Stratasys Reports Record Second Quarter Financial Results

 
Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)
               
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
(unaudited)   (unaudited) (unaudited)   (unaudited)
Net sales
Products $ 154,090 $ 90,213 $ 283,342 $ 172,023
Services   24,375     16,272     46,064     31,669  
178,465 106,485 329,406 203,692
 
Cost of sales
Products 73,394 45,731 134,416 94,774
Services   13,437     10,349     25,628     21,139  
86,831 56,080 160,044 115,913
       
Gross profit 91,634 50,405 169,362 87,779
 
Operating expenses
Research and development, net 18,957 10,337 35,728 21,126
Selling, general and administrative 77,929 42,665 145,546 85,990
Change in fair value of earn-out obligations   628     -     (6,867 )   -  
97,514 53,002 174,407 107,116
       
Operating loss (5,880 ) (2,597 ) (5,045 ) (19,337 )
 
Other income (loss) 337 138 (999 ) 652
       
Loss before income taxes (5,543 ) (2,459 ) (6,044 ) (18,685 )
 
Income taxes (benefit)   (5,370 )   326     (9,958 )   (417 )
 
Net income (loss) $ (173 ) $ (2,785 ) $ 3,914 $ (18,268 )
 
Net income attributable to non-controlling interest $ -   $ 15   $ -   $ 68  
 
Net income (loss) attributable to Stratasys Ltd. $ (173 ) $ (2,800 ) $ 3,914   $ (18,336 )
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.00 ) $ (0.07 ) $ 0.08 $ (0.47 )
Diluted (0.00 ) (0.07 ) 0.08 (0.47 )
 
Weighted average ordinary shares outstanding
Basic 49,373 38,781 49,323 38,637
Diluted 49,373 38,781 51,238 38,637
 
 
Stratasys Ltd.
 
Consolidated Balance Sheets
 
(in thousands)
   

  June 30,  

    December 31,
2014 2013
(unaudited)
ASSETS
 
Current assets
Cash and cash equivalents $ 502,314 $ 414,088
Short-term bank deposits 75,622 200,370
Accounts receivable, net 113,583 99,200
Inventories 114,346 88,406
Investment in sales-type leases, net 6,651 6,696
Prepaid expenses 7,966 5,470
Deferred income taxes 22,448 16,501
Other current assets   25,325   21,398
 
Total current assets   868,255   852,129
 
Non-current assets
Goodwill 1,203,296 1,195,891
Other intangible assets, net 587,566 622,330
Investment in sales-type leases 13,007 11,219

Amounts funded in respect of employee rights upon retirement

3,369 3,166
Property, plant and equipment, net 110,848 91,005
Other non-current assets   4,827   6,481
 
Total non-current assets   1,922,913   1,930,092
 
Total assets $ 2,791,168 $ 2,782,221
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 38,856 $ 35,375
Accrued expenses and other current liabilities 32,919 32,849
Accrued compensation and related benefits 27,427 21,441
Earn-out obligation 11,458 12,027
Unearned revenues   41,895   36,033
 
Total current liabilities   152,555   137,725
 
Non-current liabilities
Employee rights upon retirement 4,999 4,683
Earn-out obligation - long-term - 16,998
Deferred tax liabilities 97,955 105,901
Unearned revenues - long-term 4,618 3,315
Other non-current liabilities   10,870   13,812
 
Total liabilities   270,997   282,434
 
Equity

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 shares; 49,436 and 49,211 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively

134 133
Additional paid-in capital 2,428,978 2,412,197
Retained earnings 89,463 85,549
Accumulated other comprehensive income   1,596   1,908
 
Total equity   2,520,171   2,499,787
 
Total liabilities and equity $ 2,791,168 $ 2,782,221
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
           
Three Months Ended June 30, 2014 Three Months Ended June 30, 2013
 
GAAP Non-GAAP GAAP Non-GAAP
(unaudited)   Adjustments*   (unaudited) (unaudited)   Adjustments*   (unaudited)
Net sales
Products $ 154,090 $ - $ 154,090 $ 90,213 $ 199 $ 90,412
Services   24,375     -     24,375   16,272     -     16,272
178,465 - 178,465 106,485 199 106,684
 
Cost of sales
Products 73,394 (14,739 ) 58,655 45,731 (12,171 ) 33,560
Services   13,437     (340 )   13,097   10,349     (343 )   10,006
86,831 (15,079 ) 71,752 56,080 (12,514 ) 43,566
           
Gross profit 91,634 15,079 106,713 50,405 12,713 63,118
 
Operating expenses
Research and development, net 18,957 (1,318 ) 17,639 10,337 (846 ) 9,491
Selling, general and administrative 77,929 (17,617 ) 60,312 42,665 (10,748 ) 31,917
Change in fair value of earn-out obligations   628     (628 )   -   -       -
97,514 (19,563 ) 77,951 53,002 (11,594 ) 41,408
           
Operating income (loss) (5,880 ) 34,642 28,762 (2,597 ) 24,307 21,710
 
Other income 337 - 337 138 - 138
           
Income (loss) before income taxes (5,543 ) 34,642 29,099 (2,459 ) 24,307 21,848
 
Income taxes (benefit)   (5,370 )   6,475     1,105   326     2,916     3,242
 
Net income (loss) $ (173 ) $ 28,167 $ 27,994 $ (2,785 ) $ 21,391 $ 18,606
 
Net income attributable to non-controlling interest $ -   $ -   $ - $ 15   $ 25   $ 40
 
Net income (loss) attributable to Stratasys Ltd. $ (173 ) $ 28,167   $ 27,994 $ (2,800 ) $ 21,366   $ 18,566
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ (0.00 ) $ 0.57 $ (0.07 ) $ 0.48
Diluted (0.00 ) 0.55 (0.07 ) 0.45
 
Weighted average ordinary shares outstanding
Basic 49,373 49,373 38,781 38,781
Diluted 49,373 51,196 38,781 41,146
 

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 GAAP to Non-GAAP Results of Operations
 
(in thousands, except per share data)
                       
Six Months Ended June 30, 2014 Six Months Ended June 30, 2013
 
GAAP Non-GAAP GAAP Non-GAAP
(unaudited)   Adjustments*   (unaudited) (unaudited)   Adjustments*   (unaudited)
Net sales
Products $ 283,342 $ 235 $ 283,577 $ 172,023 $ 1,214 $ 173,237
Services   46,064     -     46,064     31,669     -     31,669
329,406 235 329,641 203,692 1,214 204,906
 
Cost of sales
Products 134,416 (28,468 ) 105,948 94,774 (31,348 ) 63,426
Services   25,628     (774 )   24,854     21,139     (685 )   20,454
160,044 (29,242 ) 130,802 115,913 (32,033 ) 83,880
           
Gross profit 169,362 29,477 198,839 87,779 33,247 121,026
 
Operating expenses
Research and development, net 35,728 (2,813 ) 32,915 21,126 (1,745 ) 19,381
Selling, general and administrative 145,546 (31,140 ) 114,406 85,990 (26,356 ) 59,634
Change in fair value of earn-out obligations   (6,867 )   6,867     -     -     -     -
174,407 (27,086 ) 147,321 107,116 (28,101 ) 79,015
           
Operating income (loss) (5,045 ) 56,563 51,518 (19,337 ) 61,348 42,011
 
Other income (loss) (999 ) - (999 ) 652 - 652
           
Income (loss) before income taxes (6,044 ) 56,563 50,519 (18,685 ) 61,348 42,663
 
Income taxes (benefit)   (9,958 )   11,884     1,926     (417 )   6,802     6,385
 
Net income (loss) $ 3,914 $ 44,679 $ 48,593 $ (18,268 ) $ 54,546 $ 36,278
 
Net income attributable to non-controlling interest $ -   $ -   $ -   $ 68   $ 65   $ 133
 
Net income (loss) attributable to Stratasys Ltd. $ 3,914   $ 44,679   $ 48,593   $ (18,336 ) $ 54,481   $ 36,145
 
Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic $ 0.08 $ 0.99 $ (0.47 ) $ 0.94
Diluted 0.08 0.95 (0.47 ) 0.88
 
Weighted average ordinary shares outstanding
Basic 49,323 49,323 38,637 38,637
Diluted 51,238 51,221 38,637 41,111
 

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 June 30,   Six Months Ended June 30,
2014     2013 2014     2013
Net sales, products
Deferred revenue step-up $ - $ 199 $ 235 $ 1,214
 
Cost of sales, products
Acquired intangible assets amortization (14,029 ) (11,780 ) (27,254 ) (30,542 )
Non-cash stock-based compensation expense (710 ) (314 ) (1,214 ) (633 )
Merger related expense   -     (77 )   -     (173 )
(14,739 ) (12,171 ) (28,468 ) (31,348 )
Cost of sales, services
Non-cash stock-based compensation expense (324 ) (318 ) (732 ) (633 )
Merger related expense   (16 )   (25 )   (42 )   (52 )
(340 ) (343 ) (774 ) (685 )
Research and development, net
Non-cash stock-based compensation expense (885 ) (846 ) (1,823 ) (1,745 )
Performance bonus expense (347 ) - (904 ) -
Merger related expense   (86 )     (86 )  
(1,318 ) (846 ) (2,813 ) (1,745 )
 
Selling, general and administrative
Acquired intangible assets amortization (5,507 ) (2,425 ) (10,871 ) (7,886 )
Non-cash stock-based compensation expense (5,159 ) (3,881 ) (10,045 ) (7,839 )
Merger and acquisition related expense (4,352 ) (4,442 ) (5,836 ) (10,631 )
Performance bonus expense   (2,599 )   -     (4,388 )   -  
(17,617 ) (10,748 ) (31,140 ) (26,356 )
Change in fair value of earn-out obligation
Change in Earn-out obligation (628 ) - 6,867 -
 
Income taxes
Tax expense related to non-GAAP adjustments 6,475 2,916 11,884 6,802
 
Net income attributable to non-controlling interest
Depreciation and amortization expense attributable to non-controlling interest   -     25     -     65  
       
Net income $ 28,167   $ 21,366   $ 44,679   $ 54,481  
 

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