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Stratasys FY2016 losses reduced significantly, slow business improvement

Stratasys, the current 3D printing industry market leader in terms of global sales, reported revenues $672.5 million in Stratasys FY2016 results compared to $696.0 million for fiscal 2015. This relatively contained decrement came with a huge reduction in GAAP net losses: $77.2 million, or ($1.48) per diluted share, compared to $1.4 billion, or ($26.64) per diluted share, for fiscal 2015.

The company’s non-GAAP net income for fiscal 2016 was $14.8 million, or $0.28 per diluted share, compared to non-GAAP net income of $10.0 million, or$0.19 per diluted share, reported for fiscal 2015. During the year Stratasys also generated $62.0 million in cash from operations in fiscal 2016.

“We are pleased with our fourth quarter results, and the progress we are making to improve and deepen customer engagement. Our increased revenue, combined with the ongoing activities to better align our cost structure, contributed to a significant improvement in operating profit and cash generation during the quarter. Additionally, we are encouraged by the growth in our recurring revenue during the period, demonstrating strong utilization of our installed base of systems.” Ilan Levin, Chief Executive Officer of Stratasys.

Recent Business Highlights

Stratasys maintained its leadership in the professional rapid prototype market. The company launched the new Stratasys F123, which combines optimized workflow capability and increased speed, with engineering grade performance, offering, for the first time in a professional grade rapid prototyping system, the ability to also print with low-cost PLA for concept modeling.

  • The company just introduced two innovative new materials for FDM and polyjet technologies:
    • Nylon 12CF is a new carbon-fiber-filled thermoplastic for FDM strong enough to replace metal in a range of applications, and meeting the functional performance testing demands in the automotive, aerospace, recreational goods, and industrial manufacturing sectors.
    • Agilus30 is a new line of high-durability flexible materials for PolyJet that can endure repeated flexing, providing designers and engineers with greater freedom to handle and test flexible parts and prototypes, delivering superior accuracy, fine details and enhanced product realism.

During 2016 Stratasys strengthened leadership in product and ecosystem development through collaborations with key industry leaders: during the first half it announced the agreement with Siemens to develop a cohesive, best-of-breed manufacturing capability through the integration of Siemens’ Digital Factory with Stratasys additive manufacturing solutions.

In anticipation of SolidWorks World, Stratasys announced a collaboration with Dassault Systèmes’ SIMULIA to enable final part designs that are optimized for weight and strength significantly reducing fuel consumption within the aerospace and automotive industries. The GrabCAD Print Add-In for Dassault Systèmes’ SoldiWorks was released, enabling users to estimate and print parts directly from the SolidWorks environment.

In key target markets such as aerospace and automotive highlights include Airbus standardization of Stratasys’ FDM based additive manufacturing ULTEM™ 9085 3D printing solutions for the production of flight parts on its A350 XWB aircraft. Stratasys was named as the Official Supplier of 3D Printing Solutions to the McLaren-Honda Formula 1 team for prototyping, tooling, and customized production parts. The company entered into technical relationship with Team Penske to provide 3D printing solutions for NASCAR and IndyCar engineering and manufacturing applications.

“We made significant progress in 2016 as we leverage our extensive technology and application knowledge, together with our large customer base, into value-added solutions within key target markets. Our focus is on developing enhanced products and a more robust ecosystem, supported by collaborations with industry leaders, including Siemens, Boeing, Airbus, Ford, McLaren Racing, and Team Penske. We are proud of these achievements and see them as validation of our leadership position.” Ilan Levin, CEO.

Financial Guidance:
Stratasys today provided information regarding the company’s guidance for projected revenue and net income for the fiscal year ending December 31, 2017. Revenue guidance is set at $645 to $680 million, with GAAP net loss of $53 to $39 million, or a ($1.00) to ($0.73) per diluted share. Non-GAAP net income is forecasted at $10 to $20 million, or $0.19 to $0.37 per diluted share.

Stratasys provided the following additional guidelines regarding the company’s projected performance and strategic plans for 2017:

  • Non-GAAP operating margins of 3% to 5%.
  • Capital expenditures are projected at $40 to $50 million.

Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on the Company non-GAAP net income, the Company believes that the rate of growth in its non-GAAP operating income will be the best measure of performance. Non-GAAP earnings guidance excludes $34 million of projected amortization of intangible assets; $18 to $20 million of share-based compensation expense; $2 to $3 million in merger and acquisition-related expense; and $8 to $10 million in reorganization and other related costs; and includes $3 to $4 million in tax expenses related to non-GAAP adjustments.

“As we move into 2017, we continue to invest in achieving our long-term goals. As we extend our reach into use-case centric applications, we intend to continue to shift resources to build out our capabilities around high-value added applications. We believe our combined efforts can lead to improved quality of revenue, and enable long-term, strong and sustainable growth. We are excited about the potential market opportunity that lies ahead,” concluded C EO Ilan Levin.

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