Stratasys Reports Record Quarterly Revenue and Non-GAAP Net Income

CIMdata PLM Industry Summary Online Archive

2 November 2012

Financial News

Stratasys Reports Record Quarterly Revenue and Non-GAAP Net Income

Stratasys, Inc. announced record quarter financial results.

The company reported record revenue of $49.7 million for the third quarter ended September 30, 2012, a 24% increase from the $40.0 million reported for the same period last year.

System shipments totaled 911 units for the third quarter of 2012, a 52% increase when compared to 600 units shipped for the same period last year.

Non-GAAP net income was $8.7 million for the third quarter, or $0.40 per share, representing a 42% increase over the non-GAAP net income of $6.2 million, or $0.29 per share, for the same period last year.

The company reported net income of $5.2 million for the third quarter, or $0.24 per share, compared to net income of $5.9 million, or $0.27 per share, for the same period last year.

The company reported revenue of $144.1 million for the nine-month period ended September 30, 2012, a 28% increase from the $112.3 million reported for the same period last year.

System shipments totaled 2,509 units for the nine-month period of 2012, compared to 1,902 units shipped for the same period last year.

Non-GAAP net income was $21.9 million for the nine-month period, or $1.00 per share, representing a 38% increase over the non-GAAP net income of$15.9 million, or $0.73 per share, for the same period last year.

The company reported net income of $12.7 million for nine-month period, or $0.58 per share, compared to net income of $14.8 million, or $0.68 per share, for the same period last year.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of this press release. The table provides itemized detail of the non-GAAP financial measures, including the expenses associated with the company's current efforts to combine with Objet Ltd.

"The third quarter represents another solid performance for our company, driven by the continued strong growth we are observing across all our core businesses," said Scott Crump, chairman and chief executive officer of Stratasys. "System and consumable revenue grew by 27% and 23%, respectively, over last year. Also contributing to the strong quarter was our RedEye parts service, which grew by 26% over last year. These performances contributed to a record level of revenue which grew by 24% over last year, and a record level of non-GAAP net income, which grew by 42%.

"System unit sales, which grew by 52% during the third quarter over last year, benefited from the launch our revolutionary new Mojo 3D printer, the first 3D printer available for commercial use priced under $10,000. Sales of the Mojo were helped by our new program to recruit sales agents who focus exclusively on selling our most-affordable 3D printer lines. Currently, we have expanded the sales agent program to include approximately 130 individuals and will continue to grow the program in the coming months, with the goal of having 160 agents by January of next year. We believe that the Mojo platform, combined with our new sales agent program will continue to drive an expansion in our 3D printer sales.

"Fortus 3D production system revenue grew by 37% over last year, driven by the demand created by innovative new Direct Digital Manufacturing (DDM) applications across multiple industries. Our proprietary Fused Deposition Modeling (FDM^®) technology continues to be recognized as an innovative and cost-effective alternative manufacturing solution. We are honored that Stratasys was recently chosen to be part of the National Network for Manufacturing Innovation (NNMI), a Presidential initiative that brings U.S. industry together to develop innovative manufacturing solutions using advanced technology. Stratasys was chosen given our company's industry leadership and our technology's potential use within U.S. manufacturing.

"Our RedEye parts service, which grew by 26% over last year, continues to experience strong demand, especially for large, complex and highly-durable production parts for the automotive and aerospace industries. We believe RedEye has a distinct advantage for those types of projects, given our ability to rapidly deliver high-quality parts produced on the Fortus 900mc. RedEye currently operates fourteen 900mc systems that are ideal for serving customers that need larger production parts.

"Solidscape, which we acquired in April of 2011, experienced strong revenue growth of 21% during the third quarter over last year. The division's products are widely recognized as the leader for DDM wax casting applications that require high precision, ultra-fine feature detail and a smooth surface finish. The division's new 3Z product line, introduced in the second quarter, is a major contributor to its recent success. The 3Z can produce parts at the highest possible resolution within the industry and is generating significant interest with jewelry and dental customers. We are optimistic about maintaining positive momentum within Solidscape, given our recent initiative to expand the 3Z Series into our U.S. educational channel.

"We remain excited about our pending, game-changing combination with Objet Ltd. We are conducting detailed discussions with the Committee on Foreign Investment in the United States (CFIUS) and are optimistic that any national security concerns it may have surrounding the merger can be addressed before the end of the 45-day review period that expires on November 30, 2012. Once combined, we will execute an integration plan that will allow us to offer a broad array of innovative 3D printing and direct digital manufacturing solutions through an impressive sales and marketing organization. We believe this will allow for market expansion and cross-selling opportunities of the combined product portfolio. We continue to believe that the merger will be completed prior to the end of the year.

"We are pleased with our third quarter performance, and are excited about the many initiatives that we believe will continue to drive growth for our company. In addition to the many opportunities provided by our pending combination with Objet, we have a strategy that is focused on developing our core technology platforms to meet the future needs of our customers. In addition, we are optimistic about our near-term performance, and have raised our outlook for the balance of 2012. We remain a financially strong company that is a leader within a rapidly evolving industry, and we look forward to completing another successful year," Crump concluded.

Stratasys revised its financial guidance for the fiscal year ending December 31, 2012:

Revenue guidance of $194 million to $199 million, versus previous guidance of $193 million to $198 million.
Non-GAAP earnings guidance of $1.37 to $1.40 per share, versus previous guidance of $1.31 to $1.38 per share.
GAAP earnings guidance of $0.77 to $0.88 per share, versus previous GAAP guidance of $0.83 to $0.98 per share.

GAAP earnings guidance includes the estimated impact of Objet Ltd. transaction-related expenses. Financial guidance does not reflect the potential combined performance of Stratasys, Inc. and Objet Ltd., nor does it include the estimated incremental transaction-related costs that would be incurred upon closing of the Objet transaction. In addition to excluding the impact of expenses associated with the proposed combination with Objet Ltd., non-GAAP earnings guidance excludes the impact of stock-based compensation expense and the amortization expense of acquired Solidscape intangibles.

Stratasys plans to hold a conference call to discuss its third quarter financial results on Friday, November 2, 2012 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Web site at www.stratasys.com under the "Investors" tab; or directly at the following web address: http://www.media-server.com/m/p/jg9sb7ze.

To participate by telephone, the domestic dial-in number is 866-203-3206, and the international dial-in is 617-213-8848. The access code is 41990330. Investors are advised to dial into the call at least ten minutes prior to the call to register.

The webcast will be available for 90 days on the "Investors" page of the Stratasys Web site or by accessing the provided web address.

To view the unabridged version of this press release, visit: http://investors.stratasys.com/releasedetail.cfm?ReleaseID=718201

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