Stratasys Releases Third Quarter 2018 Financial Results

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, changes in fair value of obligations in connection with acquisitions 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,
2018 2017
           
 
ASSETS
 
Current assets
Cash and cash equivalents $ 348,887 $ 328,761
Accounts receivable, net 129,477 132,671
Inventories 118,075 115,717
Net investment in sales-type leases 3,489 7,208
Prepaid expenses 5,932 7,696
Other current assets   41,870     22,858  
 
Total current assets   647,730     614,911  
 
Non-current assets
Net investment in sales-type leases - long term 2,038 4,439
Property, plant and equipment, net 191,437 199,951
Goodwill 386,728 387,108
Other intangible assets, net 117,448 142,122
Other non-current assets   20,428     31,219  
 
Total non-current assets   718,079     764,839  
 
Total assets $ 1,365,809   $ 1,379,750  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 38,944 $ 39,849
Current portion of long term-debt 5,143 5,143
Accrued expenses and other current liabilities 34,257 30,041
Accrued compensation and related benefits 32,382 35,356
Deferred revenues   53,102     52,908  
 
Total current liabilities   163,828     163,297  
 
Non-current liabilities
Long-term debt 23,286 27,143
Deferred tax liabilities 1,836 7,069
Deferred revenues - long-term 16,009 15,200
Other non-current liabilities   30,459     32,899  
 
Total non-current liabilities   71,590     82,311  
 
Total liabilities   235,418     245,608  
 
Redeemable non-controlling interests 931 1,635
 
Equity

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands
shares; 53,810 thousands shares and 53,631 thousands shares
issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 
146 145
Additional paid-in capital 2,675,762 2,663,274
Accumulated other comprehensive loss (8,815 ) (7,023 )
Accumulated deficit   (1,537,633 )   (1,523,906 )
Equity attributable to Stratasys Ltd. 1,129,460 1,132,490
Non-controlling interest - 17
 
Total equity   1,129,460     1,132,507  
 
Total liabilities and equity $ 1,365,809   $ 1,379,750  
 
Stratasys Ltd.
                   
Consolidated Statements of Operations
 
(in thousands, except per share data)
 
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
(unaudited)     (unaudited) (unaudited)     (unaudited)
Net sales
Products $ 109,647 $ 108,401 $ 331,967 $ 344,509
Services   52,402     47,466     154,151     144,510  
162,049 155,867 486,118 489,019
 
Cost of sales
Products 48,640 49,840 147,120 159,043
Services   34,481     30,788     100,773     94,465  
83,121 80,628 247,893 253,508
       
Gross profit 78,928 75,239 238,225 235,511
 
Operating expenses
Research and development, net 25,786 21,767 74,585 69,652
Selling, general and administrative   49,792     60,345     168,684     190,406  
75,578 82,112 243,269 260,058
       
Operating loss 3,350 (6,873 ) (5,044 ) (24,547 )
 
Financial income (expense), net (39 ) (305 ) (114 ) 380
       
Loss before income taxes 3,311 (7,178 ) (5,158 ) (24,167 )
 
Income tax expenses 304 2,571 1,110 5,205
 
Share in losses of associated companies   (3,752 )   (489 )   (11,185 )   (1,006 )
 
Net loss (745 ) (10,238 ) (17,453 ) (30,378 )
 
Net loss attributable to non-controlling interests (66 ) (81 ) (182 ) (377 )
 
Net loss attributable to Stratasys Ltd. $ (679 ) $ (10,157 ) $ (17,271 ) $ (30,001 )
 
Net loss per ordinary share attributable to Stratasys Ltd.
Basic $ (0.01 ) $ (0.19 ) $ (0.34 ) $ (0.57 )
Diluted (0.01 ) (0.19 ) (0.34 ) (0.57 )
 
 
Basic 53,769 53,012 53,716 52,827
Diluted 53,769 53,012 53,716 52,827
 
Stratasys Ltd.    
                                 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
           
Three Months Ended September 30,
2018 Non-GAAP 2018 2017 Non-GAAP 2017
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
 
Gross profit (1) $ 78,928 $ 5,545 $ 84,473 $ 75,239 $ 6,598 $ 81,837
Operating income (loss) (1,2) 3,350 4,815 8,165 (6,873 ) 14,933 8,060

Net income (loss) attributable to

Stratasys Ltd. (1,2,3)

(679 ) 6,383 5,704 (10,157 ) 14,299 4,142

Net income (loss) per diluted share attributable

to Stratasys Ltd. (4)

$ (0.01 ) $ 0.12 $ 0.11 $ (0.19 ) $ 0.27 $ 0.08
 
 
(1 ) Acquired intangible assets amortization expense 5,221 5,688
Non-cash stock-based compensation expense 351 642
Reorganization and other related costs (27 ) 72
Merger and acquisition related expense   -     196  
5,545 6,598
 
(2 ) Acquired intangible assets amortization expense 2,532 2,593
Non-cash stock-based compensation expense 3,662 4,256
Change in fair value of obligations in connection with acquisitions - 65
Gain from divestiture, net of transaction costs (7,016 ) -
Reorganization and other related costs 92 383

Merger and acquisition related expense

  -     1,038  
  (730 )   8,335  
  4,815     14,933  
 
 
(3 ) Corresponding tax effect (750 ) (836 )

Acquired intangible assets amortization and write-off related to equity

method investments

  2,318     202  
$ 6,383   $ 14,299  
 
(4 ) Weighted average number of ordinary

shares outstanding- Diluted

53,769 53,992 53,012 53,664
 
Stratasys Ltd.
                                     
Reconciliation of GAAP to Non-GAAP Results of Operations
 
           
Nine Months Ended September 30,
2018 Non-GAAP 2018 2017 Non-GAAP 2017
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
 
Gross profit (1) $ 238,225 $ 16,852 $ 255,077 $ 235,511 $ 19,996 $ 255,507
Operating income (loss) (1,2) (5,044 ) 28,750 23,706 (24,547 ) 47,708 23,161
Net income (loss) attributable to

Stratasys Ltd. (1,2,3)

(17,271 ) 33,789 16,518 (30,001 ) 45,729 15,728
Net income (loss) per diluted share attributable

to Stratasys Ltd. (4)

$ (0.34 ) $ 0.65 $ 0.31 $ (0.57 ) $ 0.86 $ 0.29
 
 
(1 ) Acquired intangible assets amortization expense 15,645 17,081
Non-cash stock-based compensation expense 1,180 2,084
Reorganization and other related costs 27 303
Merger and acquisition related expense   -     528  
16,852 19,996
 
(2 ) Acquired intangible assets amortization expense 7,629 7,725
Non-cash stock-based compensation expense 10,526 12,049
Change in fair value of obligations in connection with acquisitions - 1,378
Gain from divestiture, net of transaction costs (7,016 )
Reorganization and other related costs 631 2,667
Merger and acquisition related expense   128     3,893  
  11,898     27,712  
  28,750     47,708  
 
 
(3 ) Corresponding tax effect (2,661 ) (2,571 )

Acquired intangible assets amortization and write-off related to equity

method investments

  7,700     592  
$ 33,789   $ 45,729  
 
(4 )

Weighted average number of ordinary

shares outstanding- Diluted

53,716 53,820 52,827 53,521
 
Stratasys Ltd.
       
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Fiscal Year 2018
 
(in millions, except per share data)
 
 
GAAP net loss ($10) to ($2)
 

Adjustments

Stock-based compensation expense $16 to $17
Intangible assets amortization expense $34
Net Gains for Divestitures ($23) to ($22)
Reorganization Related Expense $6 to $7
Tax expense (Income) related to Non-GAAP adjustments ($1) to $1
 
Non-GAAP net income $27 to $30
 
GAAP loss per share ($0.19) to ($0.04)
 
Non-GAAP diluted earnings per share $0.50 to $0.55

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