Stratasys Releases Fourth Quarter and Full Year 2019 Financial

Stratasys Releases Fourth Quarter and Full Year 2019 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 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, 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
(Unaudited)
(in thousands, except share data)
	December 31,			December 31,
	2019			2018

ASSETS

Current assets
Cash and cash equivalents	$	293,484		$	393,167
Short-term deposits	$	28,300			-
Accounts receivable, net		132,558			138,146
Inventories		168,504			123,524
Prepaid expenses		6,567			6,398
Other current assets		29,659			22,936

Total current assets		659,072			684,171

Non-current assets
Property, plant and equipment, net		189,706			188,150
Goodwill		385,658			385,849
Other intangible assets, net		87,328			107,274
Operating lease right-of-use assets		20,936			-
Other non-current assets		38,819			22,810

Total non-current assets		722,447			704,083

Total assets	$	1,381,519		$	1,388,254

LIABILITIES AND EQUITY

Current liabilities
Accounts payable	$	35,818		$	45,855
Current portion of long term-debt		-			5,143
Accrued expenses and other current liabilities		28,528			39,115
Accrued compensation and related benefits		34,013			31,703
Deferred revenues		52,268			53,965
Operating lease liabilities - short term		9,292			-

Total current liabilities		159,919			175,781

Non-current liabilities
Long-term debt		-			22,000
Deferred revenues - long-term		16,039			18,422
Operating lease liabilities - long term		12,445			-
Other non-current liabilities		35,343			29,084

Total non-current liabilities		63,827			69,506

Total liabilities		223,746			245,287

Redeemable non-controlling interests		622			852

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 54,428 thousands shares and 53,881 thousands shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		150			146
Additional paid-in capital		2,706,892			2,681,048
Accumulated other comprehensive loss		(7,716	)		(7,753	)
Accumulated deficit		(1,542,175	)		(1,531,326	)
Total equity		1,157,151			1,142,115

Total liabilities and equity	$	1,381,519		$	1,388,254

Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2019			2018			2019			2018
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales
Products	$	108,968		$	124,537		$	430,746		$	456,504
Services		51,189			52,582			205,334			206,733
		160,157			177,119			636,080			663,237

Cost of sales
Products		46,825			56,502			182,430			203,622
Services		34,673			33,618			139,958			134,391
		81,498			90,120			322,388			338,013

Gross profit		78,659			86,999			313,692			325,224

Operating expenses
Research and development, net		24,019			24,379			94,253			98,964
Selling, general and administrative		57,921			66,423			231,138			235,107
		81,940			90,802			325,391			334,071

Operating profit (loss)		(3,281	)		(3,803	)		(11,699	)		(8,847	)

Financial income (expense), net		1,760			747			4,555			633

Income (loss) before income taxes		(1,521	)		(3,056	)		(7,144	)		(8,214	)

Income tax expenses		439			3,626			3,523			4,736

Share in profits (losses) of associated companies		(907	)		12,910			(412	)		1,725

Net income (loss)		(2,867	)		6,228			(11,079	)		(11,225	)

Net loss attributable to non-controlling interests		(78	)		(79	)		(230	)		(261	)

Net income (loss) attributable to Stratasys Ltd.	$	(2,789	)	$	6,307		$	(10,849	)	$	(10,964	)

Net income (loss) per ordinary share attributable to Stratasys Ltd.
Basic	$	(0.05	)	$	0.12		$	(0.20	)	$	(0.22	)
Diluted	$	(0.05	)		0.12		$	(0.20	)		(0.22	)


Basic		54,435			53,854			54,260			53,751
Diluted		54,435			54,132			54,260			53,751


		Three Months Ended December 31,
		2019			Non-GAAP			2019		2018			Non-GAAP			2018
		GAAP			Adjustments			Non-GAAP		GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)

	Gross profit (1)	$	78,659		$	5,294		$	83,953	$	86,999		$	5,499		$	92,498
	Operating income (loss) (1,2)	$	(3,281	)	$	13,436		$	10,155	$	(3,803	)	$	16,574		$	12,771
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)	$	(2,789	)	$	12,741		$	9,952	$	6,307		$	4,993		$	11,300
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(0.05	)	$	0.23		$	0.18	$	0.12		$	0.09		$	0.21


(1)	Acquired intangible assets amortization expense					4,770								5,221
	Non-cash stock-based compensation expense					478								294
	Reorganization and other related costs					46								(16	)
						5,294								5,499

(2)	Acquired intangible assets amortization expense					2,985								2,532
	Non-cash stock-based compensation expense					4,325								3,686
	Impairment charges of intangible assets and other long-lived assets					-								4,797
	Reorganization and other related costs					556								60
	Merger and acquisition and other expense					276								-
						8,142								11,075
						13,436								16,574

(3)	Corresponding tax effect					(721	)							1,853
	Gain from equity method divestment and related amortization and impairments					26								(13,434	)
						12,741							$	4,993
(4)	Weighted average number of ordinary shares outstanding- Diluted		54,435						54,738		54,132						54,132


		Twelve Months Ended December 31,
		2019			Non-GAAP			2019		2018			Non-GAAP			2018
		GAAP			Adjustments			Non-GAAP		GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)

	Gross profit (1)	$	313,692		$	19,074		$	332,766	$	325,224		$	22,351		$	347,575
	Operating income (loss) (1,2)	$	(11,699	)	$	45,812		$	34,113	$	(8,847	)	$	45,324		$	36,477
	Net income (loss) attributable to Stratasys Ltd. (1,2,3)	$	(10,849	)	$	41,315		$	30,466	$	(10,964	)	$	38,782		$	27,818
	Net income (loss) per diluted share attributable to Stratasys Ltd. (4)	$	(0.20	)	$	0.76		$	0.56	$	(0.22	)	$	0.74		$	0.52


(1)	Acquired intangible assets amortization expense					16,484								20,866
	Non-cash stock-based compensation expense					1,848								1,474
	Reorganization and other related costs					742								11
						19,074								22,351

(2)	Acquired intangible assets amortization expense					8,673								10,161
	Impairment charges of intangible assets and other long-lived assets					-								4,797
	Non-cash stock-based compensation expense					18,712								14,212
	Gain from divestiture, net of transaction costs					(3,578	)							(7,016	)
	Reorganization and other related costs					2,655								691
	Merger and acquisition and other expense					276								128
						26,738								22,973
						45,812								45,324

(3)	Corresponding tax effect					(2,919	)							(808	)
	Gain from equity method divestment, related write-offs and amortization					(1,578	)							(5,734	)
					$	41,315							$	38,782

(4)	Weighted average number of ordinary shares outstanding- Diluted		54,260						54,713		53,751						53,898

Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Forward Looking Guidance

Fiscal Year 2019

(in millions, except per share data)


GAAP net loss	($30) to ($18)

Adjustments
Stock-based compensation expense	$26 to $28
Intangible assets amortization expense	$25 to $26
Reorganization and other related costs	$3 to $4
Tax expense related to Non-GAAP adjustments	($3) to ($4)

Non-GAAP net income	$25 to $34

GAAP loss per share	($0.54) to ($0.33)

Non-GAAP diluted earnings per share	$0.45 to $0.60

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