May 9th 2014 Q1-2014 Financial Results XX March 2013 Conference Call
2 Live Dial-in Replay Dial-in Speakers Information Information Q4-2013 PRIMARY DIAL-IN: PRIMARY DIAL-IN: David (866) 318-8617 (866) 318-8617 • CEO Reis Conference INTERNATIONAL INTERNATIONAL and webcast DIAL-IN: DIAL-IN: (617) 399-5136 (617) 399-5136 details AVAILABLE FROM: Erez • CFO & COO PARTICIPANT 5/09/2014 12:30 PM ET Simha PASSCODE: 37260413 AVAILABLE TO: 5/16/2014 11:59 PM ET • Shane VP, Investor PARTICIPANT Glenn Relations PASSCODE: 87845736 ONLINE LIVE WEBCAST AND REPLAY: http://www.media-server.com/m/p/zig8t74z
3 Certain information included or incorporated by reference in this press may be deemed to be “forward -looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” Stratasys “project” or other similar words, but are not the only way these statements are identified. These forward-looking statements may include, but are not limited to, statements relating to the company’s objectives, plans and strategies, statements that contain projections of results of operations or of financial condition (including, with respect to acquisitions) and all Forward statements (other than statements of historical facts) that address activities, events or developments that the company intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements are not looking guarantees of future performance and are subject to risks and uncertainties. The company has based these forward-looking statement statements on assumptions and assessments made by its management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things: the company’s ability to efficiently and successfully integrate the operations of Stratasys, Inc. and Objet Ltd. after their merger as well as MakerBot, Solid Concepts, and Harvest Technologies after their acquisitions and to successfully put in place and execute an effective post- merger integration plans; the overall global economic environment; the impact of competition and new technologies; general market, political and economic conditions in the countries in which the company operates; projected capital expenditures and liquidity; changes in the company’s strategy; government regulations and approvals; changes in customers’ budgeting priorities; litigation and regulatory proceedings; and those factors referred to under “Risk Factors”, “Information on the Company”, “Operating and Financial Review and Prospects”, and generally in the company’s annual report on Form 20-F for the year ended December 31, 2013 filed with the U.S. Securities and Exchange Commission and in other reports that the company has filed with the SEC. Readers are urged to carefully review and consider the various disclosures made in the company’s SEC reports, which are designed to advise interested parties of the risks and factors that may affect its business, financial condition, results of operations and prospects. Any forward-looking statements in this press release are made as of the date hereof, and the company 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.
4 Summary Experienced strong revenue growth of 54%, including 33% organic revenue growth, driven by sales of higher-margin products and services Strong growth of our higher-margin products contributed to an impressive gross margin of 61% for the first quarter Impressive contribution from MakerBot of $20.6 million for the first quarter, as the desktop segment continues rapid expansion Invested aggressively in sales, marketing, and product development projects during the first quarter, with emphasis on MakerBot products Announced a major new initiative with our agreements to acquire Solid Concepts and Harvest Technologies Maintain positive outlook and continue to position the company for future growth through enhancements in our organizational structure
5 Change Q1-13 Q1-14 Quarter Highlights: YOY Unit Sales 1,168 8,802 653.6% – Revenue growth of 54% YOY Total Revenue $98.2 $151.2 +53.9% Financial – Organic revenue growth of 33% YOY Revenue/ Results 0.084 0.079 -6.9% Employee – Non-GAAP GM rose to 61% from 59% Gross Profit 57.9 92.1 +59.1% – Non-GAAP net income growth of 17% YOY % margin 59.0% 60.9% Stratasys Ltd. Operating 37.6 69.4 +84.5% Expenses 38.3% 45.9% % of sales Non-GAAP Operating Profit 20.3 22.8 +12.1% % margin 20.7% 15.1% ($ in millions Pre-tax Profit 20.8 21.4 +2.9% % margin 21.2% 14.2% unless noted Tax Rate 15.1% 3.8% -74.6% otherwise) EBITDA 25.1 26.0 +3.5% 17.6 20.6 +17.2% Net Income % margin 17.9% 13.6% EPS (Diluted) $0.43 $0.40 -6.5% Diluted Shares 41.1 51.2 +24.8%
6 Total Revenue - Quarter Quarter Highlights: $129.5 – System revenue +71% YOY Financial – Consumable revenue +36% YOY $82.8 Results – Maintenance Revenue and Related $21.7 Services +64% YOY $15.4 Revenue Q1-2013 Q1-2014 Stratasys Ltd. Product Service Non-GAAP Total Revenue – Quarterly Trend $135.6 $129.5 ($ in millions) $108.3 $90.4 $82.8 $21.7 $20.2 $17.7 $15.4 $16.3 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Product Service
7 Total Units – Quarter Quarter Highlights: System Unit Sales – MakerBot impact 8,802 Financial – Launch of the Objet500 Connex3 Color Results Multi-Material 3D Printer – Fortus FDM strength 1,168 System Unit Sales 1 Q1-2013 Q1-2014 System Unit Sales Stratasys Ltd. Total Units – Quarterly Trend System Unit Sales 10,963 8,802 5,925 1,261 1,168 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1-14 System Unit Sales (1) Includes systems sold by Stratasys, Inc. in all periods; and units for MakerBot starting only on August 15, 2013
8 ($ in millions % Quarter Highlights: unless noted Q1-13 Q1-14 Change otherwise) YOY – Sales of higher-margin Product Revenue $82.8 $129.5 +56.3% Financial % of sales 84.3% 85.7% products & services Results Service Revenue 15.4 21.7 +40.9% – Better overhead coverage % of sales 15.7% 14.3% Product Gross 53.0 82.2 +55.2% Gross Profit Profit % margin 63.9% 63.5% Service Gross 4.9 9.9 +100.6% Profit % margin 32.1% 45.8% Stratasys Ltd. Total Gross 57.9 92.1 +59.1% Profit % margin 59.0% 60.9% Non-GAAP Gross Margin – Quarterly Trend 60.9% 60.2% 59.0% 59.2% 58.8% 63.9% 32.1% 62.9% 38.5% 62.3% 37.6% 62.9% 41.9% 63.5% 45.8% Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Product Gross Margin Service Gross Margin Total Gross Margin
9 ($ in millions % Quarter Highlights: unless noted Q1-13 Q1-14 Change otherwise) YOY – Significant investments in R&D Expense 9.9 15.3 +54.4% Financial % of sales 10.1% 10.1% MakerBot SG&A Expense 27.7 54.1 +95.2% Results – Investing for future growth % of sales 28.2% 35.8% Total Operating 37.6 69.4 +84.5% Exp. % of sales 38.3% 45.9% Operating Profit Total Operating 20.3 22.8 +12.1% Profit % margin 20.7% 15.1% Stratasys Ltd. Non-GAAP Operating Profit Analysis – Quarterly Trend Operating Profit Analysis – Quarterly Trend 20.7% 20.3% 20.2% 19.2% 15.1% 10.1% 28.2% 8.9% 29.9% 9.5% 30.1% 9.9% 30.1% 10.1% 35.8% Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 R&D Expenses (% of sales) SGA Expenses (% of sales) Operating Margin
10 Q1-2014 (YOY) Financial Units Dollars Results System Revenue +654% +71% Consumables Growth Drivers -- +36% Revenue Maintenance Revenue -- +64% Stratasys Ltd. and Related Services -- +4% RedEye Parts Services Non-GAAP
11 Financial Geographic Sales Q1-2013 Geographic Sales Q1-2014 Results Other, Other, 1% 1% Revenue APAC, APAC, 20% Geographic 22% North Mix North America, America, 50% 51% Stratasys Ltd. EMEA, EMEA, 28% 27% Non-GAAP
12 Selected balance Highlights sheet items ($ in Q4-13 Q1-14 millions) – $607.5 M in cash, cash Cash , Cash $616.1 $607.5 equivalents and bank Financial Equivalents & Inv. Results deposits 99.2 106.0 Accounts Receivable – $4.9 M in net operating Balance Sheet 88.4 99.8 Inventories cash flow Summary – Increased inventory for 714.4 712.8 Net Working Capital supply flexibility and new Stratasys Ltd. product introductions – DSO declined to 72 from 74 ($ in millions in Q4 unless noted otherwise)
13 $660-$680 $2.15 $600.00 $2.15 – Financial $2.25 $1.95 $487 Results & $500.00 Projections $1.75 $1.84 Stratasys Ltd. $400.00 $359 $1.55 Non-GAAP $277 $300.00 $1.49 $1.35 ($ in millions unless noted $200.00 $1.15 otherwise) $100.00 $0.95 $0.94 $- $0.75 FY11 FY12 FY13 FY14 (guidance) Revenue (millions) EPS * Periods prior to 2013 are pro forma including Objet, Ltd.
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