SSYSStratasys, Ltd. (NASDAQ:SSYS) announced financial results for the third quarter of 2016.

Q3-2016 Financial Results Summary:

  • Revenue for the third quarter of 2016 was $157.2 million, compared to $167.6 million for the same period last year.
  • GAAP gross margin was 46.9% for the third quarter, compared to a GAAP negative gross margin of 47.7% for the same period last year.
  • Non-GAAP gross margin was 54.0% for the third quarter, compared to 50.8% for the same period last year.
  • GAAP operating loss for the third quarter was $19.4 million, compared to a loss of $931.3 million for the same period last year.
  • Non-GAAP operating income for the third quarter was $3.3 million, compared to non-GAAP operating loss of $10.0 million for the same period last year.
  • GAAP net loss for the third quarter was $20.8 million, or ($0.40) per diluted share, compared to a loss of $901.3 million, or ($17.35) per diluted share, for the same period last year.
  • Non-GAAP net income for the third quarter was $0.1 million, or $0.00 per diluted share, compared to Non-GAAP net income of $0.7 million, or $0.01 per diluted share, reported for the same period last year.
  • The Company maintains $239.3 million in cash and cash equivalents as of the end of the third quarter.
  • Net R&D expenses for the third quarter amounted to $24.0 million, representing 15.3% of net sales.
  • GAAP EBITDA for the third quarter amounted to $3.5 million.
  • Non-GAAP EBITDA for the third quarter amounted to $12.0 million.

Recent Business Highlights:

  • Announced that leading aircraft manufacturer Airbus is standardizing on ULTEM™ 9085 3D printing material for the production of flight parts for its A350 XWB aircraft.
  • Showcased demonstrations of next generation manufacturing technologies at IMTS 2016, designed to spearhead strategic efforts in developing advanced manufacturing applications, including:
    • The Stratasys Infinite-Build 3D Demonstrator, developed with the Boeing Company and the Ford Motor Company, designed for low-volume production of large thermo-plastic parts.
    • The Stratasys Robotic Composite Demonstrator, developed with Siemens, designed for the automated production of composite material structures for advanced manufacturing applications.
  • Launched and began shipping new MakerBot 3D printing solutions for professionals and educators, including:
    • The MakerBot Replicator+ and Replicator Mini+, which have been re-engineered and tested to provide improved performance and reliability.
    • MakerBot Print and Mobile software applications, which are designed to help professionals integrate MakerBot solutions into their workflows; and help educators introduce students to 3D printing.
    • Thingiverse Education, designed to provide educators with access to valuable classroom content created by other educators.

“The introductions of the Stratasys Infinite-Build and Robotic Composite 3D Demonstrators both evidence the unique long-term value of our core technologies and highlight the importance of strategic relationships in developing solutions that target specific, high-value added applications,” said Ilan Levin, Chief Executive Officer of Stratasys. “These innovations demonstrate our potential to meet the needs of customers by leveraging our core assets within key vertical markets. We believe these types of opportunities remain significant across multiple industries, and we are committed to seeking their further development.”

Financial Guidance:

Stratasys provided updated guidance regarding the Company’s prospective revenue and net income (loss) for the fiscal year ending December 31, 2016:

  • Revenue guidance of $662 to $673 million.
  • GAAP net loss of $76 to $71 million, or ($1.44) to ($1.35) per diluted share.
  • Non-GAAP net income of $7 to $11 million, or $0.13 to $0.21 per diluted share.

Stratasys provided the following additional information regarding the Company’s prospective performance and strategic plans for fiscal 2016:

  • Non-GAAP gross margin in a range of 54% to 55%.
  • Non-GAAP operating margin of 3% to 4%.
  • Non-GAAP Tax expense of $15 to $17 million, which includes the negative impact of the planned accounting treatment for tax valuation allowance.
  • Capital expenditures are projected at $50 to $60 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 $59.0 million of projected amortization of intangible assets; $21.0 million of share-based compensation expense; $10.0 to $11.0 million in merger and acquisition related expense; and $7.0 to $8.0 million in reorganization and other related costs; and includes $15.0 million in tax expenses related to non-GAAP adjustments.

“We were pleased to recognize additional improvements to our operational efficiency during the period which was reflected in a reduction in non-GAAP operating expenses and increase in our non-GAAP gross margin compared to the same period last year,” continued Levin. “We will continue to seek further improvements in our cost structure as we strive to align our operations even more closely with our anticipated results.” (Original Source)

Shares of Stratasys closed yesterday at $20.50, down $0.48 or -2.29%. SSYS has a 1-year high of $30.46 and a 1-year low of $14.48. The stock’s 50-day moving average is $22.72 and its 200-day moving average is $21.88.

On the ratings front, Stratasys has been the subject of a number of recent research reports. In a report issued on November 4, J.P. Morgan analyst Paul Coster reiterated a Sell rating on SSYS, with a price target of $22, which implies an upside of 7% from current levels. Separately, on October 13, Piper Jaffray’s Troy Jensen reiterated a Hold rating on the stock and has a price target of $23.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Paul Coster and Troy Jensen have a yearly average loss of 5.5% and a return of 13.9% respectively. Coster has a success rate of 45% and is ranked #3964 out of 4214 analysts, while Jensen has a success rate of 58% and is ranked #155.

Sentiment on the street is mostly neutral on SSYS stock. Out of 7 analysts who cover the stock, 3 suggest a Hold rating , 2 suggest a Sell and 2 recommend to Buy the stock. The 12-month average price target assigned to the stock is $25.33, which represents a potential upside of 24% from where the stock is currently trading.

Stratasys Ltd. engages in the provision of additive manufacturing solutions for the production of parts used in the process of designing and manufacturing products for the manufacturer of end parts. Its systems include desktop 3D printers for idea and design development, various systems for rapid prototyping and large production systems for direct digital manufacturing. It also develops, manufactures and sells materials for use with its systems and provides related service offerings to its customers.