Stratasys Reports Record Financial Results for the First Quarter

Stratasys Reports Record Financial Results for the First Quarter of 2013

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

Stratasys Ltd. (Nasdaq: SSYS) is the corporate entity formed in 2012 by the merger of 3D printing companies Stratasys Inc. and Objet Ltd., based in Minneapolis, Minn. and Rehovot, Israel. Stratasys manufactures 3D printers and materials for prototyping and production. The company’s patented FDM^® and PolyJet^® processes produce prototypes and manufactured goods directly from 3D CAD files or other 3D content. Systems include affordable desktop 3D printers for idea development, a range of systems for prototyping, and large production systems for direct digital manufacturing. Since June 2012, the company’s range of over 130 3D printing materials has been the widest in the industry and includes more than 120 proprietary inkjet-based photopolymer materials and 10 proprietary FDM-based thermoplastic materials. Stratasys also manufactures Solidscape 3D Printers and operates the RedEye On Demand digital-manufacturing service. The company has more than 1100 employees, holds more than 500 granted or pending additive manufacturing patents globally, and has received more than 20 awards for its technology and leadership. Online at: www.stratasys.com or http://blog.stratasys.com.



Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended March 31,
	2013			2012
	(unaudited)			(unaudited)
Net sales
Products	$	81,810		$	37,546
Services		15,397			7,418
		97,207			44,964

Cost of sales
Products		49,043			17,811
Services		10,790			4,199
		59,833			22,010

Gross profit		37,374			22,954

Operating expenses
Research and development, net		10,789			4,352
Selling, general and administrative		43,325			11,375
		54,114			15,727

Operating income (loss)		(16,740	)		7,227

Other income (expense)		514			296

Income (loss) before income taxes		(16,226	)		7,523

Income taxes (benefit)		(743	)		3,001

Net income (loss)	$	(15,483	)	$	4,522

Net income attributable to non-controlling interest	$	53		$	-

Net income (loss) attributable to Stratasys Ltd.	$	(15,536	)	$	4,522

Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic	$	(0.40	)	$	0.21
Diluted		(0.40	)		0.21

Weighted average ordinary shares outstanding
Basic		38,494			21,266
Diluted		38,494			21,802



Stratasys Ltd.

Consolidated Balance Sheets

(in thousands)
	March 31,			December 31,
	2013			2012
	(unaudited)
ASSETS

Current assets
Cash and cash equivalents	$	65,505		$	133,826
Short-term bank deposits		75,370			20,063
Restricted deposits		820			929
Accounts receivable:
Trade, net		72,375			64,678
Other		20,979			22,934
Inventories		66,395			67,995
Net investment in sales-type leases, net		5,082			5,134
Prepaid expenses		2,894			2,751
Deferred income taxes		7,777			4,968

Total current assets		317,197			323,278

Property, plant and equipment, net		63,842			62,070

Other assets
Goodwill		822,450			822,475
Other intangible assets, net		497,508			510,372
Net investment in sales-type leases		7,990			7,872
Long-term investments		1,634			1,634
Amounts funded in respect of employees
rights upon retirement		2,740			2,628
Other non-current assets		1,728			1,184

Total other assets		1,334,050			1,346,165

Total assets	$	1,715,089		$	1,731,513

LIABILITIES AND EQUITY

Current liabilities
Accounts payable	$	24,587		$	35,235
Other current liabilities		36,964			40,179
Deferred tax liabilities		137			945
Unearned revenues		21,961			18,068

Total current liabilities		83,649			94,427

Non-current liabilities
Employee rights upon retirement		4,238			4,188
Deferred tax liabilities		54,436			54,693
Unearned revenues - long-term		3,137			3,181
Other non-current liabilities		3,178			2,868

Total liabilities		148,638			159,357

Commitments and contingencies

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 60,000 shares;
38,669 and 38,372 shares issued and outstanding at March 31,
2013 and December 31, 2012, respectively		101			101
Additional paid-in capital		1,469,379			1,459,294
Retained earnings		96,966			112,503
Accumulated other comprehensive loss		(606	)		(238	)

Equity attributable to Stratasys Ltd.		1,565,840			1,571,660

Non-controlling interest		611			496

Total equity		1,566,451			1,572,156

Total liabilities and equity	$	1,715,089		$	1,731,513



Stratasys Ltd.

Reconciliation of Pro Forma GAAP to Pro Forma Non-GAAP Results of Operations

(in thousands, except per share data)

	Three Months Ended March 31, 2013								Three Months Ended March 31, 2012
									Pro Forma						Pro Forma
	GAAP						Non-GAAP		GAAP						Non-GAAP
	(unaudited)			Adjustments*			(unaudited)		(unaudited)			Adjustments*			(unaudited)
Net sales
Products	$	81,810		$	1,015		$	82,825	$	71,241		$	-		$	71,241
Services		15,397			-			15,397		11,798			-			11,798
		97,207			1,015			98,222		83,039			-			83,039

Cost of sales
Products		49,043			(19,177	)		29,866		38,426			(10,522	)		27,904
Services		10,790			(343	)		10,447		8,386			(347	)		8,039
		59,833			(19,520	)		40,313		46,812			(10,869	)		35,943

Gross profit		37,374			20,535			57,909		36,227			10,869			47,096

Operating expenses
Research and development, net		10,789			(899	)		9,890		9,072			(871	)		8,201
Selling, general and administrative		43,325			(15,608	)		27,717		33,112			(10,675	)		22,437
		54,114			(16,507	)		37,607		42,184			(11,546	)		30,638

Operating income (loss)		(16,740	)		37,042			20,302		(5,957	)		22,415			16,458

Other income (expense)		514			-			514		193			-			193

Income (loss) before income taxes		(16,226	)		37,042			20,816		(5,764	)		22,415			16,651

Income taxes		(743	)		3,886			3,143		2,610			1,453			4,063

Net income (loss)	$	(15,483	)	$	33,156		$	17,673	$	(8,374	)	$	20,962		$	12,588

Net income attributable to non-controlling interest	$	53		$	40		$	93	$	-		$	-		$	-

Net income (loss) attributable to Stratasys Ltd.	$	(15,536	)	$	33,116		$	17,580	$	(8,374	)	$	20,962		$	12,588

Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic	$	(0.40	)				$	0.46	$	(0.23	)				$	0.34
Diluted		(0.40	)					0.43		(0.23	)					0.32

Weighted average ordinary shares outstanding
Basic		38,494						38,494		36,710						36,710
Diluted		38,494						41,057		36,710						39,857


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,
	2013			2012
Net sales, products
Deferred revenue step-up		1,015			-

Cost of sales, products
Objet intangible assets amortization expense		(18,295	)		(9,824	)
Solidscape intangible assets amortization expense		(436	)		(436	)
Non-cash stock-based compensation expense		(318	)		(262	)
Merger related expense		(97	)		-
Fasotech Co., Ltd intangible assets amortization expense		(31	)		-
		(19,177	)		(10,522	)
Cost of sales, services
Non-cash stock-based compensation expense		(316	)		(347	)
Merger related expense		(27	)		-
		(343	)		(347	)
Research and development, net
Non-cash stock-based compensation expense		(899	)		(871	)

Selling, general and administrative
Objet intangible assets amortization expense		(5,276	)		(2,242	)
Solidscape intangible assets amortization expense		(133	)		(133	)
Fasotech Co., Ltd intangible assets amortization expense		(52	)		-
Non-cash stock-based compensation expense		(3,957	)		(5,113	)
Solidscape acquisition expense		-			(130	)
Merger related expense		(6,190	)		(3,057	)
		(15,608	)		(10,675	)
Income taxes
Tax expense related to non-GAAP adjustments		3,886			1,453

Net income attributable to non-controlling interest
Depreciation and amortization expense attributable to non-controlling interest		40			-

Net income	$	33,116		$	20,962



Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Forward Looking Guidance

Fiscal Year 2013							Earnings (loss) Per Diluted Share Range

U.S. GAAP measure							($0.41) to ($0.16)

Adjustments
Stock-based compensation expense							$0.49 to $0.55
Intangible assets amortization expense							$1.45
Merger related expense							$0.17 to $0.21

Non-GAAP estimate							$1.80 to $1.95

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