Stratasys Releases Second Quarter 2023 Financial Results

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Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys' strategy, and the statements regarding its projected future financial performance, including the financial guidance concerning its expected results for 2023 and beyond, 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 degree of our success at introducing new or improved products and solutions that gain market share; the degree of growth of the 3D printing market generally; the impact of potential shifts in the prices or margins of the products that we sell or services that we provide, including due to a shift towards lower margin products or services; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; the extent of our success at successfully consummating and integrating into our existing business acquisitions or investments in new businesses, technologies, products or services; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates and potential recessionary conditions, potential changes in our management and board of directors; global market, political and economic conditions, and in the countries in which we operate in particular; costs and potential liability relating to litigation and regulatory proceedings; risks related to infringement of our intellectual property rights by others or infringement of others' intellectual property rights by us; the extent of our success at maintaining our liquidity and financing our operations and capital needs; the impact of tax regulations on our results of operations and financial condition; and those additional factors referred to in Item 3.D “Key Information - Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2022, which we filed with the U.S. Securities and Exchange Commission, or SEC, on March 3, 2023 (the “2022 Annual Report”). Readers are urged to carefully review and consider the various disclosures made throughout our 2022 Annual Report and the Reports of Foreign Private Issuer on Form 6-K that attach Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly periods throughout 2023, which will be furnished to the SEC throughout 2023, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are provided or made (as applicable) 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.

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, and 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.

Important Additional Information Concerning the Proposed Merger with Desktop Metal

In connection with the proposed merger transaction between Stratasys and Desktop Metal, Inc. (“Desktop Metal”), Stratasys filed with the SEC a registration statement on Form F-4 that includes a joint proxy statement of Stratasys and Desktop Metal and that also constitutes a prospectus of Stratasys. Each of Stratasys and Desktop Metal may also file other relevant documents with the SEC regarding the proposed transaction. The registration statement has not yet become effective. After the registration statement is effective, the definitive joint proxy statement/prospectus will be mailed to shareholders of Stratasys and Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the registration statement and definitive joint proxy statement/prospectus and other documents containing important information about Stratasys, Desktop Metal and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with, or furnished, to the SEC by Stratasys will be available free of charge on Stratasys’ website at https://investors.stratasys.com/sec-filings. Copies of the documents filed with the SEC by Desktop Metal will be available free of charge on Desktop Metal’s website at https://ir.desktopmetal.com/sec-filings/all-sec-filings.

Stratasys Ltd.
 
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
June 30, December 31,

2023

2022

 
 
ASSETS
 
Current assets
Cash and cash equivalents

$

144,366

 

$

150,470

 

Short-term deposits

 

61,000

 

 

177,367

 

Accounts receivable, net of allowance for credit losses of $0.8 million and $0.9 million as of June 30, 2023 and December 31, 2022

 

156,264

 

 

144,739

 

Inventories

 

211,186

 

 

194,054

 

Prepaid expenses

 

10,187

 

 

5,767

 

Other current assets

 

27,463

 

 

27,823

 

 
Total current assets

 

610,466

 

 

700,220

 

 
Non-current assets
Property, plant and equipment, net

 

200,994

 

 

195,063

 

Goodwill

 

92,946

 

 

64,953

 

Other intangible assets, net

 

148,613

 

 

121,402

 

Operating lease right-of-use assets

 

20,513

 

 

18,122

 

Long-term investments

 

138,624

 

 

141,610

 

Other non-current assets

 

18,269

 

 

18,420

 

 
Total non-current assets

 

619,959

 

 

559,570

 

 
Total assets

$

1,230,425

 

$

1,259,790

 

 
LIABILITIES AND EQUITY
 
Current liabilities
Accounts payable

$

69,793

 

$

72,921

 

Accrued expenses and other current liabilities

 

50,763

 

 

45,912

 

Accrued compensation and related benefits

 

29,534

 

 

34,432

 

Deferred revenues - short term

 

51,865

 

 

50,220

 

Operating lease liabilities - short term

 

6,842

 

 

7,169

 

 
Total current liabilities

 

208,797

 

 

210,654

 

 
Non-current liabilities
Deferred revenues - long term

 

27,399

 

 

25,214

 

Deferred income taxes - long term

 

6,995

 

 

5,638

 

Operating lease liabilities - long term

 

13,346

 

 

10,670

 

Contingent consideration

 

26,151

 

 

23,707

 

Other non-current liabilities

 

24,510

 

 

24,475

 

 
Total non-current liabilities

 

98,401

 

 

89,704

 

 
Total liabilities

 

307,198

 

 

300,358

 

 
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands
shares; 68,942 thousands shares and 67,086 thousands shares issued
and outstanding at June 30, 2023 and December 31, 2022, respectively

 

193

 

 

187

 

Additional paid-in capital

 

3,073,396

 

 

3,048,915

 

Accumulated other comprehensive loss

 

(12,671

)

 

(12,818

)

Accumulated deficit

 

(2,137,691

)

 

(2,076,852

)

 

923,227

 

 

959,432

 

 
Total liabilities and equity

$

1,230,425

 

$

1,259,790

 

 
Stratasys Ltd.
 
Consolidated Statements of Operations
 
(in thousands, except per share data)
 
Three Months Ended June 30, Six Months Ended June 30,

 

 

2023

 

2022

 

2023

 

2022

(unaudited) (unaudited) (unaudited) (unaudited)
Net sales

Products

$

109,112

 

$

115,721

 

$

210,083

 

$

228,794

 

Services

 

50,639

 

 

50,882

 

 

99,045

 

 

101,238

 

 

159,751

 

 

166,603

 

 

309,128

 

 

330,032

 

 
Cost of sales

Products

 

57,576

 

 

61,132

 

 

108,689

 

 

120,505

 

Services

 

35,953

 

 

38,078

 

 

68,822

 

 

72,457

 

 

93,529

 

 

99,210

 

 

177,511

 

 

192,962

 

 
Gross profit

 

66,222

 

 

67,393

 

 

131,617

 

 

137,070

 

 
Operating expenses

Research and development, net

 

24,305

 

 

24,346

 

 

45,780

 

 

48,344

 

Selling, general and administrative

 

75,576

 

 

66,592

 

 

136,293

 

 

131,855

 

 

99,881

 

 

90,938

 

 

182,073

 

 

180,199

 

 
Operating loss

 

(33,659

)

 

(23,545

)

 

(50,456

)

 

(43,129

)

 

Financial income (expenses), net

 

687

 

 

(1,170

)

 

1,460

 

 

(2,532

)

 
Loss before income taxes

 

(32,972

)

 

(24,715

)

 

(48,996

)

 

(45,661

)

 

Income tax benefit (expenses)

 

(725

)

 

429

 

 

(4,500

)

 

502

 

 

Share in losses of associated companies

 

(4,918

)

 

(99

)

 

(7,343

)

 

(174

)

 
Net loss

$

(38,615

)

$

(24,385

)

$

(60,839

)

$

(45,333

)

 
Net loss per share
Basic

$

(0.56

)

$

(0.37

)

$

(0.89

)

$

(0.69

)

Diluted

$

(0.56

)

$

(0.37

)

$

(0.89

)

$

(0.69

)

 
Weighted average ordinary shares outstanding
Basic

 

68,648

 

 

66,568

 

 

68,107

 

 

66,151

 

Diluted

 

68,648

 

 

66,568

 

 

68,107

 

 

66,151

 

 

Three Months Ended June 30,

 

2023

Non-GAAP

2023

2022

Non-GAAP

2022

 

GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP

 

U.S. dollars and shares in thousands (except per share amounts)

 

Gross profit (1)

$

66,222

 

$

11,283

$

77,505

$

67,393

 

$

11,914

$

79,307

 

Operating income (loss) (1,2)

 

(33,659

)

 

38,666

$

5,007

 

(23,545

)

 

25,479

$

1,934

 

Net income (loss) (1,2,3)

 

(38,615

)

 

41,148

$

2,533

 

(24,385

)

 

25,560

$

1,175

 

Net income (loss) per diluted (4)

$

(0.56

)

$

0.60

$

0.04

$

(0.37

)

$

0.39

$

0.02

 

 

 

(1)

Acquired intangible assets amortization expense

 

5,014

 

6,954

 

Non-cash stock-based compensation expense

 

999

 

1,080

 

Restructuring and other related costs

 

3,378

 

15

 

Impairment charges and write off

 

1,892

 

3,865

 

 

11,283

 

11,914

 

(2)

Acquired intangible assets amortization expense

 

2,686

 

2,218

 

Non-cash stock-based compensation expense

 

7,024

 

7,751

 

Restructuring and other related costs

 

2,468

 

-

 

Revaluation of investments

 

-

 

1,255

 

Contingent consideration

 

347

 

596

 

Legal, consulting and other expenses

 

14,858

 

1,745

 

 

27,383

 

13,565

 

 

38,666

 

25,479

 

(3)

Corresponding tax effect

 

213

 

81

 

Finance expenses

 

175

 

-

 

Equity method related amortization and other

 

2,094

 

-

 

$

41,148

$

25,560

 

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

68,648

 

 

69,272

 

66,568

 

 

67,070

 

 

Six Months Ended June 30,

 

 

2023

 

Non-GAAP

 

2023

 

2022

 

Non-GAAP

 

2022

 

GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP

 

U.S. dollars and shares in thousands (except per share amounts)

 

Gross profit (1)

$

131,617

 

$

16,582

$

148,199

$

137,070

 

$

19,603

 

$

156,673

 

Operating income (loss) (1,2)

 

(50,456

)

 

56,981

$

6,525

 

(43,129

)

 

47,086

 

$

3,957

 

Net income (loss) (1,2,3)

 

(60,839

)

 

64,454

$

3,615

 

(45,333

)

 

47,718

 

$

2,385

 

Net income (loss) (4)

$

(0.89

)

$

0.95

$

0.05

$

(0.69

)

$

0.73

 

$

0.04

 

 

 

(1)

Acquired intangible assets amortization expense

 

9,015

 

13,920

 

 

Non-cash stock-based compensation expense

 

1,931

 

1,980

 

 

Restructuring and other related costs

 

3,744

 

(162

)

 

Impairment charges and write off

 

1,892

 

3,865

 

 

 

16,582

 

19,603

 

 

(2)

Acquired intangible assets amortization expense

 

4,880

 

4,443

 

 

Non-cash stock-based compensation expense

 

14,332

 

15,384

 

 

Restructuring and other related costs

 

4,266

 

555

 

 

Revaluation of investments

 

580

 

2,316

 

 

Contingent consideration

 

612

 

803

 

 

Legal, consulting and other expenses

 

15,729

 

3,982

 

 

 

40,399

 

27,483

 

 

 

56,981

 

47,086

 

 

(3)

Corresponding tax effect

 

3,251

 

-

 

 

Finance expenses

 

638

 

226

 

 

Equity method related amortization and other

 

3,584

 

406

 

 

$

64,454

$

47,718

 

 

(4)

Weighted average number of ordinary shares outstanding- Diluted

 

68,107

 

 

68,683

 

66,151

 

 

67,071





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