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

MINNEAPOLIS & REHOVOT, Israel--(BUSINESS WIRE)--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 [phone]. 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