Stratasys Releases Fourth Quarter and Full Year 2018 Financial

Stratasys Releases Fourth Quarter and Full Year 2018 Financial Results – Updated to Include Guidance Clarification

th, 2019. Readers are urged to carefully review and consider the various disclosures made throughout our 2018 Annual Report that attaches Stratasys’ unaudited, condensed consolidated financial statements as of, and for the quarter and full year ended, December 31, 2018, and its review of its results of operations and financial condition for those periods, which has been 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 made 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 (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

(in thousands, except share data)
	December 31,			December 31,
	2018			2017

ASSETS

Current assets
Cash and cash equivalents	$	393,167		$	328,761
Accounts receivable, net		138,146			132,671
Inventories		123,524			115,717
Net investment in sales-type leases		2,658			7,208
Prepaid expenses		6,398			7,696
Other current assets		20,278			22,858

Total current assets		684,171			614,911

Non-current assets
Net investment in sales-type leases - long term		1,552			4,439
Property, plant and equipment, net		188,150			199,951
Goodwill		385,849			387,108
Other intangible assets, net		107,274			142,122
Other non-current assets		21,258			31,219

Total non-current assets		704,083			764,839

Total assets	$	1,388,254		$	1,379,750

LIABILITIES AND EQUITY

Current liabilities
Accounts payable	$	45,855		$	39,849
Current portion of long term-debt		5,143			5,143
Accrued expenses and other current liabilities		39,115			30,041
Accrued compensation and related benefits		31,703			35,356
Deferred revenues		53,965			52,908

Total current liabilities		175,781			163,297

Non-current liabilities
Long-term debt		22,000			27,143
Deferred tax liabilities		1,662			7,069
Deferred revenues - long-term		18,422			15,200
Other non-current liabilities		27,422			32,899

Total non-current liabilities		69,506			82,311

Total liabilities		245,287			245,608

Redeemable non-controlling interests		852			1,635

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 53,881 thousands shares and 53,631 thousands shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively		146			145
Additional paid-in capital		2,681,048			2,663,274
Accumulated other comprehensive loss		(7,753	)		(7,023	)
Accumulated deficit		(1,531,326	)		(1,523,906	)
Equity attributable to Stratasys Ltd.		1,142,115			1,132,490
Non-controlling interest		-			17

Total equity		1,142,115			1,132,507

Total liabilities and equity	$	1,388,254		$	1,379,750


Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2018			2017			2018			2017

Net sales
Products	$	124,537		$	129,777		$	456,504		$	474,286
Services		52,582			49,566			206,733			194,076
		177,119			179,343			663,237			668,362

Cost of sales
Products		56,502			59,977			203,622			219,020
Services		33,618			32,100			134,391			126,565
		90,120			92,077			338,013			345,585

Gross profit		86,999			87,266			325,224			322,777

Operating expenses
Research and development, net		24,379			26,585			98,964			96,237
Selling, general and administrative		66,423			66,657			235,107			257,063
		90,802			93,242			334,071			353,300

Operating loss		(3,803	)		(5,976	)		(8,847	)		(30,523	)

Financial income, net		747			667			633			1,047

Loss before income taxes		(3,056	)		(5,309	)		(8,214	)		(29,476	)

Income taxes expense		3,626			4,102			4,736			9,273

Share in profits (losses) of associated companies		12,910			(704	)		1,725			(1,710	)

Net income (loss)		6,228			(10,081	)		(11,225	)		(40,459	)

Net loss attributable to non-controlling interest		(79	)		(101	)		(261	)		(478	)

Net loss attributable to Stratasys Ltd.	$	6,307		$	(9,980	)	$	(10,964	)	$	(39,981	)

Net loss per ordinary share attributable to Stratasys Ltd.
Basic	$	0.12		$	(0.19	)	$	(0.22	)	$	(0.75	)
Diluted		0.12			(0.19	)		(0.22	)		(0.75	)


Basic		53,854			53,356			53,751			52,959
Diluted		54,132			53,356			53,751			52,959


Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Results of Operations


		Three Months Ended December 31,
		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)	$	86,999		$	5,499		$	92,498	$	87,266		$	6,864		$	94,130
	Operating income (loss) (1,2)		(3,803	)		16,574			12,771		(5,976	)		19,518			13,542
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)		6,307			4,993			11,300		(9,980	)		18,429			8,449
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	0.12		$	0.09		$	0.21	$	(0.19	)	$	0.35		$	0.16


(1)	Acquired intangible assets amortization expense					5,221								5,687
	Non-cash stock-based compensation expense					294								497
	Impairment charges of other intangible assets					-								646
	Reorganization and other related costs					(16	)							34
						5,499								6,864

(2)	Acquired intangible assets amortization expense					2,532								2,594
	Non-cash stock-based compensation expense					3,686								3,092
	Impairment charges of intangible assets and other long lived assets					4,797								3,742
	Reorganization and other related costs					60								3,136
	Merger and acquisition related expense					-								90
						11,075								12,654
						16,574								19,518


(3)	Corresponding tax effect					1,853								(1,295	)
	Gain from equity method divestment, related write-offs and amortization					(13,434	)							206
					$	4,993							$	18,429

(4)	Weighted average number of ordinary shares outstanding- Diluted		54,132						54,132		53,356						53,584


Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Results of Operations


		Twelve Months Ended December 31,
		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)	$	325,224		$	22,351		$	347,575	$	322,777		$	26,860		$	349,637
	Operating income (loss) (1,2)		(8,847	)		45,324			36,477		(30,523	)		67,226			36,703
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)		(10,964	)		38,782			27,818		(39,981	)		64,158			24,177
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(0.22	)	$	0.74		$	0.52	$	(0.75	)	$	1.20		$	0.45


(1)	Acquired intangible assets amortization expense					20,866								22,768
	Non-cash stock-based compensation expense					1,474								2,581
	Impairment charges of other intangible assets					-								646
	Reorganization and other related costs					11								337
	Merger and acquisition related expense					-								528
						22,351								26,860

(2)	Acquired intangible assets amortization expense					10,161								10,319
	Impairment charges of intangible assets and other long-lived assets					4,797								3,742
	Non-cash stock-based compensation expense					14,212								15,141
	Gain from divestiture, net of transaction costs					(7,016	)							-
	Change in fair value of obligations in connection with acquisitions					-								1,378
	Reorganization and other related costs					691								5,803
	Merger and acquisition related expense					128								3,983
						22,973								40,366
						45,324								67,226


(3)	Corresponding tax effect					(808	)							(3,866	)
	Gain from equity method divestment, related write-offs and amortization					(5,734	)							798
					$	38,782							$	64,158

(4)	Weighted average number of ordinary shares outstanding- Diluted		53,751						53,898		52,959						53,536


Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Forward Looking Guidance

Fiscal Year 2019

(in millions, except per share data)


GAAP net loss		($22) to ($12)

Adjustments
Stock-based compensation expense		$20 to $22
Intangible assets amortization expense		$32
Reorganization Related Expense		$1 to $2
Tax expense (Income) related to Non-GAAP adjustments		($4) to ($3)

Non-GAAP net income		$30 to $38

GAAP diluted loss per share		($0.40) to ($0.22)

Non-GAAP diluted earnings per share		$0.55 to $0.70

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