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CORRECTING and REPLACING Stratasys Releases Third Quarter 2023 Financial Results

  • Revenue of $162.1 million, essentially flat with third quarter 2022, up 3.3% at constant currency excluding MakerBot and Stratasys Direct divestments
  • Record-level recurring revenue for consumables reflects strong printer utilization
  • GAAP net loss of $47.3 million, or $0.68 per diluted share, and non-GAAP net income of $2.4 million, or $0.04 per diluted share
  • Ninth straight quarter of adjusted profitability
  • Updating 2023 outlook

First sentence under "Stratasys Ltd. Third Quarter 2023 Webcast and Conference Call Details" should read: The Company plans to webcast its conference call to discuss its third quarter 2023 financial results on Thursday, November 16, 2023, at 8:30 a.m. (ET).

The updated release reads:

STRATASYS RELEASES THIRD QUARTER 2023 FINANCIAL RESULTS

  • Revenue of $162.1 million, essentially flat with third quarter 2022, up 3.3% at constant currency excluding MakerBot and Stratasys Direct divestments
  • Record-level recurring revenue for consumables reflects strong printer utilization
  • GAAP net loss of $47.3 million, or $0.68 per diluted share, and non-GAAP net income of $2.4 million, or $0.04 per diluted share
  • Ninth straight quarter of adjusted profitability
  • Updating 2023 outlook

 

 

Stratasys Ltd. (Nasdaq: SSYS) (“Stratasys” or the “Company”), a leader in polymer 3D printing solutions, today announced financial results for the third quarter 2023.

Third Quarter 2023 Financial Results Compared to Third Quarter 2022:

  • Revenue of $162.1 million compared to $162.2 million.
  • GAAP gross margin of 40.5%, compared to 43.6%.
  • Non-GAAP gross margin of 48.3%, compared to 48.5%.
  • GAAP operating loss of $42.8 million, which includes $17.3 million of costs related to merger and acquisition activities, defense against hostile tender offer, proxy contest and related professional fees, compared to an operating loss of $15.6 million.
  • Non-GAAP operating income of $4.1 million, compared to $4.5 million.
  • GAAP net loss of $47.3 million, or $0.68 per diluted share, compared to net income of $18.7 million, or $0.28 per diluted share, which net income in Q3 2022 included a one-time $39.1M gain from the MakerBot deconsolidation.
  • Non-GAAP net income of $2.4 million, or $0.04 per diluted share, compared to $3.3 million, or $0.05 per diluted share.
  • Adjusted EBITDA of $9.8 million, compared to $9.9 million.
  • Cash used in operations of $12.7 million, compared to $18.4 million in the year-ago quarter, due to the costs related to mergers and acquisitions activities, defense against a hostile tender offer, a proxy contest and related professional fees. Excluding these one-time payments, operating cash flow for the third quarter of 2023 would have been positive.

Dr. Yoav Zeif, Stratasys’ Chief Executive Officer stated, “During the third quarter, Stratasys delivered solid operating and financial results, highlighted by record recurring revenues from consumables, reflecting solid printer utilization. Our relentless focus on execution allowed us to deliver comparable results to the year-ago quarter for revenues, non-GAAP margins and adjusted EBITDA, as well as our ninth consecutive quarter of positive adjusted earnings per share.”

Dr. Zeif continued, “We want to acknowledge the tremendous support we have received from partners, customers, investors and our industry since the tragic events in Israel. We especially want to thank our employees who have performed in an exemplary fashion during these challenging times. Our operations have been fully functional, allowing us to continue delivering industry-leading results. We have streamlined and focused our business, while simultaneously rolling out new and exciting innovations that will expand our leadership position across systems, materials, software and customer service. Our recently introduced F3300 is the latest step in that continued evolution to unlock manufacturing benefits for our customers. Our maturity as a company, financial discipline and resilient business model position us well to deliver exceptional value for many years to come.”

2023 Financial Outlook:

Based on the divestitures in Stratasys Direct, as well as macroeconomic uncertainty in its end markets, the Company is updating its revenue guidance and its outlook for the remainder of 2023 as follows:

  • Full year revenue of $620 million to $630 million.
  • Full year non-GAAP gross margins of 48.0% to 49.0%.
  • Full year non-GAAP operating expenses in a range of $288 million to $290 million.
  • Full year non-GAAP operating margins in a range of 2.0% to 2.5%.
  • GAAP net loss of $117 million to $104 million, or ($1.70) to ($1.51) per diluted share.
  • Includes one-time extraordinary costs associated with defense of tender offer and proxy contest, and merger-related activities.
  • Non-GAAP net income of $6 million to $9 million, or $0.10 to $0.14 per diluted share.
  • Adjusted EBITDA of $35 million to $38 million.
  • Capital expenditures of $15 million to $20 million.

2023 non-GAAP earnings guidance excludes $112 million to $121 million of expenses attributable to projected amortization of intangible assets, share-based compensation expense, and reorganization and other expenses (including the one-time extraordinary costs referenced above). 2023 non-GAAP guidance includes tax adjustments of $2 million to $3 million on the above non-GAAP items.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of our press release and slide presentation, with itemized detail concerning the non-GAAP financial measures.

Stratasys Ltd. Third Quarter 2023 Webcast and Conference Call Details

The Company plans to webcast its conference call to discuss its third quarter 2023 financial results on Thursday, November 16, 2023, 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://event.choruscall.com/mediaframe/webcast.html?webcastid=bSk6aoYV

To participate by telephone, the U.S. toll-free number is 877-407-0619 and the international dial-in is +1-412-902-1012. Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for six months at investors.stratasys.com, or by accessing the above-provided web address.

Stratasys is leading the global shift to additive manufacturing with innovative 3D printing solutions for industries such as aerospace, automotive, consumer products, healthcare, fashion and education. Through smart and connected 3D printers, polymer materials, a software ecosystem, and parts on demand, Stratasys solutions deliver competitive advantages at every stage in the product value chain. The world’s leading organizations turn to Stratasys to transform product design, bring agility to manufacturing and supply chains, and improve patient care.

To learn more about Stratasys, visit www.stratasys.com, the Stratasys blog, X.com (formerly Twitter), LinkedIn, or Facebook. Stratasys reserves the right to utilize any of the foregoing social media platforms, including the Company’s websites, to share material, non-public information pursuant to the SEC’s Regulation FD. To the extent necessary and mandated by applicable law, Stratasys will also include such information in its public disclosure filings.

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 2023 and beyond, 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; the outcome of our board’s comprehensive process to explore strategic alternatives for our company; the degree to which our company’s operations remain resistant to potential adverse effects of Israel’s war against the terrorist organization Hamas; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; the extent of our success at successfully consummating and integrating into our existing business acquisitions or investments in new businesses, technologies, products or services; the global macro-economic environment, including headwinds caused by inflation, high interest rates, unfavorable currency exchange rates and potential recessionary conditions; 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; 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, 2022, which we filed with the U.S. Securities and Exchange Commission, or SEC, on March 3, 2023 (the “2022 Annual Report”). Readers are urged to carefully review and consider the various disclosures made throughout our 2022 Annual Report and the Report of Foreign Private Issuer on Form 6-K that attaches Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition for the third quarter and first nine months of 2023, which will be 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 provided or made (as applicable) 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 (i) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, and legal provisions and (ii) 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 goodwill, revaluation of our investments 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, December 31,

2023

2022

 
 
ASSETS
 
Current assets
Cash and cash equivalents $

104,563

$

150,470

 

Short-term deposits

80,000

 

177,367

 

Accounts receivable, net of allowance for credit losses of $1.4 million and $0.9 million

 

 

 

 

as of September 30, 2023 and December 31, 2022, respectively

164,075

144,739

Inventories

197,420

 

194,054

 

Prepaid expenses

9,732

 

5,767

 

Other current assets

27,534

 

27,823

 

 

 
Total current assets

583,324

 

700,220

 

 

 
Non-current assets

 

Property, plant and equipment, net

198,272

 

195,063

 

Goodwill

90,187

 

64,953

 

Other intangible assets, net

141,201

 

121,402

 

Operating lease right-of-use assets

19,533

 

18,122

 

Long-term investments

129,738

 

141,610

 

Other non-current assets

19,510

 

18,420

 

 

 
Total non-current assets

598,441

 

559,570

 

 

 
Total assets $

1,181,765

$

1,259,790

 

 

 
LIABILITIES AND EQUITY

 

 

 
Current liabilities

 

Accounts payable $

60,845

$

72,921

 

Accrued expenses and other current liabilities

49,817

 

45,912

 

Accrued compensation and related benefits

31,502

 

34,432

 

Deferred revenues - short term

51,751

 

50,220

 

Operating lease liabilities - short term

6,511

 

7,169

 

 

 
Total current liabilities

200,426

 

210,654

 

 

 
Non-current liabilities

 

Deferred revenues - long term

28,559

 

25,214

 

Deferred income taxes - long term

6,889

 

5,638

 

Operating lease liabilities - long term

12,692

 

10,670

 

Contingent consideration

25,884

 

23,707

 

Other non-current liabilities

24,172

 

24,475

 

 

 
Total non-current liabilities

98,196

 

89,704

 

 

 
Total liabilities

298,622

 

300,358

 

 

 
Equity

 

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands

 

shares; 69,165 shares and 67,086 shares issued and

 

outstanding at September 30, 2023 and December 31, 2022, respectively

194

 

187

 

Additional paid-in capital

3,080,877

 

3,048,915

 

Accumulated other comprehensive loss

(12,958

)

 

(12,818

)

Accumulated deficit

(2,184,970

)

 

(2,076,852

)

Total equity

883,143

 

959,432

 

 

 
Total liabilities and equity $

1,181,765

$

1,259,790

 

Stratasys Ltd.                
                  
Consolidated Statements of Operations                
                  
(in thousands, except per share data)                
                  
     Three Months Ended September 30,   Nine Months Ended September 30,
    

2023

 

2022

 

2023

 

2022

     (unaudited)   (unaudited)   (unaudited)   (unaudited)
Net sales                
   Products  

 $

                       113,270

 

 

 $

  112,133

 

 

 $

                       323,353

 

 

 $

                340,927

 

   Services  

 

                            48,863

 

 

 

       50,059

 

 

 

                          147,908

 

 

 

                   151,297

 

 

 

                          162,133

 

 

 

     162,192

 

 

 

                          471,261

 

 

 

                   492,224

 

               
Cost of sales                
   Products  

 

                            59,546

 

 

 

       55,916

 

 

 

                          168,235

 

 

 

                   176,421

 

   Services  

 

                            36,938

 

 

 

       35,527

 

 

 

                          105,760

 

 

 

                   107,984

 

   

 

                            96,484

 

 

 

       91,443

 

 

 

                          273,995

 

 

 

                   284,405

 

               
Gross profit  

 

                            65,649

 

 

 

       70,749

 

 

 

                          197,266

 

 

 

                   207,819

 

               
Operating expenses                
   Research and development, net  

 

                            23,567

 

 

 

       23,145

 

 

 

                            69,347

 

 

 

                    71,489

 

   Selling, general and administrative  

 

                            84,880

 

 

 

       63,230

 

 

 

                          221,173

 

 

 

                   195,085

 

 

 

                          108,447

 

 

 

       86,375

 

 

 

                          290,520

 

 

 

                   266,574

 

               
Operating loss  

 

                           (42,798

)

 

 

      (15,626

)

 

 

                           (93,254

)

 

 

                   (58,755

)

                 
Gain from deconsolidation of subsidiary  

 

                                   -

 

 

 

39,136

 

 

 

                                   -

 

 

 

                    39,136

 

   Financial income (expenses), net  

 

                                 687

 

 

 

            452

 

 

 

                              2,147

 

 

 

                     (2,080

)

               
Income (loss) before income taxes  

 

                           (42,111

)

 

 

       23,962

 

 

 

                           (91,107

)

 

 

                   (21,699

)

                 
   Income tax expenses  

 

                               (645

)

 

 

       (3,298

)

 

 

                            (5,145

)

 

 

                     (2,796

)

               
   Share in losses of associated companies  

 

                            (4,523

)

 

 

       (1,915

)

 

 

                           (11,866

)

 

 

                     (2,089

)

                 
Net income (loss)  

 $

                        (47,279

)

 

 $

    18,749

 

 

 $

                      (108,118

)

 

 $

                (26,584

)

               
Net income (loss) per share                 
Basic  

 $

                           (0.68

)

 

 $

        0.28

 

 

 $

                           (1.58

)

 

 $

                    (0.40

)

Diluted  

 $

                           (0.68

)

 

 $

        0.28

 

 

 $

                           (1.58

)

 

 $

                    (0.40

)

               
Weighted average ordinary shares outstanding                
Basic  

 

                            69,093

 

 

 

       66,772

 

 

 

                            68,432

 

 

 

                    66,356

 

Diluted  

 

                            69,093

 

 

 

       67,038

 

 

 

                            68,432

 

 

 

                    66,356

 

               
Three Months Ended September 30,

2023

 

Non-GAAP

 

2023

 

2022

 

Non-GAAP

 

2022

GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
Gross profit (1)

 $

        65,649

 

 $

        12,617

 $

        78,266

 $

                70,749

 

 $

          7,990

 

 $

             78,739

Operating income (loss)  (1,2)

 

         (42,798

)

 

           46,885

 $

          4,087

 

                 (15,626

)

 

           20,149

 

 

                   4,523

Net income (loss) (1,2,3)

 

         (47,279

)

 

           49,725

 $

          2,446

 

                   18,749

 

 

         (15,423

)

 

                   3,326

Net income (loss) per diluted share (4)

 $

           (0.68

)

 $

             0.72

 $

             0.04

 $

                    0.28

 

 $

           (0.23

)

 $

                  0.05

(1)

Acquired intangible assets amortization expense   

 

              5,142

 

              6,941

 

Non-cash stock-based compensation expense   

 

                 891

 

              1,061

 

Restructuring and other related costs   

 

              6,584

 

                 (12

)

 

           12,617

 

              7,990

 

 

(2)

Acquired intangible assets amortization expense   

 

              2,599

 

              2,138

 

Non-cash stock-based compensation expense   

 

              6,588

 

              6,330

 

Restructuring and other related costs   

 

              2,360

 

              1,309

 

Revaluation of investments

 

              4,300

 

                 901

 

Contingent consideration

 

                 265

 

                 394

 

Legal, consulting and other expenses   

 

           18,156

 

              1,087

 

 

           34,269

 

           12,159

 

 

           46,885

 

           20,149

 

 

(3)

Corresponding tax effect   

 

                 153

 

              2,993

 

Finance expenses

 

                 162

 

                    -

 

Equity method related amortization and other

 

              2,525

 

                 571

 

Gain from deconsolidation of Subsidiary 

 

         (39,136

)

 $

        49,725

 $

      (15,423

)

 

(4)

Weighted average number of ordinary

shares outstanding- Diluted

69,093

69,815

67,038

67,038

 
Nine Months Ended September 30,

2023

 

Non-GAAP

 

2023

 

2022

 

Non-GAAP

 

2022

GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
Gross profit (1)

 $

      197,266

 

 $

        29,199

 $

      226,465

 $

              207,819

 

 $

        27,593

 $

           235,412

Operating income (loss)  (1,2)

 

         (93,254

)

 

         103,866

 $

        10,612

 

                 (58,755

)

 

           67,235

 $

               8,480

Net income (loss)  (1,2,3)

 

       (108,118

)

 

         114,179

 $

          6,061

 

                 (26,584

)

 

           32,295

 $

               5,711

Net income (loss) per diluted share (4)

 $

           (1.58

)

 $

             1.67

 $

             0.09

 $

                  (0.40

)

 $

             0.49

 $

                  0.09

(1)

Acquired intangible assets amortization expense   

 

           14,157

 

           20,861

 

 

Non-cash stock-based compensation expense   

 

              2,822

 

              3,041

 

 

Restructuring and other related costs   

 

           12,220

 

              3,691

 

 

 

           29,199

 

           27,593

 

 

 

(2)

Acquired intangible assets amortization expense   

 

              7,479

 

              6,581

 

 

Non-cash stock-based compensation expense   

 

           20,920

 

           21,714

 

 

Restructuring and other related costs   

 

              6,626

 

              1,864

 

 

Revaluation of investments

 

              4,880

 

              3,217

 

 

Contingent consideration

 

                 877

 

              1,197

 

 

Legal, consulting and other expenses   

 

           33,885

 

              5,069

 

 

 

           74,667

 

           39,642

 

 

 

         103,866

 

           67,235

 

 

 

(3)

Corresponding tax effect   

 

              3,404

 

              3,219

 

 

Finance expenses

 

              1,827

 

                 571

 

 

Equity method related amortization and other

 

              5,081

 

                 406

 

 

Gain from deconsolidation of Subsidiary 

 

                    -  

 

         (39,136

)

 

 $

      114,179

 $

        32,295

 

 

 

(4)

Weighted average number of ordinary

shares outstanding- Diluted

           68,432

           69,046

66,356

67,007

 

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