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Stratasys Releases Third Quarter 2019 Financial Results

November 13, 2019 7:30 AM

Third Quarter Revenue of $157.5 million

Third Quarter GAAP net loss of $6.9 million, or ($0.13) per diluted share, and non-GAAP net income of $6.3 million, or $0.12 per diluted share

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)-- Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the third quarter of 2019.

Q3 2019 Financial Results Summary:

Revenue for the third quarter of 2019 was $157.5 million, compared to $162.0 million for the same period last year.

“Our results in the third quarter reflect a continuation of our track record of delivering earnings and profitability, despite challenging global economic conditions that have impacted customer investments in our target verticals in Europe and Asia. In the third quarter we continued to observe strong performance in our core professional and production-focused business in the Americas, our largest market, with specific strength in high-end FDM and PolyJet systems, our F123 Series, and our target verticals of automotive and aerospace,” said Elchanan (Elan) Jaglom, Interim Chief Executive Officer of Stratasys. “We continue to believe that when macro conditions improve we will see a return to growth in Europe and Asia, and believe we are well positioned with an impressive portfolio of new products as we finish 2019.”

Financial Guidance:

Stratasys today updated the following information regarding the Company’s guidance for the fiscal year ending December 31, 2019:

Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on the Company’s non-GAAP net income, the Company believes that the rate of growth in its non-GAAP operating income is the best measure of its performance.

Non-GAAP earnings guidance excludes $23 million to $24 million of projected amortization of intangible assets; $22 million to $24 million of share-based compensation expense; reorganization and other expenses of ($1 million) to $1 million. Non-GAAP guidance includes negative tax adjustments of $2 million to $3 million on the above non-GAAP items.

Stratasys Ltd. Q3 2019 Conference Call Details

The Company plans to hold the conference call to discuss its third quarter financial results on Wednesday, November 13, 2019 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Web site at investors.stratasys.com; or directly at the following web address: https://edge.media-server.com/mmc/p/gt9wb79u.

To participate by telephone, the domestic dial-in number is (866) 394-5776 and the international dial-in is (409) 350-3596. The access code is 9983069.

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 at investors.stratasys.com, or by accessing the provided web address.

Stratasys is a global leader in additive manufacturing or 3D printing technology, and is the manufacturer of FDM® and PolyJet™ 3D Printers. The Company’s technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For 30 years, Stratasys products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. The Stratasys 3D printing ecosystem of solutions and expertise includes: 3D printers, materials, software, expert services, and on-demand parts production. Online at: www.stratasys.com, http://blog.stratasys.com and LinkedIn.

Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys' strategy, and the statements regarding its projected future financial performance, including the financial guidance concerning its expected results for 2019, are forward-looking statements reflecting management's current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys' business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the degree of market acceptance of our 3D printers, high-performance systems and consumables, and the software and technology included in those systems; potential declines in the demand for, or the prices of, our products and services, or volume of our sales, due to decreased demand either for them specifically or in the 3D printing market generally; potential shifts in our overall strategy, including as related to any reorganization activities and our capital expenditures; potential shifts in our product mix to lower-margin products or in our revenues mix towards our AM services business; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; potential failure to successfully consummate acquisitions or investments in new businesses, technologies, products or services; risks related to our relationships with our suppliers, resellers and independent sales agents, and our operations at our manufacturing sites; risks related to the international scope of our operations and regulatory compliance (including reporting, environmental, anti-corruption and other regulatory compliance) related to that scope of operations; risks related to the security of our information systems (including risks related to potential cyber-attacks); changes in the overall global economic environment or in political and economic conditions in the countries in which we operate; changes in our strategy; costs and potential liability relating to litigation and regulatory proceedings; and those additional factors referred to in Item 3.D “Key Information - Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2018 (the “2018 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 7th, 2019. Readers are urged to carefully review and consider the various disclosures made throughout our 2018 Annual Report and the Report of Foreign Private Issuer on Form 6-K that attaches Stratasys’ unaudited, condensed consolidated financial statements as of, and for the quarter and nine months ended, September 30, 2019, and its review of its results of operations and financial condition for that period, which has been furnished to the SEC on or about the date hereof, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are made as of the date hereof, and Stratasys 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.

Use of non-GAAP financial measures

The non-GAAP data included herein, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our Company in gauging our results of operations (x) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, and (y) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of long-lived assets, and the corresponding tax effect of those items. These non-GAAP adjustments either do not reflect actual cash outlays that impact our liquidity and our financial condition or have a non-recurring impact on the statement of operations, as assessed by management. These non-GAAP financial measures are presented to permit investors to more fully understand how management assesses our performance for internal planning and forecasting purposes. The limitations of using these non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all items indicated above during a period, which may not provide a comparable view of our performance to other companies in our industry. Investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table below.

Stratasys Ltd.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)

September 30,
2019

December 31,
2018

ASSETS
Current assets
Cash and cash equivalents

$

347,082

$

393,167

Accounts receivable, net

133,743

138,146

Inventories

164,742

123,524

Prepaid expenses

7,646

6,398

Other current assets

29,765

22,936

Total current assets

682,978

684,171

Non-current assets
Property, plant and equipment, net

187,712

188,150

Goodwill

385,332

385,849

Other intangible assets, net

90,297

107,274

Operating lease right-of-use assets

21,757

-

Other non-current assets

22,977

22,810

Total non-current assets

708,075

704,083

Total assets

$

1,391,053

$

1,388,254

LIABILITIES AND EQUITY
Current liabilities
Accounts payable

$

43,139

$

45,855

Current portion of long term-debt

-

5,143

Accrued expenses and other current liabilities

33,176

39,115

Accrued compensation and related benefits

35,413

31,703

Deferred revenues

53,214

53,965

Operating lease liabilities - short term

9,016

-

Total current liabilities

173,958

175,781

Non-current liabilities
Long-term debt

-

22,000

Deferred revenues - long-term

15,742

18,422

Operating lease liabilities - long term

13,303

-

Other non-current liabilities

32,580

29,084

Total non-current liabilities

61,625

69,506

Total liabilities

235,583

245,287

Redeemable non-controlling interests

700

852

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 54,428 thousands shares and 53,881 thousands shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

148

146

Additional paid-in capital

2,701,974

2,681,048

Accumulated other comprehensive loss

(7,967

)

(7,753

)

Accumulated deficit

(1,539,385

)

(1,531,326

)

Total equity

1,154,770

1,142,115

Total liabilities and equity

$

1,391,053

$

1,388,254

Stratasys Ltd.
Consolidated Statements of Operations
(in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net sales
Products

$

106,346

$

109,647

$

321,778

$

331,967

Services

51,114

52,402

154,145

154,151

157,460

162,049

475,923

486,118

Cost of sales
Products

44,341

48,640

135,605

147,120

Services

35,710

34,481

105,285

100,773

80,051

83,121

240,890

247,893

Gross profit

77,409

78,928

235,033

238,225

Operating expenses
Research and development, net

23,620

25,786

70,234

74,585

Selling, general and administrative

59,741

49,792

173,217

168,684

83,361

75,578

243,451

243,269

Operating profit (loss)

(5,952

)

3,350

(8,418

)

(5,044

)

Financial income (expense), net

289

(39

)

2,796

(114

)

Income (loss) before income taxes

(5,663

)

3,311

(5,622

)

(5,158

)

Income tax expenses

586

304

3,084

1,110

Share in profits (losses) of associated companies

(733

)

(3,752

)

495

(11,185

)

Net income (loss)

(6,982

)

(745

)

(8,211

)

(17,453

)

Net loss attributable to non-controlling interests

(41

)

(66

)

(152

)

(182

)

Net income (loss) attributable to Stratasys Ltd.

$

(6,941

)

$

(679

)

$

(8,059

)

$

(17,271

)

Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic

$

(0.13

)

$

(0.01

)

$

(0.15

)

$

(0.34

)

Diluted

$

(0.13

)

$

(0.01

)

$

(0.15

)

$

(0.34

)

Basic

54,394

53,769

54,201

53,716

Diluted

54,394

53,769

54,201

53,716

Three Months Ended September 30,

2019
GAAP

Non-GAAP
Adjustments

2019
Non-GAAP

2018
GAAP

Non-GAAP
Adjustments

2018
Non-GAAP

U.S. dollars and shares in thousands (except per share amounts)
Gross profit (1)

$

77,409

$

5,087

$

82,496

$

78,928

$

5,545

$

84,473

Operating income (loss) (1,2)

$

(5,952

)

$

14,055

$

8,103

$

3,350

$

4,815

$

8,165

Net income (loss) attributable to Stratasys Ltd. (1,2,3)

$

(6,941

)

$

13,275

$

6,334

$

(679

)

$

6,383

$

5,704

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)

$

(0.13

)

$

0.25

$

0.12

$

(0.01

)

$

0.12

$

0.11

(1)

Acquired intangible assets amortization expense

3,916

5,221

Non-cash stock-based compensation expense

475

351

Reorganization and other related costs

696

(27

)

5,087

5,545

(2)

Acquired intangible assets amortization expense

2,016

2,532

Non-cash stock-based compensation expense

4,960

3,662

Reorganization and other related costs

1,992

-

Merger and acquisition and other expense

-

(6,924

)

8,968

(730

)

14,055

4,815

(3)

Corresponding tax effect

(780

)

(750

)

Gain from equity method divestment and related amortization and impairments

-

2,318

13,275

$

6,383

(4)

Weighted average number of ordinary shares outstanding- Diluted

54,394

54,940

53,769

53,992

Nine Months Ended September 30,

2019
GAAP

Non-GAAP
Adjustments

2019
Non-GAAP

2018
GAAP

Non-GAAP
Adjustments

2018
Non-GAAP

U.S. dollars and shares in thousands (except per share amounts)

Gross profit (1)

$

235,033

$

13,780

$

248,813

$

238,225

$

16,852

$

255,077

Operating income (loss) (1,2)

$

(8,418

)

$

32,376

$

23,958

$

(5,044

)

$

28,750

$

23,706

Net income (loss) attributable to Stratasys Ltd. (1,2,3)

$

(8,059

)

$

28,574

$

20,515

$

(17,271

)

$

33,789

$

16,518

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)

$

(0.15

)

$

0.53

$

0.38

$

(0.34

)

$

0.65

$

0.31

(1)

Acquired intangible assets amortization expense

11,714

15,645

Non-cash stock-based compensation expense

1,370

1,180

Reorganization and other related costs

696

27

13,780

16,852

(2)

Acquired intangible assets amortization expense

5,688

7,629

Non-cash stock-based compensation expense

14,387

10,526

Reorganization and other related costs

(1,479

)

2,230

Merger and acquisition and other expense

-

(6,926

)

Gain from sale of plant and property

-

(1,563

)

18,596

11,898

32,376

28,750

(3)

Corresponding tax effect

(2,198

)

(2,661

)

Gain from equity method divestment, related write-offs and amortization

(1,604

)

7,700

$

28,574

$

33,789

(4)

Weighted average number of ordinary shares outstanding- Diluted

54,201

54,705

53,716

53,820

Stratasys Ltd.
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
Fiscal Year 2019
(in millions, except per share data)
GAAP net loss ($17) to ($3)
Adjustments
Stock-based compensation expense $22 to $24
Intangible assets amortization expense $23 to $24
Reorganization and other related costs ($1) to $1
Tax expense related to Non-GAAP adjustments ($2) to ($3)
Non-GAAP net income $30 to $38
GAAP loss per share ($0.31) to ($0.05)
Non-GAAP diluted earnings per share $0.55 to $0.70

Stratasys Investor Relations

Yonah Lloyd

Vice President - Investor Relations

[email protected]

Source: Stratasys Ltd.

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