Business Wire | Mar 1, 2021 07:30AM EST

Stratasys Releases Fourth Quarter and Full Year 2020 Financial Results

Mar. 01, 2021

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--Mar. 01, 2021--Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the fourth quarter and full year 2020.

Fourth Quarter 2020 Financial Results Summary Compared to Fourth Quarter 2019:

* Revenue was $142.4 million, compared to $160.2 million. * GAAP gross margin was 46.4%, compared to 49.1%. * Non-GAAP gross margin was 49.5%, compared to 52.4%. * GAAP operating loss was $2.5 million, compared to an operating loss of $3.3 million. * Non-GAAP operating income was $8.3 million, compared to $10.2 million. * GAAP net income was $11.0 million, or $0.20 per diluted share, compared to a net loss of $2.8 million, or $(0.05) per diluted share. * Non-GAAP net income was $7.0 million, or $0.13 per diluted share, compared to $10.0 million, or $0.18 per diluted share. * Adjusted EBITDA was $14.6 million, compared to $16.6 million. * Generated $23.7 million of cash from operations.

Dr. Yoav Zeif, Chief Executive Officer of Stratasys, commenting on the results, stated, "Our results reflect the resilience and diversification of our business model. We delivered sequential revenue growth in the back half of the year and this quarter produced the highest operating cash flow in almost three years. We believe both our industry and company are starting to enter a meaningful, sustained trajectory of unprecedented growth and are excited to capitalize on the opportunities ahead."

Dr. Zeif continued, "In 2020, we implemented a new strategy to be the first choice for polymer 3D printing, with a specific focus on expanding into fast-growing manufacturing applications. We rightsized the company and enhanced our operating model to be application-centric, allowing our team to better leverage synergies. Stratasys is well-positioned to grow, armed with a strong balance sheet with no debt. This year we will add three new technology platforms and will continue to prudently execute on our capital allocation strategy to meaningfully accelerate revenue, earnings and cash flow as our investments begin to contribute in the years ahead and, in turn, drive value for our shareholders."

2020 Financial Results Summary Compared to 2019:

* Revenue for 2020 was $520.8 million compared to $636.1 million. * GAAP gross margin in 2020 was 42.1%, compared to 49.3%. * Non-GAAP gross margin in 2020 was 47.6%, compared to 52.3%. * GAAP operating loss for 2020 was $456.0 million, primarily due to $386.2 million goodwill impairment in the third quarter, compared to $11.7 million operating loss. * Non-GAAP operating loss for 2020 was $9.1 million, compared to $34.1 million operating income. * Adjusted EBITDA in 2020 was $16.0 million, compared to $60.0 million. * GAAP net loss for 2020 was $443.7 million, or ($8.08) per diluted share, primarily due to a $386.2 million goodwill impairment in the third quarter, compared to a loss of $10.8 million, or ($0.20) per diluted share. * Non-GAAP net loss for 2020 was $13.9 million, or $(0.25) per diluted share, compared to non-GAAP net income of $30.5 million, or $0.56 per diluted share. * Generated $27.8 million in cash from operations in 2020 compared to $11.2 million used.

Financial Outlook:

Given the dynamic and evolving impact of the pandemic on the Company's operations, and uncertainty around the timing and extent of an anticipated recovery, the Company is providing the following information based on its pipeline, current market and industry conditions, and previously communicated information:

* First quarter 2021 revenue is anticipated to track relatively similar to the first quarter of 2020. * Second quarter 2021 revenue should approximate mid-teens percentage growth year-over-year, assuming current consumption trends and the impact of the pandemic persist. * Full year operating expense is expected to increase over 2020 by approximately $25 million primarily due to the return from a four-day to a five-day work week as of January 1st, 2021, as well as the impact of recent acquisitions. Longer term, the Company expects to realize significant leverage benefits from its investments as revenue growth accelerates in 2022 and beyond. * Capital expenditures are anticipated to range from $24 million to $30 million.

Stratasys Ltd. Fourth Quarter 2020 Webcast and Conference Call Details

The Company plans to webcast its conference call to discuss its fourth quarter and full year 2020 financial results on Monday, March 1, 2021 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://78449.themediaframe.com/dataconf/productusers/ssys/mediaframe/43687/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 is leading the global shift to additive manufacturing with innovative 3D printing solutions for industries such as aerospace, automotive, consumer products and healthcare. 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, 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 2021, 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 and degree of severity of, and strength of recovery from, the global COVID-19 pandemic; 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 extent of our success at successfully integrating into our existing business, or making additional, 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 supply chain and business); potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets that we have recently acquired or may acquire in the future; 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, 2020 (the "2020 Annual Report"), which we expect to file with the Securities and Exchange Commission (the "SEC") on March 1, 2021. Readers are urged to carefully review and consider the various disclosures made throughout our 2020 Annual Report and the Reports of Foreign Private Issuer on Form 6-K that will attach Stratasys' unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly periods throughout 2021, which will be furnished to the SEC over the course of 2021, 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 (x) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, and (y) 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 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) December 31, December 31,

2020 2019

ASSETS Current assetsCash and cash equivalents $ 272,092 $ 293,484

Short-term deposits 27,000 28,300

Accounts receivable, net 106,068 132,558

Inventories 131,672 168,504

Prepaid expenses 6,717 6,567

Other current assets 16,943 29,659

Total current assets 560,492 659,072

Non-current assetsProperty, plant and equipment, net 201,232 189,706

Goodwill 35,694 385,658

Other intangible assets, net 131,569 87,328

Operating lease right-of-use assets 21,298 20,936

Other non-current assets 39,717 38,819

Total non-current assets 429,510 722,447

Total assets $ 990,002 $ 1,381,519

LIABILITIES AND EQUITY Current liabilitiesAccounts payable $ 16,987 $ 35,818

Accrued expenses and other current 31,061 28,528 liabilitiesAccrued compensation and related benefits 25,659 34,013

Deferred revenues - short-term 49,165 52,268

Operating lease liabilities - short-term 9,282 9,292

Total current liabilities 132,154 159,919

Non-current liabilitiesDeferred revenues - long-term 14,227 16,039

Operating lease liabilities - long term 12,567 12,445

Other non-current liabilities 71,459 35,343

Total non-current liabilities 98,253 63,827

Total liabilities 230,407 223,746

Redeemable non-controlling interests 227 622

EquityOrdinary shares, NIS 0.01 nominal value,authorized 180,000 thousandsshares; 56,617 thousands shares and 54,441thousands shares issuedand outstanding at December 31, 2020 and 155 148 2019, respectivelyAdditional paid-in capital 2,753,955 2,706,894

Accumulated other comprehensive loss (8,846 ) (7,716 )

Accumulated deficit (1,985,896 ) (1,542,175 )

Total equity 759,368 1,157,151

Total liabilities and equity $ 990,002 $ 1,381,519

Stratasys Ltd.Consolidated Statements of Operations(in thousands, except per share data)Three Months Ended December 31,

Twelve Months Ended December 31,

2020

2019

2020

2019

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Net salesProducts$

99,185

$

108,968

$

339,782

$

430,746

Services43,210

51,189

181,035

205,334

142,395

160,157

520,817

636,080

Cost of salesProducts44,679

46,825

171,235

182,430

Services31,697

34,673

130,188

139,958

76,376

81,498

301,423

322,388

Gross profit66,019

78,659

219,394

313,692

Operating expensesResearch and development, net18,953

24,019

84,012

94,253

Selling, general and administrative49,595

57,921

205,224

231,138

Goodwill impairment-

-

386,154

-

68,548

81,940

675,390

325,391

Operating loss(2,529

)

(3,281

)

(455,996

)

(11,699

)

Financial income (expense), net273

1,760

(575

)

4,555

Loss before income taxes(2,256

)

(1,521

)

(456,571

)

(7,144

)

Income tax expenses (benefit)(14,144

)

439

(16,394

)

3,523

Share in profits (losses) of associated companies(1,200

)

(907

)

(3,939

)

(412

)

Net income (loss)10,688

(2,867

)

(444,116

)

(11,079

)

Net loss attributable to non-controlling interests(341

)

(78

)

(395

)

(230

)

Net income (loss) attributable to Stratasys Ltd.$

11,029

$

(2,789

)

$

(443,721

)

$

(10,849

)

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

0.20

$

(0.05

)

$

(8.08

)

$

(0.20

)

Diluted$

0.20

$

(0.05

)

$

(8.08

)

$

(0.20

)

Basic55,118

54,435

54,918

54,260

Diluted55,318

54,435

54,918

54,260

Stratasys Ltd. ConsolidatedStatements ofOperations (in thousands,except per sharedata) Three Months Ended Twelve Months Ended December 31, December 31,

2020 2019 2020 2019

(unaudited) (unaudited) (unaudited) (unaudited)

Net salesProducts $ 99,185 $ 108,968 $ 339,782 $ 430,746

Services 43,210 51,189 181,035 205,334

142,395 160,157 520,817 636,080

Cost of salesProducts 44,679 46,825 171,235 182,430

Services 31,697 34,673 130,188 139,958

76,376 81,498 301,423 322,388

Gross profit 66,019 78,659 219,394 313,692

Operating expensesResearch and 18,953 24,019 84,012 94,253 development, netSelling, general and 49,595 57,921 205,224 231,138 administrativeGoodwill impairment - - 386,154 -

68,548 81,940 675,390 325,391

Operating loss (2,529 ) (3,281 ) (455,996 ) (11,699 )

Financial income 273 1,760 (575 ) 4,555 (expense), net Loss before income (2,256 ) (1,521 ) (456,571 ) (7,144 )taxes Income tax expenses (14,144 ) 439 (16,394 ) 3,523 (benefit) Share in profits (1,200 ) (907 ) (3,939 ) (412 )(losses) ofassociated companies Net income (loss) 10,688 (2,867 ) (444,116 ) (11,079 )

Net lossattributable to (341 ) (78 ) (395 ) (230 )non-controllinginterests Net income (loss) $ 11,029 $ (2,789 ) $ (443,721 ) $ (10,849 )attributable toStratasys Ltd. Net income (loss)per ordinary shareattributable toStratasys Ltd.Basic $ 0.20 $ (0.05 ) $ (8.08 ) $ (0.20 )

Diluted $ 0.20 $ (0.05 ) $ (8.08 ) $ (0.20 )

Basic 55,118 54,435 54,918 54,260

Diluted 55,318 54,435 54,918 54,260

Three Months Ended December 31,

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)$

66,019

$

4,520

$

70,539

$

78,659

$

5,294

$

83,953

Operating income (loss) (1,2)(2,529

)

10,861

8,332

(3,281

)

13,436

10,155

Net income (loss) attributableto Stratasys Ltd. (1,2,3)11,029

(4,001

)

7,028

(2,789

)

12,741

9,952

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

0.20

$

(0.07

)

$

0.13

$

(0.05

)

$

0.23

$

0.18

(1)

Acquired intangible assets amortization expense3,411

4,770

Non-cash stock-based compensation expense347

478

Restructuring and other related costs762

46

4,520

5,294

(2)

Acquired intangible assets amortization expense2,290

2,985

Non-cash stock-based compensation expense3,962

4,325

Restructuring and other related costs449

556

Other expenses (income)(360

)

276

6,341

8,142

10,861

13,436

(3)

Corresponding tax effect(1,002

)

(721

)

Release of valuation allowance(14,007

)

-

Equity method related amortization, divestments and impairments483

26

Adjustments attributable to non-controlling interest(336

)

-

$

(4,001

)

$

12,741

(4)

Weighted average number of ordinaryshares outstanding- Diluted55,318

55,318

54,435

54,738

Three Months Ended December 31,

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 $ 66,019 $ 4,520 $ 70,539 $ 78,659 $ 5,294 $ 83,953 (1) Operating (2,529 ) 10,861 8,332 (3,281 ) 13,436 10,155 income (loss) (1,2) Net income (loss) attributable to Stratasys 11,029 (4,001 ) 7,028 (2,789 ) 12,741 9,952 Ltd. (1,2,3) Net income (loss) per diluted share attributable to Stratasys $ 0.20 $ (0.07 ) $ 0.13 $ (0.05 ) $ 0.23 $ 0.18 Ltd. (4) Acquired(1) intangible 3,411 4,770 assets amortization expense Non-cash stock-based 347 478 compensation expense Restructuring 762 46 and other related costs 4,520 5,294



Acquired(2) intangible 2,290 2,985 assets amortization expense Non-cash stock-based 3,962 4,325 compensation expense Restructuring 449 556 and other related costs Other expenses (360 ) 276 (income) 6,341 8,142

10,861 13,436



(3) Corresponding (1,002 ) (721 ) tax effect Release of (14,007 ) - valuation allowance Equity method related 483 26 amortization, divestments and impairments Adjustments attributable to (336 ) - non-controlling interest $ (4,001 ) $ 12,741

(4) Weighted average number of ordinary shares 55,318 55,318 54,435 54,738 outstanding- Diluted Twelve Months Ended December 31,

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)$

219,394

$

28,582

$

247,976

$

313,692

$

19,074

$

332,766

Operating income (loss) (1,2)(455,996

)

446,848

(9,148

)

(11,699

)

45,812

34,113

Net income (loss) attributable toStratasys Ltd. (1,2,3)(443,721

)

429,820

(13,901

)

(10,849

)

41,315

30,466

Net income (loss) per diluted share attributable

to Stratasys Ltd. (4)

$

(8.08

)

$

7.83

$

(0.25

)

$

(0.20

)

$

0.76

$

0.56

(1)

Acquired intangible assets amortization expense15,607

16,484

Non-cash stock-based compensation expense1,771

1,848

Restructuring and other related costs5,948

742

Impairment charges of intangible assets5,256

-

28,582

19,074

(2)

Acquired intangible assets amortization expense8,720

8,673

Non-cash stock-based compensation expense18,433

18,716

Goodwill impairment386,154

-

Gain from divestiture, net of transaction costs-

(3,578

)

Restructuring and other related costs4,312

2,655

Other expenses647

272

418,266

26,738

446,848

45,812

(3)

Corresponding tax effect(3,398

)

(2,919

)

Release of valuation allowance(14,007

)

-

Equity method related amortization, divestments and impairments713

(1,578

)

Adjustments attributable to non-controlling interest(336

)

-

$

429,820

$

41,315

(4)

Weighted average number of ordinary

shares outstanding- Diluted

54,918

54,918

54,260

54,713

View source version on businesswire.com: https://www.businesswire.com/news/home/20210301005342/en/

CONTACT: Yonah Lloyd CCO / VP, Investor Relations Yonah.Lloyd@stratasys.com