Stratasys Releases Second Quarter 2019 Financial Results

Second Quarter Revenue of $163.2 million

Second Quarter GAAP net income of $1.2 million, or $0.02 per diluted share, and non-GAAP net income of $8.5 million, or $0.16 per diluted share

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

Q2 2019 Financial Results Summary:
Revenue for the second quarter of 2019 was $163.2 million, compared to $170.2 million for the same period last year.

  • GAAP gross margin was 49.7% for the quarter, compared to 49.1% for the same period last year.
  • Non-GAAP gross margin was 52.5% for the quarter, with no change compared to the same period last year.
  • GAAP operating income for the quarter was $0.8 million, compared to an operating loss of $1.9 million for the same period last year.
  • Non-GAAP operating income for the quarter was $9.1 million, compared to non-GAAP operating income of $10.6 million for the same period last year.
  • GAAP net income for the quarter was $1.2 million, or $0.02 per diluted share, compared to a net loss of $3.6 million, or ($0.08) per diluted share, for the same period last year.
  • Non-GAAP net income for the quarter was $8.5 million, or $0.16 per diluted share, compared to non-GAAP net income of $8.1 million, or $0.15per diluted share, for the same period last year.
  • The Company used $3.8 million of cash from operations during the second quarter and ended the period with $366.3 million of cash and cash equivalents.

“Our second quarter results reflect continued strong performance in the Americas, where we saw revenue growth across systems, consumables, and services, which was offset mainly by significant economic weakness in Europe that we believe is impacting capital investments and general spending in the automotive and industrial machinery markets in that region, as well as by the adverse impact of foreign exchange rates in Europe and Asia Pacific,” said Elchanan (Elan) Jaglom, Interim Chief Executive Officer of Stratasys. “We believe that we are well positioned to return to growth in Europe when macro conditions improve, and our new products and platforms are launched and adopted in the market. Additionally, despite relatively flat revenue growth after excluding divestments, we are pleased that our emphasis on operational efficiency delivered earnings and profitability while we continue to invest in new products and strengthen our R&D efforts to expand our addressable markets.”

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

  • Revenue guidance of $670 to $700 million.
  • GAAP net loss of $17 to $3million, or ($0.31) to ($0.05) per diluted share, compared to previous guidance of a GAAP net loss of $22 to $12million, or ($0.40) to ($0.22) per diluted share.
  • Non-GAAP net income of $30 to $38 million, or $0.55 to $0.70 per diluted share.
  • Non-GAAP operating margins of 5.5% to 6.5%.
  • Capital expenditures are projected at $30 to $45 compared to previous guidance of $45 to $60 million.

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

“We are excited about the market response to the new products that we have recently launched, and about the several additional product announcements we intend to make later this year and in 2020,” continued Jaglom. “We believe we are well positioned to continue expanding in manufacturing, rapid prototyping, and photo-realism design as well as in our target verticals of aerospace, automotive, healthcare, and dental. Our focus on innovation and select partnerships over the last several years is opening new, incremental opportunities that along with our healthy balance sheet will support our accelerated growth plan beginning in 2020.”

Stratasys Ltd. Q2 2019 Conference Call Details

The Company plans to hold the conference call to discuss its second quarter financial results on Wednesday, July 31, 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/o8gp8wcb.

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 9771494.

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 six months ended, June 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)
June 30, December 31,

2019

2018

 
ASSETS
 
Current assets
Cash and cash equivalents

$

366,327

 

$

393,167

 

Accounts receivable, net

 

131,546

 

 

138,146

 

Inventories

 

147,799

 

 

123,524

 

Prepaid expenses

 

8,117

 

 

6,398

 

Other current assets

 

29,686

 

 

22,936

 

 
Total current assets

 

683,475

 

 

684,171

 

 
Non-current assets
Property, plant and equipment, net

 

189,794

 

 

188,150

 

Goodwill

 

385,803

 

 

385,849

 

Other intangible assets, net

 

96,001

 

 

107,274

 

Operating lease right-of-use assets

 

23,399

 

 

-

 

Other non-current assets

 

18,891

 

 

22,810

 

 
Total non-current assets

 

713,888

 

 

704,083

 

 
Total assets

$

1,397,363

 

$

1,388,254

 

 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable

$

54,662

 

$

45,855

 

Current portion of long term-debt

 

-

 

 

5,143

 

Accrued expenses and other current liabilities

 

29,942

 

 

39,115

 

Accrued compensation and related benefits

 

29,572

 

 

31,703

 

Deferred revenues

 

54,298

 

 

53,965

 

Operating lease liabilities - short term

 

9,106

 

 

-

 

 
Total current liabilities

 

177,580

 

 

175,781

 

 
Non-current liabilities
Long-term debt

 

-

 

 

22,000

 

Deferred revenues - long-term

 

16,652

 

 

18,422

 

Operating lease liabilities - long term

 

14,702

 

 

-

 

Other non-current liabilities

 

31,409

 

 

29,084

 

 
Total non-current liabilities

 

62,763

 

 

69,506

 

 
Total liabilities

 

240,343

 

 

245,287

 

 
Redeemable non-controlling interests

 

742

 

 

852

 

 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 54,344 thousands shares and 53,881 thousands shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively

 

147

 

 

146

 

Additional paid-in capital

 

2,695,622

 

 

2,681,048

 

Accumulated other comprehensive loss

 

(7,047

)

 

(7,753

)

Accumulated deficit

 

(1,532,444

)

 

(1,531,326

)

Total equity

 

1,156,278

 

 

1,142,115

 

 
Total liabilities and equity

$

1,397,363

 

$

1,388,254

 

Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,

2019

2018

2019

2018

 

(unaudited) (unaudited) (unaudited) (unaudited)
Net sales
Products

$

110,341

 

$

118,403

 

$

215,432

 

$

222,320

 

Services

 

52,822

 

 

51,833

 

 

103,031

 

 

101,749

 

 

163,163

 

 

170,236

 

 

318,463

 

 

324,069

 

 
Cost of sales
Products

 

47,095

 

 

53,262

 

 

91,264

 

 

98,480

 

Services

 

34,901

 

 

33,327

 

 

69,575

 

 

66,292

 

 

81,996

 

 

86,589

 

 

160,839

 

 

164,772

 

 
Gross profit

 

81,167

 

 

83,647

 

 

157,624

 

 

159,297

 

 
Operating expenses
Research and development, net

 

24,040

 

 

23,689

 

 

46,614

 

 

48,799

 

Selling, general and administrative

 

56,322

 

 

61,887

 

 

113,476

 

 

118,892

 

 

80,362

 

 

85,576

 

 

160,090

 

 

167,691

 

 
Operating profit (loss)

 

805

 

 

(1,929

)

 

(2,466

)

 

(8,394

)

 
Financial income (expense), net

 

1,755

 

 

(83

)

 

2,508

 

 

(75

)

 
Income (loss) before income taxes

 

2,560

 

 

(2,012

)

 

42

 

 

(8,469

)

 
Income tax expenses

 

1,280

 

 

205

 

 

2,498

 

 

806

 

 
Share in profits (losses) of associated companies

 

(195

)

 

(1,360

)

 

1,228

 

 

(7,433

)

 
Net income (loss)

 

1,085

 

 

(3,577

)

 

(1,228

)

 

(16,708

)

 
Net loss attributable to non-controlling interests

 

(67

)

 

(26

)

 

(110

)

 

(116

)

 
Net income (loss) attributable to Stratasys Ltd.

$

1,152

 

$

(3,551

)

$

(1,118

)

$

(16,592

)

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

$

0.02

 

$

(0.08

)

$

(0.02

)

$

(0.33

)

Diluted

$

0.02

 

$

(0.08

)

$

(0.02

)

$

(0.33

)

 
Basic

 

54,231

 

 

53,722

 

 

54,102

 

 

53,689

 

Diluted

 

54,687

 

 

53,722

 

 

54,102

 

 

53,689

 

Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
Three Months Ended June 30,

2019

Non-GAAP

2019

2018

Non-GAAP

2018

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

$

81,167

$

4,441

 

$

85,608

$

83,647

 

$

5,708

 

$

89,355

Operating income (loss) (1,2)

 

805

 

8,246

 

 

9,051

 

(1,929

)

 

12,548

 

 

10,619

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

 

1,152

 

7,372

 

 

8,524

 

(3,551

)

 

11,643

 

 

8,092

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

$

0.02

$

0.14

 

$

0.16

$

(0.08

)

$

0.23

 

$

0.15

 
 

(1)

Acquired intangible assets amortization expense

 

3,900

 

 

5,220

 

Non-cash stock-based compensation expense

 

541

 

 

442

 

Reorganization and other related costs

 

-

 

 

46

 

 

4,441

 

 

5,708

 

 

(2)

Acquired intangible assets amortization expense

 

1,783

 

 

2,539

 

Non-cash stock-based compensation expense

 

5,552

 

 

3,836

 

Reorganization expenses and other

 

(3,530

)

 

465

 

 

3,805

 

 

6,840

 

 

8,246

 

 

12,548

 

 
 

(3)

Corresponding tax effect

 

(874

)

 

(1,119

)

Amortization of acquired intangibles assets related to equity method investments

 

-

 

 

214

 

$

7,372

 

$

11,643

 

 

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

54,687

 

54,687

 

53,722

 

 

53,745

Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
Six Months Ended June 30,

2019

Non-GAAP

2019

2018

Non-GAAP

2018

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

$

157,624

 

$

8,693

 

$

166,317

$

159,297

 

$

11,307

 

$

170,604

Operating income (loss) (1,2)

 

(2,466

)

 

18,321

 

 

15,855

 

(8,394

)

 

23,935

 

 

15,541

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

 

(1,118

)

 

15,299

 

 

14,181

 

(16,592

)

 

27,406

 

 

10,814

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

$

(0.02

)

$

0.28

 

$

0.26

$

(0.33

)

$

0.53

 

$

0.20

 
 

(1)

Acquired intangible assets amortization expense

 

7,798

 

 

10,424

 

Non-cash stock-based compensation expense

 

895

 

 

829

 

Reorganization and other related costs

 

-

 

 

54

 

 

8,693

 

 

11,307

 

 

(2)

Acquired intangible assets amortization expense

 

3,672

 

 

5,097

 

Non-cash stock-based compensation expense

 

9,427

 

 

6,864

 

Reorganization expenses and other

 

(3,471

)

 

2,230

 

Gain from sale of plant and property

 

-

 

 

(1,563

)

 

9,628

 

 

12,628

 

 

18,321

 

 

23,935

 

 
 

(3)

Corresponding tax effect

 

(1,418

)

 

(1,911

)

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

 

(1,604

)

 

5,382

 

$

15,299

 

$

27,406

 

 

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

54,102

 

 

54,585

 

53,689

 

 

53,732

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

 

Contacts

Stratasys Investor Relations
Yonah Lloyd
Vice President - Investor Relations
Yonah.Lloyd@stratasys.com

Release Summary

STRATASYS RELEASES SECOND QUARTER 2019 FINANCIAL RESULTS

Contacts

Stratasys Investor Relations
Yonah Lloyd
Vice President - Investor Relations
Yonah.Lloyd@stratasys.com