Stratasys Reports Second Quarter 2015 Financial Results

This release is available on the Stratasys web site at  www.stratasys.com

Stratasys Ltd. (Nasdaq: SSYS), headquartered in Minneapolis, Minnesota and Rehovot, Israel, is a leading global provider of 3D printing and additive manufacturing solutions. The company's patented FDM® and PolyJet™ 3D Printing technologies produce prototypes and manufactured goods directly from 3D CAD files or other 3D content. Systems include 3D printers for idea development, prototyping and direct digital manufacturing. Stratasys subsidiaries include MakerBot and Solidscape, and the company operates the digital parts manufacturing service Stratasys Direct Manufacturing. Stratasys has more than 2,900 employees, holds over 800 granted or pending additive manufacturing patents globally, and has received more than 30 awards for its technology and leadership. Online at: http://www.stratasys.com or http://blog.stratasys.com.

 
Stratasys Ltd.
 
Consolidated Balance Sheets
 
(in thousands)
    June 30,     December 31,
2015 2014
 
ASSETS
 
Current assets
Cash and cash equivalents $ 352,268 $ 442,141
Short-term bank deposits 150,370 595
Accounts receivable, net 136,970 150,806
Inventories 137,394 123,385
Net investment in sales-type leases 10,091 8,170
Prepaid expenses 9,898 7,931
Deferred income taxes 30,567 25,697
Other current assets   31,420     37,903  
 
Total current assets   858,978     796,628  
 
Non-current assets
Goodwill 1,172,125 1,323,502
Other intangible assets, net 517,085 597,903
Property, plant and equipment, net 185,992 157,036
Net investment in sales-type leases - long term 19,093 14,822
Other non-current assets   10,960     9,216  
 
Total non-current assets   1,905,255     2,102,479  
 
Total assets $ 2,764,233   $ 2,899,107  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 40,687 $ 37,359
Short term debt 175,000 50,000
Accrued expenses and other current liabilities 50,990 47,760
Accrued compensation and related benefits 45,230 42,332
Obligations in connection with acquisitions 12,003 28,092
Deferred revenues   48,821     45,023  
 
Total current liabilities   372,731     250,566  
 
Non-current liabilities
Obligations in connection with acquisitions - long term 12,761 26,461
Deferred tax liabilities 36,293 55,835
Deferred revenues - long-term 6,069 5,946
Other non-current liabilities   26,677     25,091  
 
Total non-current liabilities   81,800     113,333  
 
Total liabilities   454,531     363,899  
 
Redeemable non-controlling interests 2,564 3,969
 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000
shares; 51,669 and 50,923 shares issued and outstanding
at June 30, 2015 and December 31, 2014, respectively 140 139
Additional paid-in capital 2,587,168 2,568,149
Accumulated deficit (273,090 ) (33,871 )
Accumulated other comprehensive loss   (7,429 )   (3,647 )
Equity attributable to Stratasys Ltd. 2,306,789 2,530,770
Non-controlling interest 349 469
 
Total equity   2,307,138     2,531,239  
 
Total liabilities and equity $ 2,764,233   $ 2,899,107  
 
 
Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)
               
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
(unaudited)   (unaudited) (unaudited)   (unaudited)
Net sales
Products $ 134,490 $ 154,090 $ 261,157 $ 283,342
Services   47,832     24,375     93,896     46,064  
182,322 178,465 355,053 329,406
 
Cost of sales
Products 67,666 73,394 166,037 134,416
Services   31,748     13,437     60,020     25,628  
99,414 86,831 226,057 160,044
       
Gross profit 82,908 91,634 128,996 169,362
 
Operating expenses
Research and development, net 25,506 18,957 52,744 35,728
Selling, general and administrative 97,581 77,929 200,189 145,546
Goodwill impairment - - 150,400 -
Change in the fair value of obligations in connection with acquisitions   (6,680 )   628     (19,936 )   (6,867 )
116,407 97,514 383,397 174,407
       
Operating loss (33,499 ) (5,880 ) (254,401 ) (5,045 )
 
Financial income (expense) (711 ) 337 (5,835 ) (999 )
       
Loss before income taxes (34,210 ) (5,543 ) (260,236 ) (6,044 )
 
Income tax benefit   (11,066 )   (5,370 )   (20,688 )   (9,958 )
 
Net income (loss) (23,144 ) (173 ) (239,548 ) 3,914
 
Net loss attributable to non-controlling interest   (213 )   -     (329 )   -  
 
Net income (loss) attributable to Stratasys Ltd. $ (22,931 ) $ (173 ) $ (239,219 ) $ 3,914  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.48 ) $ (0.00 ) $ (4.71 ) $ 0.08
Diluted (0.55 ) (0.00 ) (4.77 ) 0.08
 
Weighted average ordinary shares outstanding
Basic 51,405 49,373 51,181 49,323
Diluted 51,870 49,373 51,413 51,238
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
                       
Three Months Ended June 30, 2015 Three Months Ended June 30, 2014
 
GAAP Non-GAAP GAAP Non-GAAP
(unaudited)     Adjustments*     (unaudited) (unaudited)     Adjustments*     (unaudited)
Net sales
Products $ 134,490 $ - $ 134,490 $ 154,090 $ - $ 154,090
Services   47,832     -     47,832     24,375     -     24,375
182,322 - 182,322 178,465 - 178,465
 
Cost of sales
Products 67,666 (15,975 ) 51,691 73,394 (14,739 ) 58,655
Services   31,748     (841 )   30,907     13,437     (340 )   13,097
99,414 (16,816 ) 82,598 86,831 (15,079 ) 71,752
           
Gross profit 82,908 16,816 99,724 91,634 15,079 106,713
 
Operating expenses
Research and development, net 25,506 (3,016 ) 22,490 18,957 (1,318 ) 17,639
Selling, general and administrative 97,581 (24,020 ) 73,561 77,929 (17,617 ) 60,312
Change in the fair value of obligations in connection with acquisitions   (6,680 )   6,680     -     628     (628 )   -
116,407 (20,356 ) 96,051 97,514 (19,563 ) 77,951
           
Operating income (loss) (33,499 ) 37,172 3,673 (5,880 ) 34,642 28,762
 
Financial income (expense) (711 ) - (711 ) 337 - 337
           
Income (loss) before income taxes (34,210 ) 37,172 2,962 (5,543 ) 34,642 29,099
 
Income taxes (benefit)   (11,066 )   6,279     (4,787 )   (5,370 )   6,475     1,105
 
Net income (loss) (23,144 ) 30,893 7,749 (173 ) 28,167 27,994
 
Net loss attributable to non-controlling interest   (213 )   -     (213 )   -     -     -
 
Net income (loss) attributable to Stratasys Ltd. $ (22,931 ) $ 30,893   $ 7,962   $ (173 ) $ 28,167   $ 27,994
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.48 ) $ 0.15 $ (0.00 ) $ 0.57
Diluted (0.55 ) 0.15 (0.00 ) 0.55
 
Weighted average ordinary shares outstanding
Basic 51,405 51,405 49,373 49,373
Diluted 51,870 52,705 49,373 51,196
 
 

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)
                       
Six Months Ended June 30, 2015 Six Months Ended June 30, 2014
 
 
GAAP     Adjustments*     Non-GAAP GAAP     Adjustments*     Non-GAAP
Net sales
Products $ 261,157 $ - $ 261,157 $ 283,342 $ 235 $ 283,577
Services   93,896     -     93,896     46,064     -     46,064  
355,053 - 355,053 329,406 235 329,641
 
Cost of sales
Products 166,037 (61,887 ) 104,150 134,416 (28,468 ) 105,948
Services   60,020     (2,250 )   57,770     25,628     (774 )   24,854  
226,057 (64,137 ) 161,920 160,044 (29,242 ) 130,802
           
Gross profit 128,996 64,137 193,133 169,362 29,477 198,839
 
Operating expenses
Research and development, net 52,744 (5,833 ) 46,911 35,728 (2,813 ) 32,915
Selling, general and administrative 200,189 (56,864 ) 143,325 145,546 (31,140 ) 114,406
Goodwill impairment 150,400 (150,400 ) - - - -
Change in the fair value of obligations in connection with acquisitions   (19,936 )   19,936     -     (6,867 )   6,867     -  
383,397 (193,161 ) 190,236 174,407 (27,086 ) 147,321
           
Operating income (loss) (254,401 ) 257,298 2,897 (5,045 ) 56,563 51,518
 
Financial expense (5,835 ) - (5,835 ) (999 ) - (999 )
           
Income (loss) before income taxes (260,236 ) 257,298 (2,938 ) (6,044 ) 56,563 50,519
 
Income taxes (benefit)   (20,688 )   8,093     (12,595 )   (9,958 )   11,884     1,926  
 
Net income (loss) (239,548 ) 249,205 9,657 3,914 44,679 48,593
 
Net loss attributable to non-controlling interest   (329 )   -     (329 )   -     -     -  
 
Net income (loss) attributable to Stratasys Ltd. $ (239,219 ) $ 249,205   $ 9,986   $ 3,914   $ 44,679   $ 48,593  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (4.71 ) $ 0.20 $ 0.08 $ 0.99
Diluted (4.77 ) 0.19 0.08 0.95
 
Weighted average ordinary shares outstanding
Basic 51,181 51,181 49,323 49,323
Diluted 51,413 52,524 51,238 51,221
 
 

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 June 30, Six Months Ended June 30,
2015 2014 2015 2014
Net sales, products
Deferred revenue step-up $ - $ - $ - $ 235
 
Cost of sales, products
Acquired intangible assets amortization (12,301 ) (14,029 ) (27,206 ) (27,254 )
Other intangible assets impairment - - (29,782 ) -
Non-cash stock-based compensation expense (1,237 ) (710 ) (2,462 ) (1,214 )
Reorganization and other related costs   (2,437 )   -     (2,437 )   -  
(15,975 ) (14,739 ) (61,887 ) (28,468 )
Cost of sales, services
Non-cash stock-based compensation expense (560 ) (324 ) (1,168 ) (732 )
Reorganization and other related costs (75 ) - (75 ) -
Merger and acquisition related expense   (206 )   (16 )   (1,007 )   (42 )
(841 ) (340 ) (2,250 ) (774 )
Research and development, net
Non-cash stock-based compensation expense (1,506 ) (885 ) (3,374 ) (1,823 )
Reorganization and other related costs (617 ) - (617 ) -
Merger and acquisition related expense   (893 )   (433 )   (1,842 )   (990 )
(3,016 ) (1,318 ) (5,833 ) (2,813 )
 
Selling, general and administrative
Acquired intangible assets amortization (5,684 ) (5,507 ) (12,140 ) (10,871 )
Non-cash stock-based compensation expense (6,261 ) (5,159 ) (12,320 ) (10,045 )
Merger and acquisition related expense (5,937 ) (6,951 ) (12,842 ) (10,224 )
Reorganization and other related costs (6,138 ) - (6,139 ) -
Impairment charges   -     -     (13,423 )   -  
(24,020 ) (17,617 ) (56,864 ) (31,140 )
 
Goodwill impairment - - (150,400 ) -
 
Change in the fair value of obligations in connection with acquisitions
Change in the fair value of obligations in connection with acquisitions 6,680 (628 ) 19,936 6,867
 
Income taxes
Tax expense related to non-GAAP adjustments 6,279 6,475 8,093 11,884
 
       
Net income $ 30,893   $ 28,167   $ 249,205   $ 44,679  
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Three Months Ended September 30, 2015
 
(in millions, except per share data)
   
GAAP net loss ($27) to ($22.5)
 

Adjustments

Stock-based compensation expense $9.5 to $10
Intangible assets amortization expense $18
Merger related expense $7 to $8
Tax expense related to Non-GAAP adjustments ($6) to ($6.5)
 
Non-GAAP net income $1.5 to $7
 
GAAP loss per share ($0.52) to ($0.43)
 
Non-GAAP diluted earnings per share $0.03 to $0.13
 

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