Stratasys Releases Second Quarter 2022 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 (i) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, legal provisions and (ii) 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 goodwill, revaluation of our investments 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)
	June 30,			December 31,
		2022			2021


ASSETS

Current assets
Cash and cash equivalents	$	255,886		$	243,179
Short-term deposits		182,429			259,000
Accounts receivable, net of allowance for credit losses of $1.0 million and $0.5 million as of June 30, 2022 and December 31, 2021		132,343			129,382
Inventories		153,702			129,147
Prepaid expenses		8,225			6,871
Other current assets		49,615			33,123

Total current assets		782,200			800,702

Non-current assets
Property, plant and equipment, net		192,630			203,295
Goodwill		64,959			65,144
Other intangible assets, net		133,657			152,244
Operating lease right-of-use assets		12,319			14,651
Long-term investments		31,191			28,667
Other non-current assets		12,886			12,519

Total non-current assets		447,642			476,520

Total assets	$	1,229,842		$	1,277,222

LIABILITIES AND EQUITY

Current liabilities
Accounts payable	$	61,316		$	51,976
Accrued expenses and other current liabilities		52,049			55,358
Accrued compensation and related benefits		30,513			44,684
Deferred revenues - short term		49,511			51,174
Operating lease liabilities - short term		6,111			7,276

Total current liabilities		199,500			210,468

Non-current liabilities
Deferred revenues - long term		22,727			21,133
Deferred income taxes - long term		4,511			7,341
Operating lease liabilities - long term		6,165			7,693
Contingent consideration - long term		50,299			53,478
Other non-current liabilities		22,931			21,095

Total non-current liabilities		106,633			110,740

Total liabilities		306,133			321,208

Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands
shares; 66,744 thousands shares and 65,677 thousands shares issued
and outstanding at June 30, 2022 and December 31, 2021, respectively		186			182
Additional paid-in capital		3,030,088			3,012,481
Accumulated other comprehensive loss		(13,354	)		(8,771	)
Accumulated deficit		(2,093,211	)		(2,047,878	)
		923,709			956,014

Total liabilities and equity	$	1,229,842		$	1,277,222

Stratasys Ltd.

Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales
Products	$	115,721		$	100,305		$	228,794		$	190,629
Services		50,882			46,700			101,238			90,565
		166,603			147,005			330,032			281,194

Cost of sales
Products		61,132			49,731			120,505			96,651
Services		38,078			34,004			72,457			65,696
		99,210			83,735			192,962			162,347

Gross profit		67,393			63,270			137,070			118,847

Operating expenses
Research and development, net		24,346			22,437			48,344			43,038
Selling, general and administrative		66,592			63,557			131,855			116,891
		90,938			85,994			180,199			159,929

Operating loss		(23,545	)		(22,724	)		(43,129	)		(41,082	)

Financial expenses, net		(1,170	)		(372	)		(2,532	)		(749	)

Loss before income taxes		(24,715	)		(23,096	)		(45,661	)		(41,831	)

Income tax benefit		429			4,368			502			5,310

Share in losses of associated companies		(99	)		(1,431	)		(174	)		(2,549	)

Net loss	$	(24,385	)	$	(20,159	)	$	(45,333	)	$	(39,070	)

Net loss per share
Basic	$	(0.37	)	$	(0.31	)	$	(0.69	)	$	(0.63	)
Diluted	$	(0.37	)	$	(0.31	)	$	(0.69	)	$	(0.63	)

Weighted average ordinary shares outstanding
Basic		66,568			64,908			66,151			61,796
Diluted		66,568			64,908			66,151			61,796

		Three Months Ended June 30,
			2022		Non-GAAP			2022		2021		Non-GAAP				2021
		GAAP			Adjustments		Non-GAAP		GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)
	Gross profit (1)	$	67,393		$	11,914	$	79,307	$	63,270		$	6,616		$	69,886
	Operating income (loss) (1,2)		(23,545	)		25,479	$	1,934		(22,724	)		20,133		$	(2,591	)
	Net income (loss) (1,2,3)		(24,385	)		25,560	$	1,175		(20,159	)		18,581		$	(1,578	)
	Net income (loss) per diluted share (4)	$	(0.37	)	$	0.39	$	0.02	$	(0.31	)	$	0.29		$	(0.02	)


(1)	Acquired intangible assets amortization expense					6,954							5,518
	Non-cash stock-based compensation expense					1,080							788
	Restructuring and other related costs					15							310
	Impairment charges					3,865							-
						11,914							6,616

(2)	Acquired intangible assets amortization expense					2,218							2,200
	Non-cash stock-based compensation expense					7,751							7,189
	Restructuring and other related costs					-							350
	Revaluation of investments					1,255							2,201
	Contingent consideration					596							202
	Other expenses					1,745							1,375
						13,565							13,517
						25,479							20,133

(3)	Corresponding tax effect and other expenses					81							(1,552	)
					$	25,560						$	18,581

(4)	Weighted average number of ordinary
	shares outstanding - Diluted		66,568					67,070		64,908						64,908

		Six Months Ended June 30,
			2022		Non-GAAP				2022		2021		Non-GAAP				2021
		GAAP			Adjustments			Non-GAAP		GAAP			Adjustments			Non-GAAP
		U.S. dollars and shares in thousands (except per share amounts)
	Gross profit (1)	$	137,070		$	19,603		$	156,673	$	118,847		$	13,685		$	132,532
	Operating income (loss) (1,2)		(43,129	)		47,086		$	3,957		(41,082	)		35,918		$	(5,164	)
	Net income (loss) (1,2,3)		(45,333	)		47,718		$	2,385		(39,070	)		33,692		$	(5,378	)
	Net income (loss) per diluted share (4)	$	(0.69	)	$	0.73		$	0.04	$	(0.63	)	$	0.54		$	(0.09	)


(1)	Acquired intangible assets amortization expense					13,920								10,873
	Non-cash stock-based compensation expense					1,980								1,422
	Restructuring and other related costs					(162	)							1,390
	Impairment charges					3,865								-
						19,603								13,685

(2)	Acquired intangible assets amortization expense					4,443								4,393
	Non-cash stock-based compensation expense					15,384								13,760
	Restructuring and other related costs					555								2,159
	Revaluation of investments					2,316								(1,469	)
	Contingent consideration					803								393
	Other expenses					3,982								2,997
						27,483								22,233
						47,086								35,918

(3)	Corresponding tax effect and other expenses					632								(2,226	)
					$	47,718							$	33,692

(4)	Weighted average number of ordinary
	shares outstanding - Diluted		66,151						67,071		61,796						61,796

Stratasys Ltd.

Reconciliation of GAAP to Non-GAAP Forward Looking Guidance

Fiscal Year 2022

(in millions, except per share data)


GAAP net loss		($78) to ($69)

Adjustments
Stock-based compensation expense		$33 to $35
Intangible assets amortization expense		$37 to $38
Reorganization and other		$14 to $16
Tax expense (benefit) related to Non-GAAP adjustments		($2) to ($1)

Non-GAAP net income		$10 to $13

GAAP loss per share		($1.17) to ($1.04)

Non-GAAP diluted earnings per share		$0.14 to $0.19

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