Stratasys Releases Second Quarter 2017 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 merger and acquisition related expense and reorganization-related charges, and (y) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, impairment of goodwill and other long-lived assets, changes in fair value of obligations in connection with acquisitions and the corresponding tax effect of those items. We also exclude, when applicable, non-recurring changes of non-cash valuation allowance on deferred tax assets, as well as, non-recurring significant tax charges or benefits that relate to prior periods which we do not believe are reflective of ongoing business and operating results. 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)
   

June 30,

    December 31,
2017 2016
(unaudited)      
 
ASSETS
 
Current assets
Cash and cash equivalents $ 305,345 $ 280,328
Accounts receivable, net 120,342 120,411
Inventories 116,486 117,521
Net investment in sales-type leases 9,921 11,717
Prepaid expenses 6,701 7,571
Other current assets   17,557     15,491  
 
Total current assets   576,352     553,039  
 
Non-current assets
Net investment in sales-type leases - long term 7,406 12,126
Property, plant and equipment, net 207,689 208,415
Goodwill 386,513 385,629
Other intangible assets, net 160,926 177,458
Other non-current assets   32,335     29,382  
 
Total non-current assets   794,869     813,010  
 
Total assets $ 1,371,221   $ 1,366,049  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 46,087 $ 40,933
Current portion of long term-debt 3,714 3,714
Accrued expenses and other current liabilities 28,910 32,207
Accrued compensation and related benefits 39,744 34,186
Obligations in connection with acquisitions 4,932 3,619
Deferred revenues   50,464     49,952  
 
Total current liabilities   173,851     164,611  
 
Non-current liabilities
Long-term debt 20,429 22,286
Deferred tax liabilities 4,197 5,952
Deferred revenues - long-term 14,087 12,922
Other non-current liabilities   25,984     22,251  
 
Total non-current liabilities   64,697     63,411  
 
Total liabilities   238,548     228,022  
 
Redeemable non-controlling interests 1,811 2,029
 
Equity

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 52,854 thousands shares and 52,639 thousands shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively

142 142
Additional paid-in capital 2,644,579 2,633,129
Accumulated other comprehensive loss (10,143 ) (13,479 )
Accumulated deficit   (1,503,769 )   (1,483,925 )
Equity attributable to Stratasys Ltd. 1,130,809 1,135,867
Non-controlling interest 53 131
 
Total equity   1,130,862     1,135,998  
 
Total liabilities and equity $ 1,371,221   $ 1,366,049  
 
 
Stratasys Ltd.
 
Consolidated Statements of Operations
 

(in thousands, except per share data)

       

Three Months Ended June 30,

Six Months Ended June 30,
2017     2016 2017     2016
(unaudited)     (unaudited) (unaudited)     (unaudited)
Net sales
Products $ 121,021 $ 123,758 $ 236,108 $ 242,392
Services   48,969     48,315     97,044     97,587  
169,990 172,073 333,152 339,979
 
Cost of sales
Products 54,723 61,413 109,203 118,351
Services   31,875     31,128     63,677     60,927  
86,598 92,541 172,880 179,278
       
Gross profit 83,392 79,532 160,272 160,701
 
Operating expenses
Research and development, net 23,251 24,366 47,885 49,481
Selling, general and administrative 64,569 72,884 128,748 149,271
Change in the fair value of obligations in connection with acquisitions   617     (587 )   1,313     140  
88,437 96,663 177,946 198,892
       
Operating loss (5,045 ) (17,131 ) (17,674 ) (38,191 )
 
Financial income, net 429 932 685 1,112
       
Loss before income taxes (4,616 ) (16,199 ) (16,989 ) (37,079 )
 
Income taxe expenses 1,308 2,454 2,634 4,745
 
Share in losses of associated company   (229 )   -     (517 )   -  
 
Net loss (6,153 ) (18,653 ) (20,140 ) (41,824 )
 
Net loss attributable to non-controlling interest (166 ) (163 ) (296 ) (193 )
 
Net loss attributable to Stratasys Ltd. $ (5,987 ) $ (18,490 ) $ (19,844 ) $ (41,631 )
 
Net loss per ordinary share attributable to Stratasys Ltd.
Basic $ (0.11 ) $ (0.35 ) $ (0.38 ) $ (0.80 )
Diluted (0.11 ) (0.36 ) (0.38 ) (0.80 )
 
Basic 52,778 52,169 52,733 52,133
Diluted 52,778 52,496 52,733 52,133
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
     

Three Months Ended June 30,

2017     Non-GAAP     2017     2016     Non-GAAP     2016
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
 
Gross profit (1) $ 83,392 $ 6,784 $ 90,176 $ 79,532 $ 16,715 $ 96,247
Operating income (loss) (1,2) (5,045 ) 16,117 11,072 (17,131 ) 27,332 10,201

Net income (loss) attributable to Stratasys Ltd. (1,2,3)

(5,987 ) 15,165 9,178 (18,490 ) 24,728 6,238

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)

$ (0.11 ) $ 0.28 $ 0.17 $ (0.36 ) $ 0.48 $ 0.12
 
(1) Acquired intangible assets amortization expense 5,688 10,510
Impairment charges of other intangible assets - 1,779
Non-cash stock-based compensation expense 799 729
Reorganization and other related costs 137 3,543
Merger and acquisition and other expense   160     154  
6,784 16,715
 
(2) Acquired intangible assets amortization expense 2,588 3,621
Non-cash stock-based compensation expense 4,532 4,750

Change in fair value of obligations in connection with acquisitions

617 (587 )
Reorganization and other related costs 598 956
Merger and acquisition and other expense   998     1,877  
  9,333     10,617  
  16,117     27,332  
 
(3) Corresponding tax effect (1,150 ) (2,604 )
Amortization expense of associated company   198     -  
$ 15,165   $ 24,728  
 
(4)

Weighted average number of ordinary shares outstanding- Diluted

52,778 53,473 52,496 53,238
 
 

Stratasys Ltd.

 

Reconciliation of GAAP to Non-GAAP Results of Operations

 

 

     

Six Months Ended June 30,

2017     Non-GAAP     2017     2016     Non-GAAP     2016
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
U.S. dollars and shares in thousands (except per share amounts)
 
Gross profit (1) $ 160,272 $ 13,398 $ 173,670 $ 160,701 $ 27,993 $ 188,694
Operating income (loss) (1,2) (17,674 ) 32,775 15,101 (38,191 ) 52,345 14,154

Net income (loss) attributable to Stratasys Ltd. (1,2,3)

(19,844 ) 31,430 11,586 (41,631 ) 48,465 6,834

Net income (loss) per diluted share attributable to Stratasys Ltd. (4)

$ (0.38 ) $ 0.60 $ 0.22 $ (0.80 ) $ 0.93 $ 0.13
 
 
(1) Acquired intangible assets amortization expense 11,393 20,924
Impairment charges of other intangible assets - 1,779
Non-cash stock-based compensation expense 1,442 1,452
Reorganization and other related costs 231 3,321
Merger and acquisition and other expense   332     517  
13,398 27,993
 
(2) Acquired intangible assets amortization expense 5,132 7,382
Non-cash stock-based compensation expense 7,793 9,650
Change in fair value of obligations in connection with acquisitions 1,313 140
Reorganization and other related costs 2,284 1,461
Merger and acquisition and other expense   2,855     5,719  
  19,377     24,352  
  32,775     52,345  
 
 
(3) Corresponding tax effect (1,735 ) (3,880 )
Amortization expense of associated company   390     -  
$ 31,430   $ 48,465  
 
(4)

Weighted average number of ordinary shares outstanding- Diluted

52,733 53,406 52,133 53,201
 
 
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
 
Fiscal Year 2017
 
(in millions, except per share data)
   
GAAP net loss ($53) to ($39)
 

Adjustments

Stock-based compensation expense $18 to $20
Intangible assets amortization expense $34
Merger and acquisition related expense $2 to $3
Reorganization and other related costs $8-$10
Tax expense related to Non-GAAP adjustments ($3) to ($4)
 
Non-GAAP net income $10 to $20
 
GAAP loss per share ($1.00) to ($0.73)
 
Non-GAAP diluted earnings per share $0.19 to $0.37
 

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