Inkjet & Digital Printing

Stratasys Reports Record Financial Results for the Third Quarter of 2013

Friday 08. November 2013 - -- Company reports $126.1 million in non-GAAP revenue and generates 26% organic revenue growth over last year's Stratasys and Objet pro forma combined revenue as merger synergies accelerate -- Non-GAAP earnings of $0.45 per diluted share and a GAAP loss of ($0.16) per share -- Company raises fiscal 2013 non-GAAP revenue and EPS guidance Stratasys Ltd. (NASDAQ: SSYS) today announced record financial results for the third quarter of 2013.

Q3 Financial Results Summary:
— Non-GAAP revenue (including MakerBot from August 15th) of $126.1 million for the third quarter of 2013 represents a 39% increase over the $90.9 million Stratasys and Objet pro forma combined revenue for the same period last year. GAAP revenue (including MakerBot) for the third quarter of 2013 was $125.6 million.
— Non-GAAP revenue (excluding MakerBot) increased organically by 26% for the third quarter over last year’s Stratasys and Objet pro forma combined revenue.
— Non-GAAP revenue from MakerBot was $11.6 million for the third quarter representing the period following the transaction’s close on August 15, 2013. GAAP revenue contribution from MakerBot for the third quarter was $11.4 million.
— Non-GAAP net income (including MakerBot) was $20.0 million for the third quarter, or $0.45 per diluted share, compared to Stratasys and Objet pro forma combined $16.6 million, or $0.41 per diluted share, reported for the same period last year.
— GAAP net income (including MakerBot) for the third quarter was a loss of $6.6 million, or ($0.16) per share, versus a Stratasys and Objet pro forma loss of $2.8 million, or ($0.07) per share, for the same period last year.
— The company invested a net amount of $12.0 million in R&D during the third quarter, representing 9.5% of net sales.
— Cash, investments and bank deposits balance at the end of the third quarter was $616.5 million, or $12.65 per share.
— On a combined pro forma basis, including MakerBot, the company has shipped a cumulative 64,855 systems worldwide as of September 30, 2013.
“Organic revenue growth accelerated in the third quarter as synergies resulting from the merger between Stratasys and Objet continued to develop,” said David Reis, chief executive officer of Stratasys. “We observed strong growth across multiple product lines that address an expanding range of applications. We also sustained strong gross margins during the period, which was a contributing factor to our record profitability. We are especially pleased by the contribution made by MakerBot, which added $11.6 million in revenue during the period. We are very pleased with our third quarter results.”
Business Highlights:
— Completed the acquisition of MakerBot, a leading manufacturer within the rapidly growing desktop 3D printing category.
— Introduced two new systems, the Solidscape 3Z MAX 3D printer and the MakerBot Digitizer Desktop 3D Scanner; as well as two new materials for the MakerBot platform, including flexible filament and a dissolvable support material.
— Recognized tangible revenue synergies from the sales, marketing and service team integration initiatives that resulted from the merger of Stratasys and Objet.
— Initiated a pilot program with the UPS Store, placing uPrints in six locations, enabling UPS Store customers to have 3D designs printed onsite.
— Invested heavily in global sales, marketing and channel infrastructure, including the opening of a local sales office in Singapore, and the signing of a distribution agreement with Aurora Group, a leading provider of office automation equipment in China.
— Exercised an option to acquire the remaining holdings from Fasotec in Stratasys Japan, with Stratasys Japan becoming wholly owned and operated by Stratasys Ltd.
— Completed a public offering of 5,175,000 ordinary shares at a public offering price of $93.00 per share, with net offering proceeds to Stratasys approximating $462.9 million.
“With the completion of the MakerBot acquisition in the third quarter, we believe Stratasys is now the clear leader in the desktop 3D printer category, one of the fastest growing segments within our industry,” continued Reis. “The third quarter also demonstrated our commitment to internal product development, as well as our goal of expanding our global customer reach. In addition, as the mainstream adoption of 3D printing continues to gain momentum, we have strengthened our balance sheet, improving our ability to capitalize on additional growth initiatives and acquisitions.”
Financial Guidance
The company’s overall outlook has improved for the fourth quarter of 2013, which is reflected in an upward revision to 2013 revenue guidance. In addition, earnings guidance incorporates a $0.06 per share positive impact from the improved outlook; offset by $0.06 per share of earnings dilution resulting from the company’s public offering of 5,175,000 ordinary shares on September 18, 2013. The earnings impact of the offering on 2013 results had not been previously incorporated into financial guidance. GAAP earnings guidance has been revised principally to reflect higher estimates for stock compensation expense; revised amortization expense related to acquired MakerBot intangible assets; and higher expenses related to the MakerBot performance bonus plan.
Accordingly, Stratasys is updating its following financial guidance for the fiscal year ending December 31, 2013 as follows:
— Revenue guidance of $470 million to $490 million; versus previous guidance of $455 million to $480 million.
— Non-GAAP earnings guidance of $1.75 to $1.90 per diluted share.
— GAAP earnings guidance of a ($0.83) to ($0.55) per share loss; versus previous guidance of ($0.76) to ($0.49) per share loss.
— Earnings guidance incorporates a $0.06 per share positive impact from the company’s improved outlook; and $0.06 per share of earnings dilution from the company’s ordinary share offering completed on September 18, 2013.
Non-GAAP earnings guidance excludes $67.2 million of projected amortization of intangible assets; $22.2 million to $24.9 million of share-based compensation expense; and $18.1 million to $20.7 million in merger-related expenses.
Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of this press release. The table provides itemized detail of the non-GAAP financial measures.
“As we enter the fourth quarter, we believe the acceleration in our organic growth rate, combined with the positive impact from our recent acquisition of MakerBot, will contribute to a strong finish to the year. Looking beyond 2013, we are well positioned to sustain our positive momentum as we accelerate our rate of new product introductions, and prepare to capitalize on additional inorganic growth opportunities. In addition, our industry remains ripe for growth as new and innovative applications continue to emerge for our technology. We are very excited about the future,” Reis concluded.