
		(10,324		)	(4,178		)	(16,157		)	(6,991		)
Selling, general and administrative
Acquired intangible assets amortization		(5,832		)	(6,474		)	(17,972		)	(17,344		)
Non-cash stock-based compensation expense		(3,112		)	(5,217		)	(15,432		)	(15,262		)
Merger and acquisition related expense		(9,773		)	(31,245		)	(22,616		)	(41,470		)
Reorganization and other related costs		(106		)	—			(6,245		)	—
Impairment charges		(17,577		)	—			(31,000		)	—
		(36,400		)	(42,936		)	(93,265		)	(74,076		)
Goodwill impairment		(868,101		)	—			(1,018,501		)	—
Change in the fair value of obligations in connection with acquisitions
Change in the fair value of obligations in connection with acquisitions		3,022			(5,578		)	22,958			1,289
Financial expense
Credit facility extinguishment related costs		(2,705		)	—			(2,705		)	—
Income taxes
Tax expense related to non-GAAP adjustments		8,350			22,269			16,444			34,153
Net income		$	938,622		$	61,419		$	1,187,827		$	106,098