Stratasys Reports First Quarter 2015 Financial Results

Non-GAAP Discussion Disclosure

The information discussed within this release includes financial results and projections that are in accordance with accounting principles generally accepted in the United States of America (GAAP). In addition, certain non-GAAP financial measures have been provided excluding certain charges, expenses and income. The non-GAAP measures should be read in conjunction with the corresponding GAAP measures and should be considered in addition to, and not as an alternative or substitute for, the measures prepared in accordance with GAAP. The non-GAAP financial measures are included in an effort to provide information that investors may deem relevant to evaluate results from the company's core business operations and to compare the company's performance with prior periods. The non-GAAP financial measures primarily identify and exclude certain discrete items, such as merger-related expenses, amortization of intangible assets, one time write off of deferred tax assets, impairment charges, and expenses associated with share-based compensation required under ASC 718. The company uses these non-GAAP financial measures for evaluating comparable financial performance against prior periods.

This release is available on the Stratasys web site at  www.stratasys.com

Stratasys Ltd. (Nasdaq: SSYS), headquartered in Minneapolis, Minnesota and Rehovot, Israel, is a leading global provider of 3D printing and additive and additive manufacturing solutions. The company's patented FDM®, PolyJet™ and WDM™ 3D Printing technologies produce prototypes and manufactured goods directly from 3D CAD files or other 3D content. Systems include 3D printers for idea development, prototyping and direct digital manufacturing. Stratasys subsidiaries include MakerBot and Solidscape, and the company operates a digital-manufacturing service comprising RedEye, Harvest Technologies and Solid Concepts. Stratasys has more than 2,800 employees, holds over 800 granted or pending additive manufacturing patents globally, and has received more than 25 awards for its technology and leadership. Online at: http://www.stratasys.com and http://blog.stratasys.com

 
Stratasys Ltd.
             
Consolidated Balance Sheets
 
(in thousands)
March 31, December 31,
  2015     2014  
 
ASSETS
 
Current assets
Cash and cash equivalents $ 423,032 $ 442,141
Short-term bank deposits 1,907 595
Accounts receivable, net 142,421 150,806
Inventories 130,958 123,385
Net investment in sales-type leases 8,682 8,170
Prepaid expenses 8,601 7,931
Deferred income taxes 26,569 25,697
Other current assets   20,084     37,903  
 
Total current assets   762,254     796,628  
 
Non-current assets
Goodwill 1,171,077 1,323,502
Other intangible assets, net 534,301 597,903
Property, plant and equipment, net 164,959 157,036
Net investment in sales-type leases - long term 16,129 14,822
Other non-current assets   10,478     9,216  
 
Total non-current assets   1,896,944     2,102,479  
 
Total assets $ 2,659,198   $ 2,899,107  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 47,607 $ 37,359
Short term debt 50,000 50,000
Accrued expenses and other current liabilities 47,069 47,760
Accrued compensation and related benefits 36,826 42,332
Obligations in connection with acquisitions 11,313 28,092
Deferred revenues   47,127     45,023  
 
Total current liabilities   239,942     250,566  
 
Non-current liabilities
Obligations in connection with acquisitions - long term 17,443 26,461
Deferred tax liabilities 43,035 55,835
Deferred revenues - long-term 5,359 5,946
Other non-current liabilities   28,918     25,091  
 
Total non-current liabilities   94,755     113,333  
 
Total liabilities   334,697     363,899  
 
Redeemable non-controlling interests 3,850 3,969
 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000
shares; 51,016 and 50,923 shares issued and outstanding
at March 31, 2015 and December 31, 2014, respectively 139 139
Additional paid-in capital 2,579,874 2,568,149
Accumulated deficit (250,159 ) (33,871 )
Accumulated other comprehensive loss   (9,675 )   (3,647 )
Equity attributable to Stratasys Ltd. 2,320,179 2,530,770
Non-controlling interest 472 469
 
Total equity   2,320,651     2,531,239  
 
Total liabilities and equity $ 2,659,198   $ 2,899,107  
 
 
Stratasys Ltd.
         
Consolidated Statements of Operations
 
(in thousands, except per share data)
 
Three Months Ended March 31,
2015 2014
(unaudited)   (unaudited)
Net sales
Products $ 126,667 $ 129,252
Services   46,064     21,689  
172,731 150,941
 
Cost of sales
Products 98,371 61,022
Services   28,272     12,191  
126,643 73,213
   
Gross profit 46,088 77,728
 
Operating expenses
Research and development, net 27,238 16,771
Selling, general and administrative 102,608 67,617
Goodwill impairment 150,400 -
Change in the fair value of obligations in connection with acquisitions   (13,256 )   (7,495 )
266,990 76,893
   
Operating income (loss) (220,902 ) 835
 
Financial expense (5,124 ) (1,336 )
   
Loss before income taxes (226,026 ) (501 )
 
Income tax benefit   (9,622 )   (4,588 )
 
Net income (loss) (216,404 ) 4,087
 
Net loss attributable to non-controlling interest   (116 )   -  
 
Net income (loss) attributable to Stratasys Ltd. $ (216,288 ) $ 4,087  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (4.24 ) $ 0.08
Diluted (4.24 ) 0.08
 
Weighted average ordinary shares outstanding
Basic 50,956 49,273
Diluted 50,956 51,240
 
               
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
 
Three Months Ended March 31, 2015 Three Months Ended March 31, 2014
 
GAAP Non-GAAP GAAP Non-GAAP
(unaudited)   Adjustments*   (unaudited) (unaudited)   Adjustments*   (unaudited)
Net sales
Products $ 126,667 $ - $ 126,667 $ 129,252 $ 235 $ 129,487
Services   46,064     -     46,064     21,689     -     21,689  
172,731 - 172,731 150,941 235 151,176
 
Cost of sales
Products 98,371 (45,912 ) 52,459 61,022 (13,728 ) 47,294
Services   28,272     (1,409 )   26,863     12,191     (433 )   11,758  
126,643 (47,321 ) 79,322 73,213 (14,161 ) 59,052
           
Gross profit 46,088 47,321 93,409 77,728 14,396 92,124
 
Operating expenses
Research and development, net 27,238 (2,817 ) 24,421 16,771 (1,496 ) 15,275
Selling, general and administrative 102,608 (32,844 ) 69,764 67,617 (13,522 ) 54,095
Goodwill impairment 150,400 (150,400 ) - - - -
Change in the fair value of obligations in connection with acquisitions   (13,256 )   13,256     -     (7,495 )   7,495     -  
266,990 (172,805 ) 94,185 76,893 (7,523 ) 69,370
           
Operating income (loss) (220,902 ) 220,126 (776 ) 835 21,919 22,754
 
Financial expense (5,124 ) - (5,124 ) (1,336 ) - (1,336 )
           
Income (loss) before income taxes (226,026 ) 220,126 (5,900 ) (501 ) 21,919 21,418
 
Income taxes (benefit)   (9,622 )   1,814     (7,808 ) 132.3 %   (4,588 )   5,408     820  
 
Net income (loss) (216,404 ) 218,312 1,908 4,087 16,511 20,598
 
Net loss attributable to non-controlling interest   (116 )   -     (116 )   -     -     -  
 
Net income (loss) attributable to Stratasys Ltd. $ (216,288 ) $ 218,312   $ 2,024   $ 4,087   $ 16,511   $ 20,598  
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (4.24 ) $ 0.04 $ 0.08 $ 0.42
Diluted (4.24 ) 0.04 0.08 0.40
 
Weighted average ordinary shares outstanding
Basic 50,956 50,956 49,273 49,273
Diluted 50,956 52,341 51,240 51,240
 
The Company considers these non-GAAP measures to be indicative of its core operating results and facilitates a comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes, however these measures should not be viewed as a substitute for the Company’s GAAP results.

 

* Refer to the "Reconciliation of Non-GAAP Adjustments" herein for further information regarding adjustments.

 
       
Stratasys Ltd.
 
Reconciliation of Non-GAAP Adjustments
 
(in thousands)
 
Three Months Ended March 31,
2015 2014
Net sales, products
Deferred revenue step-up amortization $ - $ 235
 
Cost of sales, products
Acquired intangible assets amortization (14,905 ) (13,225 )
Intangible assets impairment (29,782 ) -
Non-cash stock-based compensation expense   (1,225 )   (503 )
(45,912 ) (13,728 )
Cost of sales, services
Non-cash stock-based compensation expense (608 ) (409 )
Merger and acquisition related expense   (801 )   (24 )
(1,409 ) (433 )
Research and development, net
Non-cash stock-based compensation expense (1,868 ) (938 )
Merger and acquisition related expense   (949 )   (558 )
(2,817 ) (1,496 )
 
Selling, general and administrative
Acquired intangible assets amortization (6,456 ) (5,364 )
Non-cash stock-based compensation expense (6,059 ) (4,886 )
Merger and acquisition related expense (6,906 ) (3,272 )
Intangible assets impairment   (13,423 )   -  
(32,844 ) (13,522 )
 
Goodwill impairment (150,400 ) -
 
Change in the fair value of obligations in connection with acquisitions
Change in the fair value of obligations in connection with acquisitions 13,256 7,495
 
Income taxes
Tax expense related to non-GAAP adjustments 1,814 5,408
 
   
Net income $ 218,312   $ 16,511  
 
       
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Fiscal Year 2015
 
(in millions, except per share data)
 
GAAP net loss ($256) to ($224)
 

Adjustments

Stock-based compensation expense $35 to $38
Intangible assets amortization expense $78
Goodwill and other intangible asset impairment and restructuring charges $197 to $199
Merger related expense $28 to $30
Tax expense related to Non-GAAP adjustments ($24) to ($26)
 
Non-GAAP net income $63 to $90
 
GAAP loss per share ($5.0) to ($4.38)
 
Non-GAAP diluted earnings per share $1.20 to $1.70

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