Stratasys Releases Fourth Quarter and Full Year 2015 Financial Results

Stratasys is a registered trademark of Stratasys Ltd. and/or its subsidiaries or affiliates.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys' belief that its comprehensive new strategy will help grow its markets, and the statements regarding its projected future financial performance, including under the heading “Financial Guidance,” are forward-looking statements reflecting management's current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys' business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the overall global economic environment; the impact of competition and new technologies; general market, political and economic conditions in the countries in which Stratasys operates; changes in projected capital expenditures and liquidity; changes in Stratasys' strategy; changes in government regulations and approvals; changes in customers’ budgeting priorities; and other factors referred to under “Risk Factors,” “Information on the Company,” “Operating and Financial Review and Prospects,” and generally in Stratasys' annual report on Form 20-F for the year ended December 31, 2014, filed with the U.S. Securities and Exchange Commission (the “SEC”), and in other reports that Stratasys has filed with or furnished to the SEC from time to time. Readers are urged to carefully review and consider the various disclosures made in Stratasys' SEC reports, which are designed to advise investors as to the risks and other factors that may affect Stratasys' business, financial condition, results of operations and prospects. Any guidance and other forward-looking statements 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.

 
Stratasys Ltd.
               
Consolidated Balance Sheets
               
(in thousands, except share data)
        December 31,     December 31,
        2015     2014
               
ASSETS              
               
Current assets              
Cash and cash equivalents       $ 257,592       $ 442,141  
Short-term bank deposits         571         595  
Accounts receivable, net         123,215         150,806  
Inventories         123,658         123,385  
Net investment in sales-type leases         11,704         8,170  
Prepaid expenses         8,469         7,931  
Deferred income taxes         -         25,697  
Other current assets         21,864         37,903  
               
Total current assets         547,073         796,628  
               
Non-current assets              
Goodwill         383,853         1,323,502  
Other intangible assets, net         252,468         597,903  
Property, plant and equipment, net         201,934         157,036  
Net investment in sales-type leases - long term         17,785         14,822  
Deferred income taxes and other non-current assets         11,243         9,216  
               
Total non-current assets         867,283         2,102,479  
               
Total assets       $ 1,414,356       $ 2,899,107  
               
LIABILITIES AND EQUITY              
               
Current liabilities              
Accounts payable       $ 39,021       $ 37,359  
Short term debt         -         50,000  
Accrued expenses and other current liabilities         31,314         34,514  
Accrued compensation and related benefits         34,052         42,332  
Income taxes payable         11,395         13,246  
Obligations in connection with acquisitions         4,636         28,092  
Deferred revenues         52,309         45,023  
               
Total current liabilities         172,727         250,566  
               
Non-current liabilities              
Obligations in connection with acquisitions - long term         4,354         26,461  
Deferred tax liabilities         16,040         55,835  
Deferred revenues - long-term         7,627         5,946  
Other non-current liabilities         22,428         25,091  
               
Total non-current liabilities         50,449         113,333  
               
Total liabilities         223,176         363,899  
               
Redeemable non-controlling interests         2,379         3,969  
               
Equity              

Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 52,082 thousands shares and 50,923 thousands shares issued and outstanding at December 31, 2015 and 2014, respectively

        141         139  
Additional paid-in capital         2,605,957         2,568,149  
Accumulated deficit         (1,406,706 )       (33,871 )
Accumulated other comprehensive loss         (10,774 )       (3,647 )
Equity attributable to Stratasys Ltd.         1,188,618         2,530,770  
Non-controlling interest         183         469  
               

Total equity

        1,188,801         2,531,239  
               
Total liabilities and equity       $ 1,414,356       $ 2,899,107  
                       
                           
Stratasys Ltd.
                           
Consolidated Statements of Operations
                           
(in thousands, except per share data)
                           
        Three Months Ended December 31,     Twelve Months Ended December 31,
        2015     2014     2015     2014
        (unaudited)     (unaudited)            
Net sales                          
Products       $ 124,316       $ 168,595       $ 503,946       $ 612,138  
Services         49,046         48,517         192,049         137,991  
          173,362         217,112         695,995         750,129  
                           
Cost of sales                          
Products         86,753         82,985         466,221         302,838  
Services         33,537         28,943         127,602         84,897  
          120,290         111,928         593,823         387,735  
                           
Gross profit         53,072         105,184         102,172         362,394  
                           
Operating expenses                          
Research and development, net         31,919         23,189         122,360         82,270  
Selling, general and administrative         113,126         95,646         434,619         351,993  
Goodwill impairment         96,550         102,470         942,408         102,470  
Change in the fair value of obligations in connection with acquisitions         (714 )       (24,862 )       (23,671 )       (26,150 )
          240,881         196,443         1,475,716         510,583  
                           
Operating loss         (187,809 )       (91,259 )       (1,373,544 )       (148,189 )
                           
Financial expense         (947 )       (4,145 )       (10,287 )       (6,529 )
                           
Loss before income taxes         (188,756 )       (95,404 )       (1,383,831 )       (154,718 )
                           
Income taxes         43,770         (3,370 )       (10,320 )       (35,248 )
                           
Net loss         (232,526 )       (92,034 )       (1,373,511 )       (119,470 )
                           
Net loss attributable to non-controlling interest         (183 )       (25 )       (676 )       (50 )
                           
Net loss attributable to Stratasys Ltd.       $ (232,343 )     $ (92,009 )     $ (1,372,835 )     $ (119,420 )
                           
Net loss per ordinary share attributable to Stratasys Ltd.                          
Basic       $ (4.46 )     $ (1.81 )     $ (26.64 )     $ (2.39 )
Diluted         (4.46 )       (1.81 )       (26.64 )       (2.39 )
                           
Weighted average ordinary shares outstanding                          
Basic         52,046         50,912         51,592         50,019  
Diluted         52,046         50,912         51,592         50,019  
                                           
                                       
Stratasys Ltd.
                                       
Reconciliation of GAAP to Non-GAAP Results of Operations
                                       
(in thousands, except per share data)
                                       
        Three Months Ended December 31, 2015     Three Months Ended December 31, 2014
                                       
        GAAP           Non-GAAP     GAAP           Non-GAAP
        (unaudited)     Adjustments*     (unaudited)     (unaudited)     Adjustments*     (unaudited)
Net sales                                      
Products       $ 124,316       $ -       $ 124,316       $ 168,595       $ -       $ 168,595  
Services         49,046         -         49,046         48,517         -         48,517  
          173,362         -         173,362         217,112         -         217,112  
                                       
Cost of sales                                      
Products         86,753         (28,080 )       58,673         82,985         (14,490 )       68,495  
Services         33,537         (2,229 )       31,308         28,943         (1,915 )       27,028  
          120,290         (30,309 )       89,981         111,928         (16,405 )       95,523  
                                       
Gross profit         53,072         30,309         83,381         105,184         16,405         121,589  
                                       
Operating expenses                                      
Research and development, net         31,919         (9,741 )       22,178         23,189         (1,822 )       21,367  
Selling, general and administrative         113,126         (43,041 )       70,085         95,646         (20,368 )       75,278  
Goodwill impairment         96,550         (96,550 )       -         102,470         (102,470 )       -  
Change in the fair value of obligations in connection with acquisitions         (714 )       714         -         (24,862 )       24,862         -  
          240,881         (148,618 )       92,263         196,443         (99,798 )       96,645  
                                       
Operating income (loss)         (187,809 )       178,927         (8,882 )       (91,259 )       116,203         24,944  
                                       
Financial expense         (947 )       -         (947 )       (4,145 )       -         (4,145 )
                                       
Income (loss) before income taxes         (188,756 )       178,927         (9,829 )       (95,404 )       116,203         20,799  
                                       
Income taxes         43,770         (52,720 )       (8,950 )       (3,370 )       (750 )       (4,120 )
                                       
Net income (loss)         (232,526 )       231,647         (879 )       (92,034 )       116,953         24,919  
                                       
Net loss attributable to non-controlling interest         (183 )       -         (183 )       (25 )       -         (25 )
                                       
Net income (loss) attributable to Stratasys Ltd.       $ (232,343 )     $ 231,647       $ (696 )     $ (92,009 )     $ 116,953       $ 24,944  
                                       
Net income (loss) per ordinary share attributable to Stratasys Ltd.                                      
Basic       $ (4.46 )           $ (0.01 )     $ (1.81 )           $ 0.49  
Diluted         (4.46 )             (0.01 )       (1.81 )             0.48  
                                       
Weighted average ordinary shares outstanding                                      
Basic         52,046               52,046         50,912               50,912  
Diluted         52,046               52,046         50,912               52,491  
                                       

The Company considers these non-GAAP measures to be indicative of its core operating results and facilitates a comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes, however these measures should not be viewed as a substitute for the Company’s GAAP results.

 

* Refer to the "Reconciliation of Non-GAAP Adjustments" herein for further information regarding adjustments.

 
                                       
Stratasys Ltd.
                                       
Reconciliation of GAAP to Non-GAAP Results of Operations
                                       
(in thousands, except per share data)
                                       
        Twelve Months Ended December 31, 2015     Twelve Months Ended December 31, 2014
                                       
                                       
        GAAP     Adjustments*     Non-GAAP     GAAP     Adjustments*     Non-GAAP
Net sales                                      
Products       $ 503,946       $ -       $ 503,946       $ 612,138       $ 235       $ 612,373  
Services         192,049         -         192,049         137,991         -         137,991  
          695,995         -         695,995         750,129         235         750,364  
                                       
Cost of sales                                      
Products         466,221         (254,494 )       211,727         302,838         (69,717 )       233,121  
Services         127,602         (5,051 )       122,551         84,897         (6,925 )       77,972  
          593,823         (259,545 )       334,278         387,735         (76,642 )       311,093  
                                       
Gross profit         102,172         259,545         361,717         362,394         76,877         439,271  
                                       
Operating expenses                                      
Research and development, net         122,360         (28,198 )       94,162         82,270         (8,813 )       73,457  
Selling, general and administrative         434,619         (151,097 )       283,522         351,993         (94,442 )       257,551  
Goodwill impairment         942,408         (942,408 )       -         102,470         (102,470 )       -  
Change in the fair value of obligations in connection with acquisitions         (23,671 )       23,671         -         (26,150 )       26,150         -  
          1,475,716         (1,098,032 )       377,684         510,583         (179,575 )       331,008  
                                       
Operating income (loss)         (1,373,544 )       1,357,577         (15,967 )       (148,189 )       256,452         108,263  
                                       
Financial income (expense)         (10,287 )       2,705         (7,582 )       (6,529 )       -         (6,529 )
                                       
Income (loss) before income taxes         (1,383,831 )       1,360,282         (23,549 )       (154,718 )       256,452         101,734  
                                       
Income taxes         (10,320 )       (22,507 )       (32,827 )       (35,248 )       33,403         (1,845 )
                                       
Net income (loss)         (1,373,511 )       1,382,789         9,278         (119,470 )       223,049         103,579  
                                       
Net loss attributable to non-controlling interest         (676 )       -         (676 )       (50 )       -         (50 )
                                       
Net income (loss) attributable to Stratasys Ltd.       $ (1,372,835 )     $ 1,382,789       $ 9,954       $ (119,420 )     $ 223,049       $ 103,629  
                                       
Net income (loss) per ordinary share attributable to Stratasys Ltd.                                      
Basic       $ (26.64 )           $ 0.19       $ (2.39 )           $ 2.07  
Diluted         (26.64 )             0.19         (2.39 )             2.00  
                                       

Weighted average ordinary shares outstanding

                                     
Basic         51,592               51,592         50,019               50,019  
Diluted         51,592               52,824         50,019               51,805  
                                                       

The Company considers these non-GAAP measures to be indicative of its core operating results and facilitates a comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes, however these measures should not be viewed as a substitute for the Company’s GAAP results.

 
* Refer to the "Reconciliation of Non-GAAP Adjustments" herein for further information regarding adjustments.
 
 
Stratasys Ltd.
                           
Reconciliation of Non-GAAP Adjustments
                           
(in thousands)
                           
       

Three Months Ended December
31,

   

Twelve Months Ended December
31,

        2015     2014     2015     2014
Net sales, products                          
Deferred revenue step-up       $ -       $ -       $ -       $ 235  
                           
Cost of sales, products                          
Acquired intangible assets amortization         (10,830 )       (14,654 )       (50,353 )       (56,235 )
Acquired intangible assets impairment         (10,779 )       -         (191,534 )       (11,636 )
Non-cash stock-based compensation expense         (675 )       164         (3,508 )       (1,846 )
Reorganization and other related costs         (5,796 )       -         (9,099 )       -  
          (28,080 )       (14,490 )       (254,494 )       (69,717 )
Cost of sales, services                          
Acquired intangible assets amortization         -         537         -         -  
Non-cash stock-based compensation expense         (338 )       (1,430 )       (1,873 )       (2,647 )
Reorganization and other related costs         (1,726 )       -         (1,850 )       -  
Merger and acquisition related expense         (165 )       (1,022 )       (1,328 )       (4,278 )
          (2,229 )       (1,915 )       (5,051 )       (6,925 )
Research and development, net                          
Non-cash stock-based compensation expense         (1,400 )       (1,942 )       (5,758 )       (4,862 )
Acquired intangible assets impairment         (7,900 )       -         (17,746 )       (3,000 )
Reorganization and other related costs         (249 )       -         (1,593 )       -  
Merger and acquisition related expense         (192 )       120         (3,101 )       (951 )
          (9,741 )       (1,822 )       (28,198 )       (8,813 )
                           
Selling, general and administrative                          
Acquired intangible assets amortization         (4,464 )       (7,607 )       (22,436 )       (24,952 )
Non-cash stock-based compensation expense         (3,437 )       (5,589 )       (18,871 )       (20,852 )
Merger and acquisition related expense         (2,624 )       (7,172 )       (25,238 )       (48,638 )
Reorganization and other related costs         (9,117 )       -         (15,361 )       -  
Acquired intangible assets impairment         (23,399 )       -         (69,191 )       -  
          (43,041 )       (20,368 )       (151,097 )       (94,442 )
                           
Goodwill impairment         (96,550 )       (102,470 )       (942,408 )       (102,470 )
                           
Change in the fair value of obligations in connection with acquisitions                          
Change in the fair value of obligations in connection with acquisitions         714         24,862         23,671         26,150  
                           
Financial expense                          
Credit facility extinguishment related costs         -         -         (2,705 )       -  
                           
Income taxes                          
Corresponding tax effect and other tax adjustments         (52,720 )       (750 )       (22,507 )       33,403  
                           
                           
Net income       $ 231,647       $ 116,953       $ 1,382,789       $ 223,049  
                                           
 
Stratasys Ltd.
           
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
           
Fiscal Year 2016
           
(in millions, except per share data)
           
GAAP net loss         ($84) to ($67)
           

Adjustments

         
Stock-based compensation expense         $25 to $27
Intangible assets amortization expense         $59
Merger and acquisition related expense         $7
Reorganization and other related costs         $4 to $5
Tax expense related to Non-GAAP adjustments         ($5)
           
Non-GAAP net income         $9 to $23
           
GAAP loss per share         ($1.60) to ($1.28)
           
Non-GAAP diluted earnings per share         $0.17 to $0.43




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