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Stratasys Ltd. (NASDAQ: SSYS) announced record financial results for the second quarter of 2013.
Q2 Financial Results Summary:
• Non-GAAP revenue of $106.7 million for the second quarter of 2013 represents a 20% organic increase over the $88.7 million pro forma revenue recorded for the same period last year after giving effect to the Stratasys-Objet merger as though it closed on January 1, 2011. • GAAP revenue for the second quarter was $106.5 million. • Non-GAAP net income of $18.6 million for the second quarter, or $0.45 per diluted share, represents a 32% increase over pro forma non-GAAP net income of $14.1 million, or $0.35 per diluted share, reported for the same period last year. • GAAP net income for the second quarter was a loss of $2.8 million, or ($0.07) per share, versus a pro forma loss of $6.9 million, or ($0.19) per share, for the same period last year. • Non-GAAP gross margins improved to 59.2% for the second quarter from pro forma non-GAAP gross margins of 57.5% in the same period last year. • GAAP gross margins improved to 47.3% for the second quarter from pro forma gross margins of 45.3% in the same period last year. • The company invested a net amount of $10.3 million in R&D during the second quarter, representing 9.7% of sales. • On a combined basis, the company has shipped a cumulative 32,245 systems worldwide as of June 30, 2013.
"We sustained positive momentum in the second quarter as global demand for our products and services remained strong," said David Reis, chief executive officer of Stratasys. "Our growth in the second quarter accelerated compared to the first quarter, as the benefits of our recent channel integration and cross-selling initiatives have begun to materialize. This occurred while we continued to invest significantly in other merger integration initiatives. In addition, our margins were favorably impacted by the operating synergies produced by the Stratasys-Objet merger, and the strong sales of our higher-margin products and services. We are very pleased with our record second quarter results.
Q2 Business Highlights:
• Announced the signing of a merger agreement with MakerBot, a leading manufacturer of systems and ecosystem developer within the rapidly growing desktop 3D printing segment. • Completed the critical sales, marketing and service team integration initiatives that resulted from the merger of Stratasys and Objet. • Observed significant cross-selling opportunities develop within the company's recently-combined channel, with opportunities expected to build over the coming quarters. • Received a multi-million-dollar order that will be shipped in the second half of 2013 from a leading Fortune 500 company for the purchase of multiple Fortus 3D production systems to be used for functional prototyping, and the manufacture of tools and end-use products.
"With our critical Stratasys-Objet merger-integration activities nearly complete, we can now focus more intently on leveraging our combined sales and marketing organization to drive faster growth," continued Reis. "Manufacturing applications remain one of the critical drivers of this growth, which was highlighted by the sizable order we received from a leading manufacturer for Fortus systems during the quarter. In addition, we are excited about our announced plan to merge with MakerBot, which we believe will accelerate our growth within the rapidly expanding segment for desktop 3D printers."
As previously communicated, the merger with MakerBot is expected to accelerate Stratasys' growth rate and be slightly dilutive to Non-GAAP earnings per share in 2013 and accretive to Stratasys Non-GAAP earnings per share by the end of 2014. Stratasys updated its following financial guidance for the fiscal year ending December 31, 2013 to take into consideration the pending merger with MakerBot, with the assumption this merger is completed by mid-August:
• Revenue guidance of $455 million to $480 million; versus previous guidance of $430 million to $445 million. • Non-GAAP earnings guidance of $1.75 to $1.90 per diluted share; versus previous guidance of $1.80 to $1.95 per diluted share. • GAAP earnings guidance of a ($0.76) to ($0.49) per share loss; versus previous guidance of a ($0.41) to ($0.16) per share loss.
Non-GAAP earnings guidance excludes $65.2 million of projected amortization of intangible assets; $21.0 million to $23.6 million of share-based compensation expense; and $16.3 million to $18.9 million in merger-related expenses.
Organic revenue growth is expected to be relatively stronger toward the end of this year as the company progresses with its Stratasys-Objet integration plan and realizes revenue synergies from selling the combined product portfolio. 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.
"We begin the third quarter with positive sales momentum and a strong pipeline of opportunities within the channel. The benefits from our recent integration initiatives are tangible, and we are very excited about our plan to merge with Makerbot, which we expect to close in the middle of this month. Although we are pleased with our near-term performance and continue to project strong growth for the year, we also remain focused on developing the many opportunities that can drive long-term growth for our shareholders," Reis concluded.
Stratasys Ltd. Q2-2013 Conference Call Details
Stratasys held a conference call to discuss its second quarter financial results on Thursday, August 8, 2013. The webcast will be available for 90 days on the "Investors" page of the Stratasys Web site or by accessing the provided web address.
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