Business Wire | Nov 12, 2020 06:00AM EST

Stratasys Reports Third Quarter 2020 Financial Results

Nov. 12, 2020

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--Nov. 12, 2020--Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the third quarter of 2020.

Q3 2020 Financial Results Summary:

* Revenue for the third quarter of 2020 was $127.9 million, compared to $157.5 million for the same period last year. The 18.8% reduction was primarily driven by the adverse impact of COVID-19 on the company's customers throughout the industries into which the company sells its products and services. * GAAP gross margin was 38.9% for the quarter, compared to 49.2% for the same period last year. Non-GAAP gross margin was 46.8% for the quarter, compared to 52.4% for the same period last year. GAAP and non-GAAP gross margin improved sequentially from Q2 by 170bp and 140bp, respectively. The company believes that gross margins will continue to recover as and when our customers return to their pre-COVID utilization levels. * GAAP operating loss for the quarter was $404.3 million, compared to GAAP operating loss of $6.0 million for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP operating loss for the quarter was $1.0 million, compared to non-GAAP operating income of $8.1 million for the same period last year. * GAAP net loss for the quarter was $405.1 million, or ($7.35) per diluted share, compared to GAAP net loss of $6.9 million, or ($0.13) per diluted share, for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP net loss for the quarter was $3.0 million, or ($0.05) per diluted share, compared to non-GAAP net income of $6.3 million, or $0.12 per diluted share, for the same period last year. * Non-GAAP EBITDA was $5.2 million for the quarter, compared to $14.5 million for the same period last year. Non-GAAP EBITDA improved sequentially from Q2 by $6.8 million. * The Company recorded a non-cash goodwill impairment charge of $386.2 million, or $7.01 per share, related to the Company's FDM and PolyJet technologies, primarily as a result of the COVID-19 impact on the Company's business. * The Company generated $2.6 million of cash from operations and ended the period with $308.2 million in cash, cash equivalents and short-term deposits. The Company has no debt.

"We were pleased to see sequential improvements in both our top and bottom lines for this quarter, reflecting the beginning of a potential recovery from the pandemic," said Yoav Zeif, CEO of Stratasys. "We are laser-focused on leading the polymer 3D printing market by delivering the most innovative, next-gen technologies to address the fastest-growing and most transformative manufacturing applications, while leveraging the strongest go-to-market infrastructure in our industry. We believe that our innovations of today will drive competitive production advantages for the factories of tomorrow, resulting in growth and value creation for our customers and shareholders."

Stratasys Ltd. Q3 2020 Conference Call Details

The Company plans to hold the conference call to discuss its third quarter 2020 financial results on Thursday, November 12, 2020 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Website at investors.stratasys.com, or directly at the following web address: https://78449.themediaframe.com/dataconf/productusers/ssys/mediaframe/41658/indexl.html

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 6 months at investors.stratasys.com, or by accessing the above-provided web address.

Stratasys (Nasdaq: SSYS) is a global leader in additive manufacturing or 3D printing technology and is the manufacturer of FDM(r), PolyJet(tm), and stereolithography 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 more than 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.

To learn more about Stratasys, visit www.stratasys.com, the Stratasys blog, 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, 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 duration of the global COVID-19 pandemic, which, if extending for a further significant period of time, may continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers; 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; 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 acquisitions or investments in new businesses, technologies, products or services; 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 (including risks related to the impact of coronavirus on our operations, supply chain, liquidity, cash flow and customer orders); 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, 2019 (the "2019 Annual Report"), which we filed with the Securities and Exchange Commission (the "SEC") on February 26, 2020. Readers are urged to carefully review and consider the various disclosures made throughout our 2019 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 quarterly period ended September 30, 2020, which we are furnishing 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 on an ongoing basis after (i) excluding mergers, acquisitions and divestments related expense or gains and restructuring-related charges or gains, 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 goodwill and 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, December 31,

2020 2019

ASSETS Current assetsCash and cash equivalents $ 252,906 $ 293,484

Short-term deposits $ 55,300 $ 28,300

Accounts receivable, net 103,693 132,558

Inventories 152,685 168,504

Prepaid expenses 7,568 6,567

Other current assets 19,209 29,659

Total current assets 591,361 659,072

Non-current assetsProperty, plant and equipment, net 198,521 189,706

Goodwill - 385,658

Other intangible assets, net 65,083 87,328

Operating lease right-of-use assets 18,905 20,936

Other non-current assets 35,238 38,819

Total non-current assets 317,747 722,447

Total assets $ 909,108 $ 1,381,519

LIABILITIES AND EQUITY Current liabilitiesAccounts payable $ 23,478 $ 35,818

Accrued expenses and other current liabilities 26,462 28,528

Accrued compensation and related benefits 28,536 34,013

Deferred revenues 47,288 52,268

Operating lease liabilities - short term 8,675 9,292

Total current liabilities 134,439 159,919

Non-current liabilitiesDeferred revenues - long-term 13,436 16,039

Operating lease liabilities - long term 10,600 12,445

Other non-current liabilities 33,291 35,343

Total non-current liabilities 57,327 63,827

Total liabilities 191,766 223,746

Redeemable non-controlling interests 568 622

EquityOrdinary shares, NIS 0.01 nominal value,authorized 180,000 thousands shares; 55,112 150 148 thousands shares and 54,441 thousands sharesissued and outstanding at September 30, 2020and December 31, 2019, respectivelyAdditional paid-in capital 2,722,839 2,706,894

Accumulated other comprehensive loss (9,289 ) (7,716 )

Accumulated deficit (1,996,926 ) (1,542,175 )

Total equity 716,774 1,157,151

Total liabilities and equity $ 909,108 $ 1,381,519

Stratasys Ltd.Consolidated Statements of Operations(in thousands, except per share data)Three Months Ended September 30,Nine Months Ended September 30,2020

2019

2020

2019

(unaudited)(unaudited)(unaudited)(unaudited)Net salesProducts$

83,548

$

106,346

$

240,597

$

321,778

Services44,344

51,114

137,825

154,145

127,892

157,460

378,422

475,923

Cost of salesProducts47,339

44,341

126,556

135,605

Services30,784

35,710

98,491

105,285

78,123

80,051

225,047

240,890

Gross profit49,769

77,409

153,375

235,033

Operating expensesResearch and development, net19,562

23,620

65,059

70,234

Selling, general and administrative48,343

59,741

155,630

173,217

Goodwill impairment386,154

-

386,154

-

454,059

83,361

606,843

243,451

Operating loss(404,290

)

(5,952

)

(453,468

)

(8,418

)

Financial income (expense), net(167

)

289

(847

)

2,796

Loss before income taxes(404,457

)

(5,663

)

(454,315

)

(5,622

)

Income tax expenses (benefit)(343

)

586

(2,250

)

3,084

Share in profits (losses) of associated companies(952

)

(733

)

(2,740

)

495

Net Loss(405,066

)

(6,982

)

(454,805

)

(8,211

)

Net loss attributable to non-controlling interests(4

)

(41

)

(54

)

(152

)

Net loss attributable to Stratasys Ltd.$

(405,062

)

$

(6,941

)

$

(454,751

)

$

(8,059

)

Net loss per ordinary share attributable to Stratasys Ltd.Basic$

(7.35

)

$

(0.13

)

$

(8.29

)

$

(0.15

)

Diluted$

(7.35

)

$

(0.13

)

$

(8.29

)

$

(0.15

)

Basic55,086

54,394

54,851

54,201

Diluted55,086

54,394

54,851

54,201

Stratasys Ltd.Consolidated Statements of Operations(in thousands, except pershare data) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019

(unaudited) (unaudited) (unaudited) (unaudited)Net salesProducts $ 83,548 $ 106,346 $ 240,597 $ 321,778

Services 44,344 51,114 137,825 154,145

127,892 157,460 378,422 475,923

Cost of salesProducts 47,339 44,341 126,556 135,605

Services 30,784 35,710 98,491 105,285

78,123 80,051 225,047 240,890

Gross profit 49,769 77,409 153,375 235,033

Operating expensesResearch and development, 19,562 23,620 65,059 70,234 netSelling, general and 48,343 59,741 155,630 173,217 administrativeGoodwill impairment 386,154 - 386,154 -

454,059 83,361 606,843 243,451

Operating loss (404,290 ) (5,952 ) (453,468 ) (8,418 )

Financial income (167 ) 289 (847 ) 2,796 (expense), net Loss before income taxes (404,457 ) (5,663 ) (454,315 ) (5,622 )

Income tax expenses (343 ) 586 (2,250 ) 3,084 (benefit) Share in profits (losses) (952 ) (733 ) (2,740 ) 495 of associated companies Net Loss (405,066 ) (6,982 ) (454,805 ) (8,211 )

Net loss attributable to (4 ) (41 ) (54 ) (152 )non-controlling interests Net loss attributable to $ (405,062 ) $ (6,941 ) $ (454,751 ) $ (8,059 )Stratasys Ltd. Net loss per ordinaryshare attributable toStratasys Ltd.Basic $ (7.35 ) $ (0.13 ) $ (8.29 ) $ (0.15 )

Diluted $ (7.35 ) $ (0.13 ) $ (8.29 ) $ (0.15 )

Basic 55,086 54,394 54,851 54,201

Diluted 55,086 54,394 54,851 54,201

Three Months Ended September 30,

2020

Non-GAAP

2020

2019

Non-GAAP

2019

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

U.S. dollars and shares in thousands (except per share amounts)

Gross profit (1)$

49,769

$

10,036

$

59,805

$

77,409

$

5,087

$

82,496

Operating income (loss) (1,2)(404,290

)

403,268

(1,022

)

(5,952

)

14,055

8,103

Net income (loss) attributable to Stratasys Ltd. (1,2,3)(405,062

)

402,050

(3,012

)

(6,941

)

13,275

6,334

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)$

(7.35

)

$

7.30

$

(0.05

)

$

(0.13

)

$

0.25

$

0.12

(1)

Acquired intangible assets amortization expense4,065

3,916

Non-cash stock-based compensation expense524

475

Restructuring and other related costs191

696

Impairment charges of intangible assets5,256

-

10,036

5,087

(2)

Acquired intangible assets amortization expense2,162

2,016

Non-cash stock-based compensation expense4,352

4,960

Goodwill impairment386,154

-

Restructuring and other related costs34

1,992

Other expenses530

-

393,232

8,968

403,268

14,055

(3)

Corresponding tax effect(1,296

)

(780

)

Equity method related amortization, divestments and impairments78

-

$

402,050

$

13,275

(4)

Weighted average number of ordinary shares outstanding- Diluted55,086

55,086

54,394

54,940

Three Months Ended September 30,

2020 Non-GAAP 2020 2019 Non-GAAP 2019

GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP

U.S. dollars and shares in thousands (except per share amounts)

Gross profit $ 49,769 $ 10,036 $ 59,805 $ 77,409 $ 5,087 $ 82,496 (1) Operating (404,290 ) 403,268 (1,022 ) (5,952 ) 14,055 8,103 income (loss) (1,2) Net income (loss) (405,062 ) 402,050 (3,012 ) (6,941 ) 13,275 6,334 attributable to Stratasys Ltd. (1,2,3) Net income (loss) per diluted share $ (7.35 ) $ 7.30 $ (0.05 ) $ (0.13 ) $ 0.25 $ 0.12 attributable to Stratasys Ltd. (4) Acquired(1) intangible 4,065 3,916 assets amortization expense Non-cash stock-based 524 475 compensation expense Restructuring 191 696 and other related costs Impairment charges of 5,256 - intangible assets 10,036 5,087

Acquired(2) intangible 2,162 2,016 assets amortization expense Non-cash stock-based 4,352 4,960 compensation expense Goodwill 386,154 - impairment Restructuring 34 1,992 and other related costs Other 530 - expenses 393,232 8,968

403,268 14,055

(3) Corresponding (1,296 ) (780 ) tax effect Equity method related amortization, 78 - divestments and impairments $ 402,050 $ 13,275

Weighted average(4) number of 55,086 55,086 54,394 54,940 ordinary shares outstanding- DilutedNine Months Ended September 30,

2020

Non-GAAP

2020

2019

Non-GAAP

2019

GAAP

Adjustments

Non-GAAP

GAAP

Adjustments

Non-GAAP

U.S. dollars and shares in thousands (except per share amounts)

Gross profit (1)$

153,375

$

24,062

$

177,437

$

235,033

$

13,780

$

248,813

Operating income (loss) (1,2)(453,468

)

435,987

(17,481

)

(8,418

)

32,376

23,958

Net income (loss) attributable to Stratasys Ltd. (1,2,3)(454,751

)

433,821

(20,930

)

(8,059

)

28,574

20,515

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)$

(8.29

)

$

7.91

$

(0.38

)

$

(0.15

)

$

0.53

$

0.38

(1)

Acquired intangible assets amortization expense12,196

11,714

Non-cash stock-based compensation expense1,424

1,370

Restructuring and other related costs5,187

696

Impairment charges of intangible assets5,256

-

24,062

13,780

(2)

Acquired intangible assets amortization expense6,430

5,688

Non-cash stock-based compensation expense14,470

14,387

Goodwill impairment386,154

-

Restructuring and other related costs3,863

(1,479

)

Other expenses1,007

-

411,925

18,596

435,987

32,376

(3)

Corresponding tax effect(2,396

)

(2,198

)

Equity method related amortization, divestments and impairments230

(1,604

)

$

433,821

$

28,574

(4)

Weighted average number of ordinary shares outstanding- Diluted54,851

54,851

54,201

54,705

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CONTACT: Stratasys Investor Relations Yonah Lloyd Vice President - Investor Relations Yonah.Lloyd@stratasys.com