Stratasys Reports Second Quarter Financial Results

“The company remains focused on executing its long-term plan, and we remain confident in the long-term growth opportunities in our core businesses,” Crump concluded.

The company will hold a conference call to discuss its second quarter financial results on Wednesday, July 29, 2009 at 8:30 a.m. (ET). The investor conference call will be available via live webcast on the Stratasys Web site at www.stratasys.com under the "Investors" tab. To participate by telephone, the domestic dial-in number is 800-299-7098, and the international dial-in is 617-801-9715. The access code is 55972822. 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 on the "Investors" page of the Stratasys website.

Stratasys, Inc., Minneapolis, manufactures additive fabrication machines for prototyping and manufacturing plastic parts. The company also operates a service for part prototyping and production. According to Wohlers Report 2009, Stratasys supplied 43 percent of all additive fabrication systems installed worldwide in 2008, making it the unit market leader for the seventh consecutive year. Stratasys patented and owns the process known as FDM.® The process creates functional prototypes and end-use parts directly from any 3D CAD program, using high-performance industrial thermoplastics. The company holds more than 250 granted or pending additive fabrication patents globally. Stratasys products are used in the aerospace, defense, automotive, medical, business and industrial equipment, education, architecture, and consumer-product industries. Online at: www.Stratasys.com.

Forward Looking Statements

All statements herein that are not historical facts or that include such words as “expects”, “anticipates”, “projects”, “estimates”, “vision”, “planning” or “believes” or similar words constitute forward-looking statements covered by the safe harbor protection of the Private Securities Litigation Reform Act of 1995. Except for the historical information herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. These include statements regarding projected revenue and income in future quarters; the size of the 3D printing market; our objectives for the marketing and sale of our Dimension® 3D Printers and our FortusTM 3D Production Systems, particularly for use in direct digital manufacturing (DDM); the demand for our proprietary consumables; the expansion of our paid parts service; and our beliefs with respect to the growth in the demand for our products. Other risks and uncertainties that may affect our business include our ability to penetrate the 3D printing market; our ability to maintain the growth rates experienced in preceding quarters; our ability to introduce, produce and market new materials, such as ABSplus and ABS-M30, and the market acceptance of these and other materials; the impact of competitive products and pricing; our timely development of new products and materials and market acceptance of those products and materials; the success of our recent R&D initiative to expand the DDM capabilities of our core FDM technology; and the success of our RedEyeOnDemandTM and other paid parts services. Actual results may differ from those expressed or implied in our forward-looking statements. These statements represent beliefs and expectations only as of the date they were made. We may elect to update forward-looking statements, but we expressly disclaim any obligation to do so, even if our beliefs and expectations change. In addition to the statements described above, such forward-looking statements are subject to the risks and uncertainties described more fully in our reports filed or to be filed with the Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly reports on Form 10-Q.

Financial Tables & Non-GAAP Discussion

The information discussed within this release includes financial results that are in accordance with accounting principles generally accepted in the United States (GAAP). Certain prior year balance sheet amounts shown in the financial tables have been reclassified to conform to the current year’s presentation. In addition, certain non-GAAP financial measures have been provided that exclude certain charges and expenses. The non-GAAP measures should be read in conjunction with the corresponding GAAP measures and should be considered in addition to, and not as an alternative or substitute for, the measures prepared in accordance with GAAP. The non-GAAP financial measures are provided in an effort to provide information that investors may deem relevant to evaluate results from the company’s core business operations and to compare the company’s performance with prior periods. The non-GAAP financial measures primarily identify and exclude certain discrete items, such as an impairment charge for certain auction rate securities, restructuring expenses, and expenses associated with stock-based compensation required under SFAS 123R. The company uses these non-GAAP financial measures for evaluating comparable financial performance against prior periods.

This release is also available on the Stratasys Web site at www.Stratasys.com.

 
STRATASYS, INC.
       
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                   

Three Months Ended June 30,

Six Months Ended June 30,

      2009
(unaudited)
  2008
(unaudited)
2009
(unaudited)
  2008
(unaudited)
 
Net sales
Product $ 18,200,029 $ 24,846,032 $ 35,151,531 $ 49,953,572
Services   6,448,248     6,428,890     12,641,547     12,029,039  
24,648,277 31,274,922 47,793,078 61,982,611
 
 
Cost of goods sold
Product 10,278,739 11,721,570 20,964,894 22,463,924
Services   2,796,317     2,244,982     5,682,610     4,846,440  
13,075,056 13,966,552 26,647,504 27,310,364
       
Gross profit 11,573,221 17,308,370 21,145,574 34,672,247
 
Operating expenses
Research and development 1,655,206 2,572,764 3,526,965 4,741,473
Selling, general and administrative   8,467,618     8,897,955     17,775,827     18,588,823  
10,122,824 11,470,719 21,302,792 23,330,296
       
Operating income (loss) 1,450,397 5,837,651 (157,218 ) 11,341,951
 
Other income (expense)
Interest income, net 237,913 546,833 524,266 1,147,899
Foreign currency transaction losses, net (399,819 ) (187,658 ) (163,218 ) (215,826 )
Other   12,078     22,747     25,803     (253,032 )
(149,828 ) 381,922 386,851 679,041
       
Income before income taxes 1,300,569 6,219,573 229,633 12,020,992
 
Income taxes   450,998     2,123,517     83,990     4,126,366  
 
Net income $ 849,571   $ 4,096,056   $ 145,643   $ 7,894,626  
 
Earnings per common share
Basic $ 0.04   $ 0.20   $ 0.01   $ 0.38  
Diluted $ 0.04   $ 0.19   $ 0.01   $ 0.37  
 

Weighted average number of common shares outstanding

Basic   20,223,139     20,878,049     20,221,995     20,934,889  
Diluted   20,242,197     21,491,704     20,236,245     21,470,288  
 
STRATASYS, INC. AND SUBSIDIARIES
   
CONSOLIDATED BALANCE SHEETS
 
                   
June 30,
2009
December 31,
2008
      (unaudited)        
 
ASSETS
 
Current assets
Cash and cash equivalents $ 34,753,226 $ 27,945,799
Short-term investments - held to maturity 4,902,849 4,835,055

Accounts receivable, less allowance for doubtful accounts of $1,096,157 and $1,017,521 in 2009 and 2008, respectively

24,298,173 26,539,733
Inventories 18,387,423 19,889,351

Net investment in sales-type leases, less allowance for doubtful accounts of $311,358 and $324,642 in 2009 and 2008, respectively

3,923,803 3,870,472
Prepaid expenses and other current assets 1,684,717 2,608,080
Deferred income taxes   2,168,000     2,168,000  
Total current assets   90,118,191     87,856,490  
 
Property and equipment, net   28,073,243     29,749,921  
 
Other assets
Intangible assets, net 8,034,671 8,347,200
Net investment in sales-type leases 3,577,686 4,545,977
Long-term investments - available for sale securities 1,109,250 1,109,250
Long-term investments - held to maturity 10,299,470 13,825,981
Other non-current assets   2,338,231     2,308,214  
Total other assets   25,359,308     30,136,622  
 
Total assets $ 143,550,742   $ 147,743,033  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities
Accounts payable and other current liabilities $ 8,940,241 $ 11,795,238
Unearned revenues   10,515,178     12,765,396  
Total current liabilities   19,455,419     24,560,634  
 
Non-current liabilities
Deferred tax liabilities   620,000     620,000  
Total non-current liabilities   620,000     620,000  
 
Total liabilities   20,075,419     25,180,634  
 
Commitments and contingencies
 
Stockholders' equity

Common stock, $.01 par value, authorized 30,000,000 shares, issued 25,913,503 shares as of June 30, 2009 and 25,909,603 shares as of December 31, 2008

259,135 259,096
Capital in excess of par value 92,325,558 91,611,078
Retained earnings 70,045,311 69,899,669
Accumulated other comprehensive loss (150,256 ) (203,019 )
Less cost of treasury stock, 5,687,631 shares in 2009 and 2008   (39,004,425 )   (39,004,425 )
Total stockholders' equity   123,475,323     122,562,399  
 
Total liabilities and stockholders' equity $ 143,550,742   $ 147,743,033  
 
STRATASYS, INC.
                   
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
 
                                     
Non-GAAP Adjustments for the Three Months Ended June 30, 2009 Non-GAAP Adjustments for the Three Months Ended June 30, 2008
      Consolidated
(unaudited)
As Reported
 

Stock-Based
Compensation (1)

  Consolidated
(unaudited)
Non-GAAP
Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
 

Consolidated (unaudited)
Non-GAAP

 
 
Selling, general and administrative expenses $ 8,467,618     $ (182,374 )   $ 8,285,244   $ 8,897,955     $ (319,823 )   $ 8,578,132
 
Total operating expenses 10,122,824 (182,374 ) 9,940,450 11,470,719 (319,823 ) 11,150,896
 
Operating income   1,450,397       182,374       1,632,771     5,837,651       319,823       6,157,474
 
Other income 12,078 - 12,078 22,747 - 22,747
Total other income (loss)   (149,828 )     -       (149,828 )   381,922       -       381,922
 
Income before income taxes 1,300,569 182,374 1,482,943 6,219,573 319,823 6,539,396
Income taxes   450,998       20,000       470,998     2,123,517       52,218       2,175,735
 
Net income $ 849,571 $ 162,374 $ 1,011,945 $ 4,096,056 $ 267,605 $ 4,363,661
 
Earnings per common share
Basic $ 0.04     $ 0.01     $ 0.05   $ 0.20     $ 0.01     $ 0.21
Diluted $ 0.04     $ 0.01     $ 0.05   $ 0.19     $ 0.01     $ 0.20
 

Weighted average number of common shares outstanding

Basic   20,223,139           20,223,139     20,878,049           20,878,049
Diluted   20,242,197           20,242,197     21,491,704           21,491,704
 
 
 
                               
Non-GAAP Adjustments for the Six Months Ended June 30, 2009 Non-GAAP Adjustments for the Six Months Ended June 30, 2008
      Consolidated
(unaudited)
As Reported
  Stock-Based
Compensation (1)
 

Restructuring (2)

 

Consolidated (unaudited)
Non-GAAP

    Consolidated
(unaudited)
As Reported
 

Stock-Based
Compensation (1)

 

Auction Rate
Security (3)

 

Consolidated (unaudited)
Non-GAAP

 
 
Selling, general and administrative expenses $ 17,775,827     $ (432,927 )   $ (778,840 )   $ 16,564,060 $ 18,588,823     $ (635,218 )   $ -   $ 17,953,605
 
Total operating expenses 21,302,792 (432,927 ) (778,840 ) 20,091,025 23,330,296 (635,218 ) - 22,695,078
 
Operating income (loss)   (157,218 )     432,927       778,840       1,054,549   11,341,951       635,218       -     11,977,169
 
Other income (loss) 25,803 - - 25,803 (253,032 ) - 390,000 136,968
Total other income   386,851       -       -       386,851   679,041       -       390,000     1,069,041
 
Income before income taxes 229,633 432,927 778,840 1,441,400 12,020,992 635,218 390,000 13,046,210
Income taxes   83,990       74,000       266,907       424,897   4,126,366       106,218       133,000     4,365,584
 
Net income $ 145,643 $ 358,927 $ 511,933 $ 1,016,503 $ 7,894,626 $ 529,000 $ 257,000 $ 8,680,626
 
Earnings per common share
Basic $ 0.01     $ 0.02     $ 0.03     $ 0.05 $ 0.38     $ 0.03     $ 0.01   $ 0.41
Diluted $ 0.01     $ 0.02     $ 0.03     $ 0.05 $ 0.37     $ 0.02     $ 0.01   $ 0.40
 

Weighted average number of common shares outstanding

Basic   20,221,995               20,221,995   20,934,889               20,934,889
Diluted   20,236,245               20,236,245   21,470,288               21,470,288
 

These adjustments reconcile the Company’s GAAP results of operations to its non-GAAP results of operations.  The Company believes that presentation of results adjusted for the non-GAAP items described below provides meaningful supplemental information to both management and investors.

 

(1)  -  Represents non-cash stock-based compensation expense recognized in accordance with FAS 123R.

(2)  -  Represents severance and other related costs associated with the Company's restructuring in the first quarter of 2009.

(3)  -  Represents a reduction in the assessed fair value of an auction rate security investment that the Company considered to be other-than-temporary.

 

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.





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