Stratasys Releases Fourth Quarter and Full Year 2019 Financial Results

Fourth Quarter Revenue of $160.2 million and $636.1 million for full year 2019

Fourth Quarter GAAP net loss of $2.8 million, or $0.05 per diluted share, and non-GAAP net income of $10.0 million, or $0.18 per diluted share

Company releases full year 2020 earnings guidance

MINNEAPOLIS & REHOVOT, Israel--()--Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the fourth quarter and full year 2019.

Q4 2019 Financial Results Summary:
Revenue for the fourth quarter of 2019 was $160.2 million, compared to $177.1 million for the same period last year.

  • GAAP gross margin was 49.1% for the quarter, flat compared to the same period last year.
  • Non-GAAP gross margin was 52.4% for the quarter, compared to 52.2% for the same period last year.
  • GAAP operating loss for the quarter was $3.3 million, compared to an operating loss of $3.8 million for the same period last year.
  • Non-GAAP operating income for the quarter was $10.2 million, compared to non-GAAP operating income of $12.8 million for the same period last year.
  • Non-GAAP EBITDA was $15.8 million for the quarter, compared to $20.1 million for the same period last year.
  • GAAP net loss for the quarter was $2.8 million, or ($0.05) per diluted share, compared to a net income of $6.3 million, or $0.12 per diluted share, for the same period last year.
  • Non-GAAP net income for the quarter was $10.0 million, or $0.18 per diluted share, compared to net income of $11.3 million, or $0.21 per diluted share, for the same period last year.
  • The Company used $3.4 million of cash from operations during the fourth quarter and ended the period with $321.8 million in cash, cash equivalents and short-term deposits.

“Since joining Stratasys I have taken the opportunity to begin an in-depth review of the business and am already impressed by the deep level of knowledge, professionalism, and dedication exhibited at all levels of the organization. I strongly believe in the solid foundation for growth that has been created at Stratasys, including an innovative and expanding product portfolio, disciplined financial management, and the industry’s leading distribution partners,” said Yoav Zeif, Chief Executive Officer of Stratasys. “Starting in the back half of this year we expect to introduce our next phase of growth with a notable step-change in our portfolio as we begin to launch a series of new products for both manufacturing and design prototyping solutions. I am extremely optimistic regarding the outlook of the business, and I believe that there is tremendous potential to drive significant near-term and long-term value for all of our stakeholders.”

Fiscal 2019 Financial Results Summary:

  • Revenue for fiscal 2019 was $636.1 million compared to $663.2 million for fiscal 2018.
  • GAAP operating loss for fiscal 2019 was $11.7 million, compared to a loss of $8.8 million for fiscal 2018.
  • Non-GAAP operating income for fiscal 2019 was $34.1 million, compared to $36.5 million for fiscal 2018.
  • GAAP net loss for fiscal 2019 was $10.8 million, or ($0.20) per diluted share, compared to a loss of $11.0 million, or ($0.22) per diluted share, for fiscal 2018.
  • Non-GAAP net income for fiscal 2019 was $30.5 million, or $0.56 per diluted share, compared to non-GAAP net income of $27.8 million, or $0.52 per diluted share, for fiscal 2018.
  • The Company used $11.2 million in cash from operations in fiscal 2019.

Financial Guidance:
Stratasys today issued the following information regarding the Company’s guidance for the fiscal year ending December 31, 2020:

  • Revenue guidance of $620 million to $680 million.
  • GAAP net loss of $30 million to $18 million, or ($0.54) to ($0.33) per diluted share.
  • Non-GAAP net income of $25 million to $34 million, or $0.45 to $0.60 per diluted share.
  • Non-GAAP operating margins of 5% to 6.5%.
  • Capital expenditures are projected at $40 million 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 $25 million to $26 million of projected amortization of intangible assets; $26 million to $28 million of share-based compensation expense; reorganization and other expenses of ($3 million) to $4 million. Non-GAAP guidance includes tax adjustments of $3 million to $4 million on the above non-GAAP items.

Stratasys Ltd. Q4 2019 Conference Call Details

The Company plans to hold the conference call to discuss its fourth quarter and full year 2019 financial results on Wednesday, February 26, 2020 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/fkuz2uod.

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 3394546.

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®, PolyJet™ and stereolithography 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, strategic consulting and professional services, and paid parts production. Online at: http://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 2020, 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 our success at introducing new or improved products and solutions that gain market share; the degree of growth of the 3D printing market generally; the impact of potential shifts in the prices or margins of the products that we sell or services that we provide, including due to a shift towards lower-margin products or services; 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; to the extent of our success at successfully consummating acquisitions or investments in new businesses, technologies, products or services; potential changes in our management and board of directors; global market, political and economic conditions, and in the countries in which we operate in particular (including risks related to the impact of coronavirus on our supply chain and business); costs and potential liability relating to litigation and regulatory proceedings; risks related to infringement of our intellectual property rights by others or infringement of others' intellectual property rights by us; the extent of our success at maintaining our liquidity and financing our operations and capital needs; the impact of tax regulations on our results of operations and financial condition; 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, 2019 (the “2019 Annual Report”), which we expect to file with the Securities and Exchange Commission (the “SEC”) on February 26, 2020. Readers are urged to carefully review and consider the various disclosures made throughout our 2019 Annual Report and the Reports of Foreign Private Issuer on Form 6-K that attach Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly periods throughout 2020, which will be furnished to the SEC throughout 2020, 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)  

December 31,

 

December 31,

2019

 

2018

   
ASSETS  
   
Current assets  
Cash and cash equivalents

$

293,484

 

 

$

393,167

 

Short-term deposits

$

28,300

 

 

 

-

 

Accounts receivable, net

 

132,558

 

 

 

138,146

 

Inventories

 

168,504

 

 

 

123,524

 

Prepaid expenses

 

6,567

 

 

 

6,398

 

Other current assets

 

29,659

 

 

 

22,936

 

   
Total current assets

 

659,072

 

 

 

684,171

 

   
Non-current assets  
Property, plant and equipment, net

 

189,706

 

 

 

188,150

 

Goodwill

 

385,658

 

 

 

385,849

 

Other intangible assets, net

 

87,328

 

 

 

107,274

 

Operating lease right-of-use assets

 

20,936

 

 

 

-

 

Other non-current assets

 

38,819

 

 

 

22,810

 

   
Total non-current assets

 

722,447

 

 

 

704,083

 

   
Total assets

$

1,381,519

 

 

$

1,388,254

 

   
LIABILITIES AND EQUITY  
   
Current liabilities  
Accounts payable

$

35,818

 

 

$

45,855

 

Current portion of long term-debt

 

-

 

 

 

5,143

 

Accrued expenses and other current liabilities

 

28,528

 

 

 

39,115

 

Accrued compensation and related benefits

 

34,013

 

 

 

31,703

 

Deferred revenues

 

52,268

 

 

 

53,965

 

Operating lease liabilities - short term

 

9,292

 

 

 

-

 

   
Total current liabilities

 

159,919

 

 

 

175,781

 

   
Non-current liabilities  
Long-term debt

 

-

 

 

 

22,000

 

Deferred revenues - long-term

 

16,039

 

 

 

18,422

 

Operating lease liabilities - long term

 

12,445

 

 

 

-

 

Other non-current liabilities

 

35,343

 

 

 

29,084

 

   
Total non-current liabilities

 

63,827

 

 

 

69,506

 

   
Total liabilities

 

223,746

 

 

 

245,287

 

   
Redeemable non-controlling interests

 

622

 

 

 

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

 

150

 

 

 

146

 

Additional paid-in capital

 

2,706,892

 

 

 

2,681,048

 

Accumulated other comprehensive loss

 

(7,716

)

 

 

(7,753

)

Accumulated deficit

 

(1,542,175

)

 

 

(1,531,326

)

Total equity

 

1,157,151

 

 

 

1,142,115

 

   
Total liabilities and equity

$

1,381,519

 

 

$

1,388,254

 

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

Three Months Ended December 31,

 

Twelve Months Ended December 31,

2019

 

2018

 

2019

 

2018

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Net sales
Products

$

108,968

 

$

124,537

 

$

430,746

 

$

456,504

 

Services

 

51,189

 

 

52,582

 

 

205,334

 

 

206,733

 

 

160,157

 

 

177,119

 

 

636,080

 

 

663,237

 

 
Cost of sales
Products

 

46,825

 

 

56,502

 

 

182,430

 

 

203,622

 

Services

 

34,673

 

 

33,618

 

 

139,958

 

 

134,391

 

 

81,498

 

 

90,120

 

 

322,388

 

 

338,013

 

 
Gross profit

 

78,659

 

 

86,999

 

 

313,692

 

 

325,224

 

 
Operating expenses
Research and development, net

 

24,019

 

 

24,379

 

 

94,253

 

 

98,964

 

Selling, general and administrative

 

57,921

 

 

66,423

 

 

231,138

 

 

235,107

 

 

81,940

 

 

90,802

 

 

325,391

 

 

334,071

 

 
Operating profit (loss)

 

(3,281

)

 

(3,803

)

 

(11,699

)

 

(8,847

)

 
Financial income (expense), net

 

1,760

 

 

747

 

 

4,555

 

 

633

 

 
Income (loss) before income taxes

 

(1,521

)

 

(3,056

)

 

(7,144

)

 

(8,214

)

 
Income tax expenses

 

439

 

 

3,626

 

 

3,523

 

 

4,736

 

 
Share in profits (losses) of associated companies

 

(907

)

 

12,910

 

 

(412

)

 

1,725

 

 
Net income (loss)

 

(2,867

)

 

6,228

 

 

(11,079

)

 

(11,225

)

 
Net loss attributable to non-controlling interests

 

(78

)

 

(79

)

 

(230

)

 

(261

)

 
Net income (loss) attributable to Stratasys Ltd.

$

(2,789

)

$

6,307

 

$

(10,849

)

$

(10,964

)

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

$

(0.05

)

$

0.12

 

$

(0.20

)

$

(0.22

)

Diluted

$

(0.05

)

 

0.12

 

$

(0.20

)

 

(0.22

)

 
 
Basic

 

54,435

 

 

53,854

 

 

54,260

 

 

53,751

 

Diluted

 

54,435

 

 

54,132

 

 

54,260

 

 

53,751

 

   

Three Months Ended December 31,

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)

$

78,659

 

$

5,294

 

$

83,953

 

$

86,999

 

$

5,499

 

$

92,498

Operating income (loss) (1,2)

$

(3,281

)

$

13,436

 

$

10,155

 

$

(3,803

)

$

16,574

 

$

12,771

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

$

(2,789

)

$

12,741

 

$

9,952

 

$

6,307

 

$

4,993

 

$

11,300

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

$

(0.05

)

$

0.23

 

$

0.18

 

$

0.12

 

$

0.09

 

$

0.21

   
   

(1)

Acquired intangible assets amortization expense

 

4,770

 

 

 

5,221

 

Non-cash stock-based compensation expense

 

478

 

 

 

294

 

Reorganization and other related costs

 

46

 

 

 

(16

)

 

5,294

 

 

 

5,499

 

   

(2)

Acquired intangible assets amortization expense

 

2,985

 

 

 

2,532

 

Non-cash stock-based compensation expense

 

4,325

 

 

 

3,686

 

Impairment charges of intangible assets and other long-lived assets

 

-

 

 

 

4,797

 

Reorganization and other related costs

 

556

 

 

 

60

 

Merger and acquisition and other expense

 

276

 

 

 

-

 

 

8,142

 

 

 

11,075

 

 

13,436

 

 

 

16,574

 

   

(3)

Corresponding tax effect

 

(721

)

 

 

1,853

 

Gain from equity method divestment and related amortization and impairments

 

26

 

 

 

(13,434

)

 

12,741

 

 

$

4,993

 

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

54,435

 

 

54,738

 

 

54,132

 

 

54,132

Twelve Months Ended December 31,

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)

$

313,692

 

$

19,074

 

$

332,766

 

$

325,224

 

$

22,351

 

$

347,575

Operating income (loss) (1,2)

$

(11,699

)

$

45,812

 

$

34,113

 

$

(8,847

)

$

45,324

 

$

36,477

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

$

(10,849

)

$

41,315

 

$

30,466

 

$

(10,964

)

$

38,782

 

$

27,818

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

$

(0.20

)

$

0.76

 

$

0.56

 

$

(0.22

)

$

0.74

 

$

0.52

   
   

(1)

Acquired intangible assets amortization expense

 

16,484

 

 

 

20,866

 

Non-cash stock-based compensation expense

 

1,848

 

 

 

1,474

 

Reorganization and other related costs

 

742

 

 

 

11

 

 

19,074

 

 

 

22,351

 

   

(2)

Acquired intangible assets amortization expense

 

8,673

 

 

 

10,161

 

Impairment charges of intangible assets and other long-lived assets

 

-

 

 

 

4,797

 

Non-cash stock-based compensation expense

 

18,712

 

 

 

14,212

 

Gain from divestiture, net of transaction costs

 

(3,578

)

 

 

(7,016

)

Reorganization and other related costs

 

2,655

 

 

 

691

 

Merger and acquisition and other expense

 

276

 

 

 

128

 

 

26,738

 

 

 

22,973

 

 

45,812

 

 

 

45,324

 

   

(3)

Corresponding tax effect

 

(2,919

)

 

 

(808

)

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

 

(1,578

)

 

 

(5,734

)

$

41,315

 

 

$

38,782

 

   

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

54,260

 

 

54,713

 

 

53,751

 

 

53,898

Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Fiscal Year 2019
 
(in millions, except per share data)
 
 
GAAP net loss

($30) to ($18)

 

Adjustments

 

Stock-based compensation expense

$26 to $28

Intangible assets amortization expense

$25 to $26

Reorganization and other related costs

$3 to $4

Tax expense related to Non-GAAP adjustments

($3) to ($4)

 

Non-GAAP net income

$25 to $34

 

GAAP loss per share

($0.54) to ($0.33)

 

Non-GAAP diluted earnings per share

$0.45 to $0.60

 

Contacts

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

Release Summary

STRATASYS RELEASES FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS

Contacts

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