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Stratasys Releases Third Quarter 2019 Financial Results

November 13, 2019

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--Nov 13, 2019--

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 7 th, 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

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191113005372/en/

CONTACT: Stratasys Investor Relations

Yonah Lloyd

Vice President - Investor Relations

Yonah.Lloyd@stratasys.com

KEYWORD: MINNESOTA UNITED STATES NORTH AMERICA ISRAEL MIDDLE EAST

INDUSTRY KEYWORD: HARDWARE ELECTRONIC DESIGN AUTOMATION PACKAGING ENGINEERING CONSUMER ELECTRONICS CHEMICALS/PLASTICS TECHNOLOGY MANUFACTURING

SOURCE: Stratasys Ltd.

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PUB: 11/13/2019 07:30 AM/DISC: 11/13/2019 07:30 AM

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