Stratasys Releases First 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)            
March 31, December 31,
2017 2016
(unaudited)      
 
ASSETS
 
Current assets
Cash and cash equivalents $ 297,246 $ 280,328
Accounts receivable, net 115,099 120,411
Inventories 116,018 117,521
Net investment in sales-type leases 10,844 11,717
Prepaid expenses 6,371 7,571
Other current assets   19,411     15,491  
 
Total current assets   564,989     553,039  
 
Non-current assets
Net investment in sales-type leases - long term 9,655 12,126
Property, plant and equipment, net 206,722 208,415
Goodwill 385,808 385,629
Other intangible assets, net 169,302 177,458
Other non-current assets   31,626     29,382  
 
Total non-current assets   803,113     813,010  
 
Total assets $ 1,368,102   $ 1,366,049  
 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable $ 44,805 $ 40,933
Current portion of long term-debt 3,714 3,714
Accrued expenses and other current liabilities 28,582 32,207
Accrued compensation and related benefits 42,797 34,186
Obligations in connection with acquisitions 4,315 3,619
Deferred revenues   50,673     49,952  
 
Total current liabilities   174,886     164,611  
 
Non-current liabilities
Long-term debt 21,357 22,286
Deferred tax liabilities 4,916 5,952
Deferred revenues - long-term 12,942 12,922
Other non-current liabilities   24,293     22,251  
 
Total non-current liabilities   63,508     63,411  
 
Total liabilities   238,394     228,022  
 
Redeemable non-controlling interests 1,939 2,029
 
Equity

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 52,728 thousands shares and 52,639 thousands shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively

142 142
Additional paid-in capital 2,637,561 2,633,129
Accumulated other comprehensive loss (12,243 ) (13,479 )
Accumulated deficit   (1,497,782 )   (1,483,925 )
Equity attributable to Stratasys Ltd. 1,127,678 1,135,867
Non-controlling interest 91 131
 
Total equity   1,127,769     1,135,998  
 
Total liabilities and equity $ 1,368,102   $ 1,366,049  
 
       
Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)            
 
Three Months Ended March 31,
2017 2016
(unaudited)     (unaudited)
Net sales
Products $ 115,087 $ 118,634
Services   48,075     49,272  
163,162 167,906
 
Cost of sales
Products 54,480 56,938
Services   31,802     29,799  
86,282 86,737
   
Gross profit 76,880 81,169
 
Operating expenses
Research and development, net 24,634 25,115
Selling, general and administrative 64,179 76,387
Change in the fair value of obligations in connection with acquisitions   696     727  
89,509 102,229
   
Operating loss (12,629 ) (21,060 )
 
Financial income, net 256 180
   
Loss before income taxes (12,373 ) (20,880 )
 

Income tax expenses

1,326 2,291
 
Share in losses of associated company   (288 )   -  
 
Net loss (13,987 ) (23,171 )
 
Net loss attributable to non-controlling interest (130 ) (30 )
 
Net loss attributable to Stratasys Ltd. $ (13,857 ) $ (23,141 )
 
Net loss per ordinary share attributable to Stratasys Ltd.
Basic $ (0.26 ) $ (0.44 )
Diluted (0.26 ) (0.44 )
 
Weighted average ordinary shares outstanding
Basic 52,690 52,098
Diluted 52,690 52,098
 
                       
Stratasys Ltd.
 
Reconciliation of GAAP to Non-GAAP Results of Operations
 
     
Three Months Ended March 31,
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) $ 76,880 $ 6,614 $ 83,494 $ 81,169 $ 11,278 $ 92,447
Operating income (loss) (1,2) (12,629 ) 16,658 4,029 (21,060 ) 25,013 3,953

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

(13,857 ) 16,265 2,408 (23,141 ) 23,737 596

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

$ (0.26 ) $ 0.31 $ 0.05 $ (0.44 ) $ 0.45 $ 0.01
 
 
(1) Acquired intangible assets amortization expense 5,705 10,414
Non-cash stock-based compensation expense 643 723
Reorganization and other related costs 94 -
Merger and acquisition and other expense   172     141  
6,614 11,278
 
(2) Acquired intangible assets amortization expense 2,544 3,760
Non-cash stock-based compensation expense 3,261 4,900
Change in fair value of obligations in connection with acquisitions 696 727
Reorganization and other related costs 1,686 -
Merger and acquisition and other expense   1,857     4,348  
  10,044     13,735  
  16,658     25,013  
 
 
(3) Corresponding tax effect (585 ) (1,276 )
Amortization expense of associated company   192     -  
$ 16,265   $ 23,737  
 
(4)

Weighted average number of ordinary shares outstanding- Diluted

52,690 53,341 52,098 53,143
 
   
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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